Preliminary Announcement January 2007 Results
THURSDAY 29th MARCH 2007
S & U PLC
Providers of Consumer Credit & Motor Finance
RESULTS FOR THE YEAR TO 31st JANUARY 2007
* PRE-TAX PROFITS £8.9m (2006:£9.1M), AFTER IMPROVED SECOND HALF £4.1M (2006:
£3.8M), ON REVENUE £42.8M (2006:£41.3M).
* PROPOSED DIVIDEND FOR HALF YEAR 23P (2006:22P) MAKING 32P FOR YEAR (2006:
31P). EARNINGS PER SHARE 53.2P (2006:54.0P).
* HOME COLLECTED CREDIT - PROFITS £6.6M (2006:£6.9M) WITH SIGNIFICANT
IMPROVEMENT IN SECOND HALF. CUSTOMERS UP BY OVER 5000 AND REPRESENTATIVES
BY 20%.CONTINUED CONTROLLED GROWTH EXPECTED IN 2007.
* MOTOR CAR FINANCE - PROFIT £2.3M (2006:£2.2M) IN MORE CHALLENGING MARKETS.
POSITION CONSOLIDATED AS A LEADER IN SUB-PRIME MARKET.
* CONFIDENCE IN COMING YEAR. FURTHER GROWTH EXPECTED IN 2007/2008.
Issued on behalf of S & U plc by Simon Preston 0207 655 0500
Enquiries: Anthony Coombs
Managing Director
S & U PLC
Tel: 07767 687150
Date of issue: Thursday 29th March 2007
POLHILL COMMUNICATIONS TEL: 0207 655 0500
DOME HOUSE FAX: 0207 655 0501
48 ARTILLERY LANE WWW.POLHILL.COM
LONDON E1 7LS Polwoods Limited
Registration Number 1983318
CHAIRMAN'S STATEMENT
Results
Following the reduction in profit in the first half year I am pleased to report
that second half pre-tax profits of £4.1m were £0.3m up on 2006. This profit
improvement was helped by controlled second half investment and significant
growth in our home collected customer numbers and representative network. Group
revenue for the year grew to £42.8m compared to £41.3m for 2006. Profit on
ordinary activities before tax for the year was £8.9m compared to £9.1m for
2006. Earnings per share for 2007 was 53.2p (2006: 54.0p) , maintaining good
cover.
We are pleased to announce a 1p increase in the second half dividend making a
combined proposed dividend of 32p for the year as a whole. The second half
dividend for ordinary shares of 23p per share will be paid on the 1st June 2007
and the shares will be dealt ex dividend from the 2nd May 2007. Excellent
dividend payment every year since 1988 is our proud achievement and we hope to
continue this trend.
Home Collected Credit
Our network of representatives grew by 20% in the second half year and whilst
this led to increased second half costs, we were rewarded with strong Christmas
sales on which our early collections are encouraging. Loan loss provisioning
charges for the year rose by 7%, on revenue up by 4%, and we continue to take a
justifiably cautious approach to credit control. The positive developments
during the year further reinforce our strong home collected credit business and
we look forward to continued controlled growth during 2007.
Advantage Finance Limited - Motor Car Finance
Our motor car finance company Advantage Finance Limited continues to progress
and this year produced a further advance in profits to £2.3m in 2007 from £2.2m
in 2006. In more challenging market conditions in 2006, the business adapted
extremely well and enters 2007 having consolidated its position as a leading
provider of subprime motor finance.
Staff
Every company is only as good as the quality and dedication of its staff and
within the S&U group we are very fortunate to have a team of the highest
calibre. I must take this opportunity to thank our staff on your behalf for
their contribution during the year.
Outlook for the Group as a whole
We hope and expect the results for the coming year will justify the confidence
expressed in this statement.
We would like to thank all Shareholders for their support.
Derek M Coombs
Chairman
28th March 2007
MANAGING DIRECTOR'S REPORT
Although profits before tax are slightly less than last year, a significant
improvement in the second half of 2006/2007, expansion in our home credit
operations during this period and, most important, good current trading lead me
to be more optimistic now than for many years. Pre-tax profit for 2006/2007 was
£8.9m (£9.1m in 2005/2006) on revenues up from £41.3m to £42.8m. However, Group
current and non-current assets in the form of receivables from their customers
grew in the year from £64.2m to £72.0m. At over 12% this was the largest
increase in S&U's history.
Of this no less than £4m was in our rejuvenated home credit operations. Despite
the costs of adding new branches and recruiting over 80 additional
Representatives throughout the country, home credit has led the Group's profits
recovery in the second half and current trading, and in particular debt
quality, is excellent. Further, although the ability of legislators and
regulators to embark upon unnecessary and impractical consumer initiatives can
never be underestimated, the current legislative environment is both more
stable and predictable.
Meanwhile our secured credit operations make steady progress. In a more
challenging market, Advantage Finance, our motor credit subsidiary, has
produced record profits at £2.3m (2006:£2.2m) and Communitas Finance, our
second mortgage subsidiary launched last year, has, as I expected, achieved
near break-even in its first full year of trading.
We maintain our frugal approach to unnecessary overheads, which have fallen
around 8% since last year at Head Office level.
All this means that if current trends in trading persist, we can look forward
to a resumption in Group profits growth in 2007/2008 after the hiatus of the
last two years. Both this and the continued very low gearing of our company at
79% (2006: 75%) of total equity allows us to recommend an increase in dividend
to 23p per Ordinary Share (2006: 22p) for the 6 months ending 31 January 2007.
Operating Results
Year Ended Year Ended
31st January 31st January
2007 2006
£m £m
Revenue 42.8 41.3
Cost of sales (14.1) (13.2)
Gross profit 28.7 28.1
Administrative Expenses (18.2) (17.3)
Operating profit 10.5 10.8
Interest (1.6) (1.7)
Profit before taxation 8.9 9.1
Home Credit
My confidence in the recession resistant values of the home credit industry is
butressed now by the significant opportunities that consolidation in the
industry presents to S&U. As consumer debts have grown, so more restrictive
underwriting practices from competitors outside home credit has led more
consumers to appreciate the flexibility and convenience of the products we
offer. Hence S&U's 6% (and accelerating) increase in home credit gross advances
over the last year.
Further, as the industry consolidates we increase our market share. Recent
uncertainty regarding Park Credit, House of Stirling and latterly London &
Scottish Bank and Morses, has given us the opportunity to increase our customer
base by over 5,000 in the past year and our Representative numbers (by 20%). By
profitability, S&U is now within the top two in the industry and by volume has
moved up to number three.
Profits this year from our home credit activities were £6.6m. Although this is
4% less than last year, this trend was reversed in the second half and allowed
for very significant investment in the expansion referred to earlier.
Debt quality remains good, although the activities of debt consolidators,
misguided consumerists and the disposable debt culture promoted by this
Government have led to an increase in loan loss provisioning of 7% on last
year. Retaining, and improving, our debt quality in these conditions has seen
our investment in a new Call Centre, the centralising of our customer
relations, particularly in anticipation of the new Alternative Dispute
Resolution regime commencing in April, and the introduction of new loan
products. However, a shortening in our home credit debt profile and, in two of
our subsidiaries some management reorganisation, have seen a very promising
rise in overall cash collections after the year end.
The Competition Commission issued its Final Inquiry Report in December and the
industry is currently cooperating with it on implementing its Remedies. It was
encouraging to see the Competition Commission comment upon how the home credit
service fitted customers "like a glove", and how popular it is. Although we
still dispute much of the industry diagnosis that led to the remedies, I see no
concerns for S&U in implementing them. Indeed the now general recognition that
the home credit industry provides a vital role in serving otherwise financially
excluded customers should provide a more stable regulatory climate in which S&U
can profitably operate in the coming years.
Advantage Finance
Our motor finance subsidiary has performed creditably in producing its highest
ever profits of £2.3m (2006: £2.2m) in much more challenging market conditions
which have seen consumer credit for used car sales down by 6% on a year ago. In
this light, Advantage has maintained its sales levels whilst migrating to more
aspirational customers and by providing a more comprehensive finance service to
its key dealers through its network of regional Sales Managers. The quality of
Advantage's debt and collections remains strong and this has been reflected in
the appointment of its Underwriting and Collections Managers to the Advantage
Board.
With the appointment of a new Sales Manager and the reorganisation of the
Advantage sales team I am confident that within its niche markets Advantage
will continue to produce steady, and increasingly cash generative, growth in
the coming year.
Communitas Finance
At a time when second mortgage lending, particularly in the United States, has
come under some scrutiny, the performance of Communitas in building a book of
over £2.1m net receivables and nearing break-even in its first year of trading
is encouraging. Sensible and achievable business targets have been set to
enable it to move into profit this year. The quality of its loan book remains
strong and supervision of it has been blended with the Advantage Finance
collections operation which will underpin future quality. I anticipate further
growth in this secure, but inevitably more capital intensive, third leg of S&U
in the coming year.
Group Profit, Dividend and Earnings Per Share
Year Year 6 months 6 months 6 months 6 months
ended ended ended ended ended ended
31.1. 31.1. 31.1. 31.1. 31.7. 31.7.
2007 2006 2007 2006 2006 2005
£m £m £m £m £m £m
Profit before tax 8.9 9.1 4.1 3.8 4.8 5.3
Profit after tax 6.2 6.3 2.9 2.6 3.3 3.7
Earnings per share 53.2 54.0 24.8 22.5 28.4 31.5
Dividends declared per 32.0 31.0 23.0 22.0 9.0 9.0
share
Capital Structure, Liquidity and Treasury
As our total assets have risen by 10% to £75.4m in the past year, further
financing has been required. Although we retain the ability to issue equity for
this purpose, both the stability and relative tax efficiency of interest rates
and bank borrowing have made debt our principal source of finance in addition
to retained profits.
Even so our financial position is very strong. Current gearing stands at 78.9%
against 75.3% last year. Our home credit business expansion and additional
funds to build both Advantage and Communitas can both be comfortably
accommodated within our existing banking facilities.
This year S&U has made a number of small home credit purchases and we monitor
very carefully opportunities both in the consolidating home credit and motor
finance industries. We have the resources, if necessary, to take advantage of
these.
Prospects
The recent expansion of our home credit business, high standards of
professionalism and debt quality leave me optimistic for the future. If
inflation and the domestic economy stays benign, and the employment market
remains steady, I see no reason why we should not continue to profitably
increase our customer base, and the business we do with them.
Nevertheless, good customer service is not automatic. It depends upon the
enthusiasm and commitment of our growing number of staff and representatives. I
pay tribute to their professionalism and persistence over the past year. Once
again, I thank fellow Directors and my colleagues throughout the Group for
their robust support and look forward with confidence to a satisfying and
successful year ahead.
Anthony M V Coombs
Managing Director
28.3.07
Note 2007 2006
£000 £000
Restated
(note 11)
Revenue 3 42,795 41,275
Cost of sales 4 (14,146) (13,143)
----- -----
Gross profit 28,649 28,132
Administrative expenses (18,180) (17,314)
----- -----
Operating profit 10,469 10,818
Finance costs 5 (1,539) (1,694)
----- -----
Profit before taxation 3 8,930 9,124
Taxation (2,691) (2,787)
----- -----
Profit for the year 6,239 6,337
----- -----
Earnings per share basic and 6 53.2p 54.0p
diluted
Dividends per share
- Proposed final dividend 23.0p 22.0p
-Total dividend in respect of the 32.0p 31.0p
year
-Paid in the year 31.0p 31.0p
----- -----
INCOME STATEMENT
Year ended 31st January 2007
All activities derive from continuing operations
STATEMENT OF RECOGNISED INCOME AND EXPENSE
2007 2006
£000 £000
Profit for the Year 6,239 6,337
Actuarial gain on defined benefit 22 14
pension scheme
----- -----
Total recognised income for the
year attributable
to equity holders of the parent 6,261 6,351
----- -----
Note 2007 2006
£000 £000
ASSETS Restated
(note 11)
Non Current Assets
Property, plant and equipment 2,280 2,283
Amounts Receivable from customers 7 22,495 19,807
Derivative financial instruments 9 93 -
Retirement benefit asset 40 -
Deferred tax assets - 27
----- -----
24,908 22,117
----- -----
Current Assets
Inventories 176 81
Amounts receivable from customers 7 49,526 44,375
Trade and other receivables 784 619
Current income tax assets - 1,427
Cash and cash equivalents 5 11
----- -----
50,491 46,513
----- -----
Total Assets 75,399 68,630
----- -----
LIABILITIES
Current liabilities
Bank overdrafts and loans (11,647) (8,214)
Trade and other payables (978) (953)
Tax Liabilities (867) (198)
Accruals and deferred income (1,223) (1,303)
----- -----
(14,715) (10,668)
----- -----
Non current liabilities
Bank loans (20,000) (20,000)
Deferred tax liabilities (130) -
Financial liabilities (450) (450)
Derivative financial instruments 9 - (19)
----- -----
(20,580) (20,469)
----- -----
Total liabilities (35,295) (31,137)
----- -----
NET ASSETS 40,104 37,493
----- -----
Equity
Called up share capital 1,667 1,667
Share premium account 8 2,136 2,136
Profit and loss account 8 36,301 33,690
----- -----
Total equity 8 40,104 37,493
----- -----
BALANCE SHEET
31st January 2007
CASH FLOW STATEMENT
Year ended 31st January 2007
Note 2007 2006
£000 £000
Net cash from operating activities 10 715 1,657
Cash flows from investing activities
Proceeds on disposal of property, 162 125
plant and equipment
Purchases of property, plant and (666) (569)
equipment
----- -----
Net cash used in investing activities (504) (444)
----- -----
Cash flows from financing activities
Dividends paid (3,650) (3,639)
Net increase in overdraft 3,433 2,423
----- -----
Net cash used in financing activities (217) (1,216)
----- -----
Net (decrease) in cash and cash (6) (3)
equivalents
----- -----
Cash and cash equivalents at the 11 14
beginning of period
----- -----
Cash and cash equivalents at the end 5 11
of period
----- -----
Cash and bank overdrafts comprise
Cash 5 11
----- -----
There are no cash and cash equivalent balances which are not available for use
by the group (2006 £nil)
1. SHAREHOLDER INFORMATION
1.1 Preliminary Announcement
The figures shown for the year ended 31 January 2007 are not statutory accounts
within the meaning of section 240 of the Companies Act 1985. The statutory
accounts for the year ended 31 January 2007 on which the auditors have given an
unqualified audit report and did not contain an adverse statement under section
237(2) or 237(3) of the Companies Act 1985 will be delivered to the Registrar
of Companies after the Annual General Meeting. The figures shown for the year
ended 31 January 2006 are not statutory accounts. A copy of the statutory
accounts has been delivered to the Registrar of Companies, contained an
unqualified audit report and did not contain an adverse statement under section
237(2) or 237(3) of the Companies Act 1985. This announcement has been agreed
with the company's auditors for release. A copy of this preliminary
announcement will be published on the website www.suplc.co.uk. The Directors
are responsible for the maintenance and integrity of the company website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements differ from legislation in other jurisdictions.
1.2 Annual General Meeting
The Annual General Meeting will be held on 18th May 2007.
1.3 Dividend
If approved at the Annual General Meeting a final dividend of 23.0p per
Ordinary Share is proposed, payable on 1st June 2007 with a record date of 4 May 2007.
1.4 Annual Report
The 2007 Annual Report and Financial Statements will be posted to shareholders
in due course. Copies of this announcement are available from the Company Secretary,
S & U plc, Royal House, Prince's Gate, Homer Road, Solihull, West Midlands B91 3QQ.
2. KEY ACCOUNTING POLICIES
The 2007 financial statements have been prepared in accordance with applicable
accounting standards and accounting policies - these key accounting policies
are a subset of the full accounting policies.
2.1 Basis of preparation
As a listed company we are required to prepare our consolidated financial
statements in accordance with international financial reporting standards
(IFRS) adopted by the European Union. The financial information included in
this preliminary announcement does not include all the disclosures required for
IFRS or the Companies Act 1985. Both the consolidated financial statements and
the financial information included in this preliminary announcement have been
prepared under the historical cost convention as modified by the revaluation of
derivative financial instruments to fair value.
2.2 Revenue recognition
Credit charges are recognised in the income statement for all loans and
receivables measured at amortised cost using the effective interest rate method
(EIR). The EIR is the rate that exactly discounts estimated future cash flows
of the loan back to the present value of the advance. Acceptance fees charged
to customers and any direct transaction cost are included in the calculation of
the EIR. Under IAS 39 credit charges on loan products continue to accrue at the
EIR on all impaired capital balances throughout the life of the agreement
irrespective of the terms of the loan and whether the customer is actually
being charged arrears interest. This is referred to as the gross up adjustment
to revenue and is offset by a corresponding gross up adjustment to the loan
loss provisioning charge to reflect the fact that this additional revenue is
not collectable.
Commission received from third party insurers for brokering the sale of
insurance products, for which the group does not bear any underlying insurance
risk is recognised and credited to the income statement when the brokerage
service has been provided.
Sales of goods are recognised in the income statement when the product has been
supplied.
2.3 Amounts receivable from customers
All customer receivables are initially recognised at the amount loaned to the
customer plus direct transaction costs. After initial recognition the amounts
receivable from customers are subsequently measured at amortised cost.
The directors assess on an ongoing basis whether there is objective evidence
that a loan asset or group of loan assets is impaired and requires a deduction
for impairment. A loan asset or a group of loan assets is impaired only if
there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the loan. Impairment is then
calculated by estimating the future cash flows for such impaired loans,
discounting the flows to a present value using the original EIR and comparing
this figure with the balance sheet carrying value. All such impairments are
charged to the income statement.
2.4 Derivative financial instruments
The group's activities expose it to the financial risks of changes in interest
rates and the group uses interest rate derivative contracts to hedge these
exposures. The group does not use derivative financial instruments for
speculative purposes. The use of financial derivatives is governed by the
group's policies approved by the board of directors which provides written
principles on the use of financial derivatives.
Changes in the fair value of derivative financial instruments that are
designated effective as hedges of future cash flows are directly recognised in
equity and the ineffective portion is recognised immediately in the income
statement. If the cash flow hedge of a firm commitment or forecasted
transaction results in the recognition of and asset or liability then at the
time the asset or liability is recognised the associated gains or losses on the
derivative that had previously been recognised in equity are included in the
initial measurement of the asset or liability. For hedges that do not result in
the recognition of an asset or liability, amounts deferred in equity are
recognised in the income statement in the same period in which the hedged item
affects profit or loss.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they
arise.
Hedge accounting is discontinued when the hedging instrument expires or is
sold, terminated, exercised or no longer qualifies for hedge accounting. At
that time any cumulative gain or loss on the hedging instrument recognised in
equity is retained in equity until the forecasted transaction occurs. If a
hedged transaction is no longer expected to occur the net cumulative gain or
loss is recognised in equity is transferred to net profit or loss for the
period.
Derivatives embedded in other financial instruments or other host contracts are
treated as separate derivatives when their risks and characteristics are not
closely related to those of host contracts and the host contracts are not
carried at fair value with gains or losses reported in the income statement.
3. SEGMENTAL ANALYSIS
Analyses by class of business of revenue and profit before taxation are stated
below:
----Revenue---- ----Profit before----
taxation
Class of business Year ended Year Year ended Year
31.1.07 ended 31.1.07 ended
£000 31.1.06 £000 31.1.06
£000 £000
Restated
(note 11)
Consumer credit, 31,120 30,099 6,618 6,887
rentals and other
retail
Car finance 11,675 11,176 2,312 2,237
----- ----- ----- -----
42,795 41,275 8,930 9,124
----- ----- ----- -----
Analyses by class of business of assets and liabilities are stated below:
----Assets---- ----Liabilities----
Class of business Year ended Year Year ended Year
31.1.07 ended 31.1.07 ended
£000 31.1.06 £000 31.1.06
£000 £000
Restated
(note 11)
Consumer credit, rentals 43,233 38,215 (6,913) (3,786)
and other retail
Car finance 32,166 30,415 (28,382) (27,351)
----- ----- ----- -----
75,399 68,630 (35,295) (31,137)
----- ----- ----- -----
Depreciation of assets for consumer credit was £398,000 (2006: £387,000) and
for car finance was £80,000 (2006: £90,000) Fixed asset additions for consumer
credit were £586,000 (2006: £463,000) and for car finance were £80,000 (2006: £
106,000).
The assets and liabilities of the parent company are classified as consumer
credit, rentals and other retail trading.
No geographical analysis is presented because all operations are situated in
the United Kingdom.
4. COST OF SALES
2007 2006
£000 £000
Restated
(note 11)
Loan loss provisioning charge - consumer credit 6,337 5,928
Loan loss provisioning charge - car finance 4,105 3,756
----- -----
Total Loan loss provisioning charge 10,442 9,684
Other cost of sales 3,704 3,459
----- -----
14,146 13,143
----- -----
5. FINANCE COSTS
2007 2006
£000 £000
31.5% cumulative preference dividend 142 142
Bank loan and overdraft 1,585 1,527
(Profit)/Loss on financial derivative (112) 19
instrument
Other interest payable 5 6
----- -----
Interest payable and similar charges 1,620 1,694
Interest receivable (81) -
----- -----
1,539 1,694
----- -----
6. EARNINGS PER ORDINARY SHARE
The calculation of earnings per Ordinary share is based on profit after tax of
£6,239,000 (2006 -£6,337,000).
The number of shares used in the calculation is the average number of shares in
issue during the year of 11,737,228 (2006 - 11,737,228). There are no dilutive
shares.
7. AMOUNTS RECEIVABLE FROM CUSTOMERS
2007 2006
£000 £000
Consumer Credit 55,622 48,857
Car finance hire purchase 40,894 37,920
----- -----
96,516 86,777
Less: Loan loss provision (15,459) (14,661)
consumer credit
Less: Loan loss provision car (9,036) (7,934)
finance
----- -----
Amounts receivable from 72,021 64,182
customers
Analysed as
- due within one year 49,526 44,375
- due in more than one year 22,495 19,807
----- -----
72,021 64,182
----- -----
8. SHAREHOLDERS' FUNDS AND STATEMENT OF CHANGES IN EQUITY
Called up Share Profit
Share Premium and Total
Capital Account Loss Equity
Account
Restated Restated
(note 11) (note 11)
£000 £000 £000 £000
At 1 February 2005 1,667 2,136 30,978 34,781
Actuarial gain on pension - - 14 14
Profit for year - - 6,337 6,337
Dividends - - (3,639) (3,639)
----- ----- ----- -----
At 1 February 2006 1,667 2,136 33,690 37,493
Actuarial gain on pension - - 22 22
Profit for Year - - 6,239 6,239
Dividends - - (3,650) (3,650)
----- ----- ----- -----
At 31 January 2007 1,667 2,136 36,301 40,104
----- ----- ----- -----
9. DERIVATIVE FINANCIAL INSTRUMENTS
The group's activities expose it to the financial risks of changes in interest
rates and the group uses interest rate derivative contracts to hedge these
exposures in accordance with the accounting policy noted in 2.4 above. A 5 year
hedge contract on £20m of the group's borrowings was entered into on 20th
September 2005. The fair value of this contract at 31st January 2007 was
estimated to be an asset of £93,000 (2006: liability of £19,000). The contract
is designated as a hedge. The credit of £112,000 (2006: debit of £19,000) has
been included within finance costs for the year (note 5).
10. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES
2007 2006
£000 £000
Operating Profit 10,469 10,818
Finance costs paid (1,732) (1,675)
Finance income received 81 -
Tax paid (438) (2,074)
Depreciation on plant,property and 478 477
equipment
Loss on disposal of plant, property and 29 41
equipment
(Increase) in amounts receivable from (7,839) (5,732)
customers
(Increase)/decrease in inventories (95) 10
(Increase)/decrease in trade and other (165) 98
receivables
Increase/ (decrease) in trade and other 25 (353)
payables
Increase/(decrease) in accruals and (80) 70
deferred income
(Decrease) in retirement benefit (18) (23)
obligations
----- -----
Net cash from operating activities 715 1,657
----- -----
11. PRIOR YEAR ADJUSTMENTS
Further to a review of our implementation of IFRS, we have:
* amended the basis on which the gross-up adjustment to revenue and cost of
sales is recognised under IAS 39. As a result, Revenue and Cost of Sales
have been reduced by £12.2m in the 12 months to January 2006. This
adjustment does not affect profit.
* reviewed the classification and measurement of the preference shares. We
consider that it is more appropriate to recognise the junior preference
shares as a liability measured at amortised cost and the senior preference
shares as equity, recognised at par. Financial liabilities have therefore
been reduced by £1.6m and called up share capital has been increased by £
0.2m as at 31 January 2006. The adjustments increase retained reserves by
£1.6m and do not impact the profit for the period.