RNS Number:2837T
Carpetright PLC
16 December 2003
16 December 2003
Carpetright plc
Strong performance delivers record first half profits
Carpetright plc, Europe's leading specialist carpet and floor covering retailer
with 438 stores across the UK, Republic of Ireland, Belgium and Holland, today
announces its interim results for the 26 weeks ended 1 November 2003.
Highlights
Group
* Underlying profit before tax * #32.3m an increase of 33.5%
against last year
* Profit on ordinary activities before taxation #31.9m up 45.7% on
last year
* Underlying earnings per share * 33.0p an increase of 39.2%
against last year
* Basic earnings per share 32.4p up 47.9% on last year
* Strong cash generation with net cash flow pre share buy back of
#20.7m
* Proposed interim dividend of 17.0p an increase of 13.3% on last
year
UK and Republic of Ireland
* Operating profits #29.2m an increase of 16.8% against last year **
* Operating margin 15.4%, up 2.3 percentage points against last year **
Benelux
* Underlying Operating profit * of #0.4m, compared to #1.5m loss
last year
* Market share increased and good progress made towards key
objectives
* 'Underlying' excludes exceptional costs and goodwill amortisation
** Last year adjusted to 26 weeks for comparison purposes
Lord Harris, Chairman and Chief Executive, said:
"I am pleased to report another record profit performance for the Group with
strong growth in our UK and Republic of Ireland business as well as the first
operating profit for our business in the Benelux, which we acquired 12 months
ago. All our businesses have continued to grow market share despite the
difficult trading conditions for floor coverings. This, combined with our
improved gross margins and reduced variable costs, has delivered excellent
profit growth on last year."
"During the first six weeks of the second half sales in our UK and Republic of
Ireland business have been more encouraging and have grown by 2.7%, with like
for like sales improving by 1.8%. Gross margin has continued to show good growth
on last year. In the Benelux for the same period, sales have also been
encouraging and are slightly above last year even though we are trading from six
fewer stores. Both gross margin and costs continue to run in line with the
improved levels achieved in the first half."
For further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Darren Shapland, Finance Director
Telephone 020 7282 8000 (until 1pm), 01708 525522
Citigate Dewe Rogerson
Patrick Toyne Sewell / Sara Batchelor
Telephone 020 7638 9571
A copy of the interim results and presentation to analysts can be found on our
website www.carpetright.plc.uk today at 7.00am and 9.30am, respectively.
Chairman's statement
Trading results and operational review
Group Summary
UK and Benelux Total Group
Republic of Ireland
#'m % growth #'m #'m % growth
**
Sales 189.1 - 1.0 27.5 216.6 - 1.1
Underlying
operating 29.2 + 16.8 0.4 29.7 + 23.2
profit *
Underlying
operating
profit after
interest * 28.7 + 22.1
Underlying profit 32.7 + 29.8 - 0.4 32.3 + 33.5
/loss before
tax *
Underlying earnings
per share (pence) * 33.0 + 39.2
* 'Underlying' excludes exceptional costs and amortisation of goodwill
** Last year adjusted to 26 weeks for comparison purposes
UK and Republic of Ireland
Results
I am pleased to report another record profit on ordinary activities before
taxation of #32.7m for the 26 weeks to 1 November 2003, an increase of 29.8%
against last year as adjusted to the comparable 26 weeks. The business recorded
an operating profit of #29.2m, an increase of 16.8% against the comparable 26
weeks last year.
Sales for the first half were #189.1m, a decrease of 1.0% against last year as
adjusted to the comparable 26 weeks. Like for like sales reduced by 1.8% against
tough comparatives although market share again increased in what has been a
difficult trading environment for carpets and floor coverings. There was a sales
increase of 0.8% from additional space, which included the sales from our new
concessions in Allders. We remain confident that our business proposition of
widest range, best prices and excellent service will enable us to continue to
grow market share.
Gross margin improved by 3.0 percentage points to 60.7%. This strong growth
reflected the full year effect of our in house cutting operation; our new 5
metres warehouse, and better buying scale from Group sourcing. We expect to
continue improving gross margin going forward primarily through in house
efficiencies and buying scale.
Costs reduced by #0.2m against last year as adjusted to the comparable 26 weeks.
This was slightly better than we had expected and reflects the inroads we have
made in reducing our cost base by making more costs variable and linked to
performance as well as improving our efficiency. This programme which started in
the second half of the last financial year will result in us saving around #6.5m
a year from our cost base and has allowed us to continue to invest in our
customer service offering without costs increasing significantly. Costs
increased 0.2 percentage points to 45.4% of sales.
Operating margin has increased to 15.4% a new record for the business. This is a
2.5 percentage point improvement against last year, and reflects the strong
gross margin growth, the small overall cost percentage point increase and a
reduction in other income as a result of freehold property sales.
Stores and Selling Channels
We continue to actively manage our property portfolio and opened a total of 12
new stores in the half while also closing 12 stores. At the end of the half the
business traded from 351 stores and had gross space including stockrooms of
3,405k sqft. Many of these openings and closures were relocations from A1 parks
to bulky good parks and this remains an important part of our overall property
strategy as they provide lower rents, better adjacencies and property profit
opportunities. The business generated #3.7m of property profits in the first
half, which comprised #0.6m from the surrender of leasehold properties and #3.1m
from the sale of a freehold interest. We expect to continue to make property
profits from changes in our portfolio as over half of our stores still trade
from A1 retail parks. We expect to be trading from a total of 366 stores in the
UK and Republic of Ireland by the end of the financial year in line with our
original target, as of today we are trading from 357 stores and will open a
further 5 stores by Boxing Day.
Following the successful trial of four flooring departments in Allders we have
agreed to rollout the offer to a further 29 Allders stores, out of a total of 46
stores. The four trial stores, which trade as "Carpets at Allders", performed in
line with our expectations and brought to the Allders customers wider ranges,
lower prices and better service. These benefits leveraged off the back of our
Group buying scale as well as the investment we have made in our warehousing and
cutting infrastructure. We also learnt some important ranging and promotional
lessons from the trial and are confident that the rollout will enable us to
reach a new market sector, which is not currently served by the Group.
We continue to see growth in our other channels to market with the van business
showing strong sales and profit gains and the insurance operation continuing to
grow its market share as well as its sales and profit contribution.
Product
The rollout to all stores of our new laminate offer was completed in September
in line with our plans. This range of over 30 laminate options has already
proved a big success in the stores and our laminate sales have more than doubled
during October, compared to the previous year. We believe the combination of the
wide range, good prices, expert advice and the service offering we provide will
enable us to grow share quickly.
Our take away roll stock carpet business has also shown good growth on the year.
The roll stock offer, which has seen significant improvement in range, styling
and product development has proven increasingly popular at the value end of the
market where an average room will cost less than #95 to carpet. We believe this
quality, affordable product, which still makes up the majority of our sales,
will continue to appeal and grow sales in the future.
Service
The investment in service has continued in the first half with additional store
training, improved processes and systems being introduced. The fitters'
assessment and training programme with the Flooring Industry Training
Association (FITA) is now in full roll out and at the end of the half we had
completed the assessment of over 400 fitters, just under 30% of the total. This
investment is an incremental cost for the business but the potential for
improved service, better customer satisfaction and repeat custom is significant.
Benelux
Results
The Benelux business recorded its first operating profit of #0.4m (pre goodwill
amortisation) in the six months to 31 October 2003, 12 months to the day from
when we acquired 100% of the company. This compares to the same period last year
when the result was a #1.5m loss (pre exceptional costs and goodwill
amortisation) for only four months and with the business operating as a joint
venture.
Sales in both Holland and Belgium have been on an improving trend throughout the
half as the floor covering offer has been expanded, our market leading price
position further improved, underpinned by our Group sourcing and investment made
to improve retail disciplines and create a real focus on sales and customer
service. There have been market share gains in both Holland and Belgium. With
the platform now in place in both countries and local requirements better
understood in terms of offer and marketing we are confident that further market
share growth can be achieved in the medium term. The market in Holland and
Belgium though remains tough and has been significantly down on last year in
every quarter so far reported.
The gross margin for product has improved to 53.9% (excluding fitting sales and
income), which is slightly ahead of the target we set and some 13.1 percentage
points above the 4-month period last year, which included the sale of the
discontinued product areas. There is more scope for further margin growth both
from internal efficiency and improved sourcing over the medium term.
Costs have been reduced significantly on last year, which reflects the
rationalised support office functions, streamlined central distribution and
Group synergies from sharing with the UK business. We will continue to focus on
costs within the business working towards the principles we have now established
in the UK and Republic of Ireland.
Stores and Operations
At the end of the half we had 59 stores in Holland and 28 in Belgium having
closed a further three, loss making stores in the first half as part of our
overhaul of the store portfolio. During the last six months we have reviewed
every store and the market in both countries and have concluded that we will
need approximately 100 stores overall to achieve full market coverage. We have
the locations identified and are now working towards this target over a 2-3 year
period.
As well as the change of stores we have also assessed the space we require to
trade in these markets with the offer we have now created. The portfolio of
stores we have acquired is excellent with good locations in busy areas. However
we have identified about 10-15 opportunities where we are significantly over
spaced for our requirements and have started the process to sublet or concession
out space to retailers complementary to our proposition. To date we have
completed three such sublets. We also took the opportunity to modernise the
stores when the sublet work was being completed. The sublets not only bring in
rental income and further footfall to the site but also enable us to run the
existing operation with less resource so improving contribution. We are working
on a further five opportunities for the second half and whilst these will cause
some business disruption and lost trading in the period of completion they will
provide benefits going forward.
We believe that having now completed a full 12 months of ownership we have
established the foundations for a good business for the medium term. We
recognise that we will need to continue to refine our offer, invest in price and
improve our service to achieve our market share goal but believe we are well on
track towards achieving our 3-year target.
Group
Results
The Group recorded an underlying profit before tax of #32.3m an increase of
33.5% on last year. This was a result of the improved operating profits for both
the businesses, as well as the property profits of #3.6m. The interest charge
increased to #0.9m for the Group (2002; #0.6m) mostly as a result of the debt
taken on to acquire the Benelux business on 31 October 2002. The Group profit on
ordinary activities before taxation increased by 45.7% to #31.9m, inclusive of
#0.4m goodwill amortisation on the Benelux acquisition.
Earnings per share
The Group's underlying earnings per share increased by 39.2% to 33.0p. Basic
earnings per share increased by 47.9% to 32.4p.
The Group purchased 3.146m of its own shares at an average price of 751.8p
during the period as part of the share buy back programme which commenced in the
second half of the previous financial year. The total consideration for these
shares was #23.6m including fees and tax. The share buy back programme including
the shares bought back at the end of the previous financial year has increased
the earnings per share in the period by 0.75p equivalent to 2.4% of the total
increase. At the end of the first half #10.4m of the consideration for the
shares bought back was still outstanding, and this has been paid in the second
half.
Dividend
The Board has declared that the interim dividend will be increased by 13.3% to
17.0p. The dividend will be paid on 20 February 2004 to shareholders on the
register on 6 February 2004.
Finance and cash flow
The Group continues to be highly cash generative and during the half achieved an
operating cash flow of #44.1m. This funded capital expenditure of #5.0m,
dividends of #15.9m and taxation payments of #7.8m. The total payment for share
buybacks during the period was #22.7m. The net cash flow for the Group was an
outflow of #1.8m. At the end of the first half Group net debt had increased by a
total of #0.9m, which included the net cash flow as well as a small positive
book movement on exchange for the euro debt of #0.9m. Group net debt at 1
November 2003 is #34.7m made up of a 5-year term loan of #28.1m as well as the
net of bank balances, overdrafts and finance leases which total #6.6m.
Outlook
For the UK and Republic of Ireland business November showed continued strong
profit growth. The total sales for the first six weeks of the second half to 13
December 2003 have increased by 2.7% with like for like sales increased by 1.8%.
Trading space has increased by 6 stores and the business is now trading from 357
stores. We are due to open a further 5 stores by Boxing Day. Gross margin has
continued to show good growth on last year. Whilst the UK floor covering market
remains tough and the economic outlook uncertain, we are confident that with the
investment made and strategies in place that we can continue to grow market
share and profits in the future.
In our Benelux business the sales are ahead of last year for the first six weeks
to 13 December 2003, even though we are trading from six fewer stores than the
comparable period last year. This performance is encouraging as we continue to
invest in price and service to gain market share in what remain difficult market
conditions. Gross margin and costs are coming through in line with those
achieved in the first half. We remain confident that we have created a good
foundation for our business in the Benelux and believe we are well on track
towards achieving our objectives.
Calendar
As previously reported we will provide a further trading update on 3 February
2004 at the end of the January sale period (first 13 weeks of the second half)
as well as a post Easter trading update on 20 April 2004 (first 24 weeks of the
second half). The financial year will close on 1 May 2004.
The Group has now increased the number of trading updates provided to the market
with communication on a quarterly basis (as adjusted to match our important
trading periods). This, we believe, gives a better indication of the underlying
trading position over a reasonable time period. Consequently, going forward, the
Group will not provide current trading updates at the Interim and Preliminary
results.
Consolidated profit and loss account for the 26 weeks to 1 November 2003
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
Note #'000 #'000 #'000
Group Turnover 2 216,550 218,938 436,766
Cost of sales (88,559) (96,574) (185,487)
Gross profit 2 127,991 122,364 251,279
Distribution costs (2,476) (2,907) (5,513)
Administrative expenses (see note below) (96,941) (98,581) (198,687)
Other operating income 679 861 1,828
Group Operating profit before exceptional 2 29,690 24,064 55,036
costs and goodwill amortisation (see note
below)
Exceptional costs* - (2,064) (5,448)
Goodwill amortisation* (437) (263) (681)
Group Operating profit 2 29,253 21,737 48,907
Profit on disposal of fixed assets 3,601 693 3,797
Profit on ordinary activities before 2 32,854 22,430 52,704
interest
Net interest payable (942) (578) (1,768)
Profit on ordinary activities before 31,912 21,852 50,936
taxation
Tax on profit on ordinary activities 3 (8,369) (6,709) (14,222)
Profit on ordinary activities after 23,543 15,143 36,714
taxation
Minority interests - 1,332 1,360
Profit for the financial 23,543 16,475 38,074
period
Dividends 4, 6 (11,665) (11,272) (27,461)
Retained profit 6 11,878 5,203 10,613
Note: Operating profit before exceptional costs and goodwill amortisation is
after adding back the items marked (*), which are included within Administrative
expenses.
There are no differences between the Group's historical cost profit and that
recorded in the profit and loss account (2003: #nil).
All items in the profit and loss account arise from continuing operations.
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
pence pence pence
Note
Underlying earnings per share 5 33.0 23.7 56.2
Basic earnings per share 5 32.4 21.9 50.7
Fully diluted earnings per share 5 32.4 21.9 50.7
Dividend per ordinary share 4 17.0 15.0 37.0
Note: Underlying earnings are defined in note 5.
Consolidated statement of total recognised gains and losses for the 26 weeks to 1 November 2003
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
Note
Profit for the financial period 23,543 16,475 38,074
Exchange rate movement 6 11 (407) 609
Total recognised gain relating to the 23,554 16,068 38,683
period
Exchange rate movement includes an amount of #0.7m arising on the retranslation
of foreign currency borrowings that has been offset against the other foreign
exchange movements (27 weeks to 2 November 2002: #nil)(53 weeks to 3 May 2003:
#3.5m).
Consolidated balance sheet at 1 November 2003
Note 1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Intangible fixed assets 16,047 16,826 16,866
Tangible fixed assets 135,971 139,586 140,152
152,018 156,412 157,018
Current assets
Stock 34,960 36,740 40,672
Debtors 22,889 23,789 20,296
Cash at bank and in hand 7,433 10,501 13,266
65,282 71,030 74,234
Creditors: amounts falling due within one year
Trade creditors (46,136) (49,195) (46,225)
Other creditors (96,831) (89,221) (93,121)
(142,967) (138,416) (139,346)
Net current liabilities (77,685) (67,386) (65,112)
Total assets less current liabilities 74,333 89,026 91,906
Creditors: amounts falling due after more than one (26,306) (26,276) (31,836)
year
Provisions for liabilities and charges (3,361) (3,535) (3,627)
Net assets 2 44,666 59,215 56,443
Capital and reserves
Called up share capital 705 751 736
Share premium account 14,045 13,872 13,938
Capital redemption reserve 98 51 67
Profit and loss account 29,818 44,541 41,702
Shareholders' funds 6 44,666 59,215 56,443
Consolidated cash flow statement for the 26 weeks to 1 November 2003
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
Operating profit 29,253 21,737 48,907
Exceptional asset write off - 1,687 2,445
Depreciation 5,952 6,209 12,853
Amortisation 437 263 681
Decrease in stocks 5,498 3,713 619
(Increase)/Decrease in debtors (2,657) (4,560) 1,453
Increase in creditors 5,568 13,833 5,653
Net cash inflow from operating 44,051 42,882 72,611
activities
Returns on investments and servicing of
finance
Interest received 55 14 251
Interest paid (743) (410) (1,703)
Interest on finance leases (82) (182) (316)
Net cash outflow from investments and servicing of finance (770) (578) (1,768)
Taxation paid (7,804) (7,445) (18,659)
Payments to acquire tangible fixed (4,956) (11,653) (20,485)
assets
Receipts from sales of tangible fixed 6,093 1,442 9,462
assets
Net cash inflow/(outflow) for capital 1,137 (10,211) (11,023)
expenditure
Purchase of subsidiary undertakings - (33,673) (34,227)
Acquisitions and disposals - (33,673) (34,227)
Equity dividends paid (15,875) (15,030) (26,301)
Net cash inflow/(outflow) before 20,739 (24,055) (19,367)
financing
Financing
Issue of Ordinary shares 107 - 67
Purchase of own shares (22,686) - -
Net (repayment)/increase of loans (3,548) 30,911 28,830
Capital element of finance lease (1,473) (1,418) (2,864)
rentals
Net cash (outflow)/inflow from financing (27,600) 29,493 26,033
(Decrease)/Increase in cash in the period (6,861) 5,438 6,666
Notes to the cash flow statement
Reconciliation of net cash flow to movement in net debt
Note 26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
(Decrease)/Increase in cash in the (6,861) 5,438 6,666
period
Opening net (debt)/funds (33,760) 313 313
(40,621) 5,751 6,979
Exchange difference 937 55 (4,470)
Finance lease repayments 1,473 1,418 2,864
Loans acquired with subsidiary - (10,389) (10,389)
Cash acquired with subsidiary - 86 86
Movement in loans 3,548 (30,911) (28,830)
Closing net debt 2 (34,663) (33,990) (33,760)
Analysis of changes in net debt during the year
3 May 2003 Cash flow Exchange 1 November
#'000 #'000 difference 2003
#'000 #'000
Cash at bank and in hand 13,266 (5,763) (70) 7,433
Overdraft and loans (11,639) (1,098) 287 (12,450)
Loan to finance acquisition (32,367) 3,548 720 (28,099)
(30,740) (3,313) 937 (33,116)
Finance leases (3,020) 1,473 - (1,547)
Net debt (33,760) (1,840) 937 (34,663)
Major non-cash transactions
The repurchase of 1,255,000 shares by the parent company, Carpetright plc, was
not paid until after the period end so the consideration of #10.4m does not
appear in the cash flow statement (27 weeks to 2 November 2002: #nil) (53 weeks
to 3 May 2003: 1,580,000 shares with consideration of #9.3m). The #9.3m payment
outstanding at 3 May 2003 was paid during the 26 weeks to 1 November 2003 and
has been included in the cash flow for this current period.
Notes to the accounts
Note 1: Basis of preparation
The interim accounts for the 26 weeks ended 1 November 2003 and the comparative
figures for the 27 weeks ended 2 November 2002 are unaudited. The comparative
figures for the 53 weeks ended 3 May 2003 are extracted from the Group's
statutory accounts. Those accounts have been reported on by the Group's auditors
and delivered to the Registrar of Companies. The report of the Auditors was
unqualified and did not contain a statement under sections 237(2) or (3) of the
Companies Act 1985.
The consolidated accounts include the accounts of the Company made up to 1
November 2003 and those of its European subsidiary undertakings made up to 31
October 2003.
Note 2: Segmental reporting
26 weeks to 1 November 2003 27 weeks to 2 November 2002 53 weeks to 3 May 2003
UK Benelux Group UK Benelux Group UK Benelux Group
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Profit and loss account
Turnover 189,080 27,470 216,550 198,256 20,682 218,938 386,839 49,927 436,766
Gross profit 114,695 13,296 127,991 114,447 7,917 122,364 230,639 20,640 251,279
Operating profit before 29,242 448 29,690 25,583 (1,519) 24,064 57,931 (2,895) 55,036
exceptional costs and
goodwill amortisation
Operating profit 29,242 11 29,253 25,583 (3,846) 21,737 57,931 (9,024) 48,907
Profit before interest and 32,940 (86) 32,854 26,276 (3,846) 22,430 61,728 (9,024) 52,704
tax
Balance sheet
Net assets pre debt 39,672 39,657 79,329 62,812 30,393 93,205 51,549 38,654 90,203
Net debt (34,663) (33,990) (33,760)
Net assets 44,666 59,215 56,443
Note 3: Taxation on profit on ordinary activities
The estimated effective tax rate on the profits of the Group for the 52 weeks
ended 1 May 2004 is approximately 29.7% (2003: 27.9%). The tax charge for the
26 weeks to 1 November 2003 is 26.2% as it includes a release of #1.0m relating
to an overprovision in prior years. This release reduces the estimated overall
tax charge for the 52 weeks ended 1 May 2004 to 28.1%.
Note 4: Dividends
The interim ordinary dividend of 17p per share (2002: 15p) will be paid on 20
February 2004 to shareholders registered at the close of business on 6 February
2004.
As a result of share repurchases between 3 May 2003 and the date of the final
dividend, #0.3m of the proposed final dividend was not paid on those shares and
has been released to the profit and loss account during the 26 weeks ended 1
November 2003.
Note 5: Earnings per share
The calculation of basic and diluted earnings per share for the 26 weeks to 1
November 2003 is based on earnings of #23,543,000 (27 weeks to 2 November 2002:
#16,475,000) (53 weeks to 3 May 2003: #38,074,000).
The weighted average number of shares used in the calculation of basic earnings
per share for the 26 weeks to 1 November 2003 was 72,568,000 (27 weeks to 2
November 2002: 75,148,000) (53 weeks to 3 May 2003: 75,128,000). The weighted
average number of shares used in the calculation of diluted earnings per share
was 72,598,000 (27 weeks to 2 November 2002: 75,164,000) (53 weeks to 3 May
2003: 75,140,000).
Share options outstanding at less than fair market value represent the 30,000
difference between the basic and diluted weighted average number of shares (27
weeks to 2 November 2002: 16,000) (53 weeks to 3 May 2003: 12,000).
The Directors have presented an additional measure of earnings per share based
on underlying earnings, defined as profit before exceptional costs and goodwill
amortisation, as they believe this provides a more comparable measure on an
ongoing basis.
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
Profit for the financial period 23,543 16,475 38,074
Exceptional costs after tax - 1,402 3,993
Goodwill amortisation 437 263 681
Minority interest in exceptionals - (334) (547)
Underlying earnings 23,980 17,806 42,201
Weighted average number of shares (thousands) 72,568 75,148 75,128
Underlying earnings per share (pence) 33.0 23.7 56.2
Note 6: Reconciliation of movements in shareholders' funds
26 weeks to 27 weeks to 53 weeks to
1 November 2 November 3 May
2003 2002 2003
#'000 #'000 #'000
Profit for the financial period 23,543 16,475 38,074
Dividends (11,665) (11,272) (27,461)
Retained profit for the period 11,878 5,203 10,613
Exchange rate movement 11 (407) 609
Issue of Ordinary shares 107 - 67
Purchase of own shares (23,773) - (9,265)
Net (decrease)/increase in shareholders' funds (11,777) 4,796 2,024
Shareholders' funds at start of period 56,443 54,419 54,419
Shareholders' funds at end of period 44,666 59,215 56,443
Note 7: Revenue recognition
On 13 November 2003 The Accounting Standards Board issued an amendment to
Financial Reporting Standard 5 "Reporting the substance of transactions" in the
form of Application Note G - Revenue Recognition. An initial assessment of the
impact of these new requirements has been completed. This has indicated that
the Group will be required to amend its accounting policy in respect of the
recognition of some types of product sales. From our initial assessment we
expect this amendment to result in a non material adjustment to current year
sales and profits (and their comparatives) as well as adjustments to prior year
reserves and working capital. The new accounting requirements take effect for
the years ending on or after 23 December 2003. The Group will adopt the
requirements of the amendment in its year end financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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