HYNS.L Regulatory News (HYNS)

1 Feb 2007 07:00

Haynes Publishing Group PLC01 February 2007 HAYNES PUBLISHING GROUP P.L.C. INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 November 2006 Haynes Publishing Group P.L.C. is the worldwide market leader in the productionand sale of automotive and motorcycle repair manuals. Every Haynes manual is based on a complete vehicle strip-down and rebuild in ourworkshops, so that the instructions to our customers are inherently practicaland easy to follow. The Haynes Group publishes many other DIY titles as well as an extensive arrayof books about motor sport, vehicles and general transport. Financial Highlights - Turnover on continuing operations of £14.5m (2005: £16.1m) - Operating profit on continuing operations of £3.1m (2005: £4.3m) - Profit before tax on continuing operations of £3.1m (2005: £4.1m) - Closure costs in relation to France of £0.5m. - Write-down provisions in relation to disposal of Sutton Publishing of £2.3m - Basic earnings per share from continuing operations of 12.6 pence (2005: 16.4 pence) - Net cash of £1.8m (2005: £0.9m) - Interim dividend declared of 5.5 pence per share (2005: 5.5 pence) Enquiries : Haynes Publishing Group P.L.C.John Haynes OBE, Chairman 01963 442009Eric Oakley, Group Chief Executive 01963 442009 Rowan Dartington & Co. LimitedBarrie Newton 01225 424666 Cautionary Statement : This report contains certain forward-looking statements with regards thefinancial condition and results of the operations of Haynes Publishing GroupP.L.C. These statements and forecasts involve risk factors which are associatedwith, but are not exclusive to, the economic and business circumstancesoccurring from time to time in the countries and sectors in which the Groupoperates. These forward-looking statements are made only as at the date of thisannouncement. Nothing in this announcement should be construed as a profitforecast. Except as required by law, Haynes Publishing Group P.L.C. has noobligation to update the forward-looking statements or to correct anyinaccuracies therein. INTERIM STATEMENT Business overview In our 2006 Annual Report, we referred to certain factors which were likely tocause downward pressures on the Group's revenue streams during the early part ofthe current financial year. This message was reinforced through the Board'strading statement at the time of our Annual General Meeting last October.Firstly, the recent trend of consumers deferring work on their vehicles, ashigher energy costs reduced disposable incomes, continues to lead our keycustomers to manage their inventory more tightly and has had a direct impact onsales of our repair manuals. Secondly, and as anticipated, the US Dollarweakened against Sterling during the period although the magnitude of themovement at 14% was higher than expected with the effect of the currency change,on a like for like basis, accounting for £0.5m of the reduction in Grouprevenue. In addition, in the US, we experienced some unusual customer purchasingpatterns during November 2005, as customers increased stock holdings ahead ofthe 1 December price increase. On a positive note, the Group has now completed its strategic review of thoseareas of the business where trading has remained consistently below managementexpectations, as outlined in the 2006 Annual Report. On 24th November 2006, theGroup announced the closure of its French operation and this was followed on24th January, by the sale of its 'historical publishing' subsidiary, SuttonPublishing Limited for a consideration of £3.0 million in cash. The combinedpre-tax loss of these two operations, over the last five years, has been inexcess of £3.7m. In France, management undertook a detailed review of the Frenchoperations and whilst the French business had a strong customer base, the highcosts of sales and distribution and the relative size of the business in themarket place, provided the business with little prospect of turnaround in thenext three years. For this reason, management took the decision to withdraw fromthe French market. In contrast, the sale of Sutton Publishing follows astrategic decision to concentrate management time and resources on the Haynesbusinesses. Much effort in both management time and financial resource has beenspent on the Sutton's business over the last 3 years and significant steps havebeen taken to make the business profitable. However, management now feel thatthe available resources could be more productively spent on developing andgrowing the Haynes businesses. As a result of the above restructuring, the Grouphas had to take a one-off charge to the Income Statement of £2.9 million. Financial review Income statement As mentioned above, trading has been difficult during the first half of thefinancial year and as a result Group revenue from continuing activities endedthe six month period to 30 November 2006 down 10% at £14.5 million (2005: £16.1million). During the same period, we experienced continued pressure on our costbase (mainly paper) and whilst the price increases introduced during our lastfinancial year, in both our main geographic markets, helped to mitigate thisadverse pressure, we did experience a small decline in our gross margin to 63.3%(2005: 65.4%). Nevertheless, a continued tight control over operating costs led to a decreasein such costs of 4% against the same period last year. There was also a positivevariance in finance income as the Group's cash position shows a markedimprovement over last year and there has been a higher than expected return onpension scheme assets. The net impact of the above, left the Group with a pre-tax profit on continuingactivities of £3.1 million, down 24% on the prior period (2005: £4.1 million). The one-off charge in relation to the discontinued activities was £2.9 millionand arises following the closure of the French operations and the disposal ofSutton Publishing. The loss of the combined operations during the six monthperiod was £0.1m whilst the closure costs of the French business amounted to£0.5 million and the loss recognised on the measurement to fair value, lesscosts to sell, of Sutton Publishing was £2.3 million. Balance sheet and cash flow The Group's IAS 19 pension deficit at the half year increased to £11.7m (2005:£9.1m) principally due to revised actuarial assumptions adopted by the Scheme'sactuaries in preparing their interim valuation. The main driver behind theincrease was a move by the UK actuaries to updated mortality tables. However, itshould be noted that the IAS 19 liability is an accounting estimate and issubject to high volatility. During the period, the net cash inflow from continuing operations increased byover 50% to £3.8 million (2005 : £2.5 million) with the reduction in operatingprofits being more than compensated for by a positive movement in workingcapital of £2.4 million. With an increase in tax paid to revenue authorities of£0.3 million being offset by a similar reduction in capital expenditure, cashand cash equivalents doubled to £1.8 million (2005: £0.9 million). Interim dividend The Board is confident that the recent Group restructuring, whilst having ashort-term adverse impact on retained earnings in the current financial year,will strengthen the platform from which to grow the business going forward.Accordingly, the Board is maintaining the interim dividend at 5.5 pence pershare (2005: 5.5 pence). The payment of the interim dividend will be made on 24April 2007 to shareholders on the register at the close of business on 23 March2007. The shares will be declared ex-dividend on 21 March 2007. Operational Review North America and Australia As mentioned at the beginning of this report, revenue in comparison to the priorperiod was adversely affected by the unusual buying patterns experienced inNovember 2005 with the resultant impact of the high prior year sales leaving USrevenue, in local currency, down 12% at $16.2 million (2005: $18.4 million).Mainly due to the weakened US Dollar, the reduction in revenue from manual salesin the US, after translation to Sterling, was 17% at £8.6 million (2005: £10.3million). Despite a 3% reduction in operating costs and improved net interest receivable,reflecting the stronger US cash position, the impact of the weaker US Dollarmeant that after translation to Sterling, US segmental profit ended the periodat £2.7 million, down 21% (2005: £3.4 million). UK and Europe Sales of UK automotive repair manuals continued to perform below expectationsand against the comparable period as car owners deferred repair and maintenancework and key customers maintained a tight control over inventory levels. Thiswas particularly evident during the first quarter of the financial year andwhilst sales in the second quarter were also behind the prior period, theshortfall was not as marked as that of the first three months. As a result,sales ended the period down 13% against last year. Sales of the Haynes modifyingtitles also ended the period down against the prior year, as the trend ofmodifying vehicles amongst the younger drivers appeared to be slowing. Incontrast, sales of Swedish translated manuals performed well, ending the sixmonth period 11% ahead of last year. The Haynes Book division had a very strong second quarter and ended the period22% ahead of the first half of 2005/06. The Official Formula 1TM and MotoGPseason reviews have once again proven to be very popular titles and with theirrelease coming so close to the end of the racing season they are quicklydeveloping into a 'must have' purchase for motor racing enthusiasts. Building onthe success of the range, the division also published its first Official BritishSuper Bike Season Review at the end of October. The division also hadconsiderable success with books on two of the great British motorcyclingchampions, John Reynolds and Barry Sheene. Also during the period, Haynes published the first five titles in the excitingnew range of Children's books in partnership with Top Trumps; with 'Top Trumps:Dr Who' proving to be a particularly popular title in the run up to Christmas. As a result of the higher book division and third party printing turnover, UKand European segmental revenue from continuing operations increased by 2% to£5.9 million (2005: £5.8 million). However, as a result of changes in mix ofsales, segmental profit from continuing operations ended the period 25% lower at£0.6 million (2005: £0.8 million). Future outlook Following recent reductions in oil prices and falling gasoline prices in the US,there have been indications of improved performance. Also, with last year'sunusual purchases now behind us, December sales ended substantially ahead of anunusually low December 2005, thereby reducing the overall shortfall against theprior year. I indicated at our AGM that we could see a further decline in tradingperformance this year and this continues to be our view. However, with asignificant print advertising campaign due in the US in the Spring, we believethat there is a fair chance that recent higher levels of activity will continuefor the remainder of the year. We also expect the Dollar to remain weak against Sterling for the rest of thefinancial year and this will undoubtedly negate some of the benefits of theseanticipated higher activity levels. In the UK and Europe, the recently completed restructuring will allow managementto focus on developing new product initiatives from its core automotivedatabase, as well as pursuing opportunities for growth in its general publishingand licensing markets. The development of a new product range, utilising theHaynes technical data base and aimed at the professional market is progressingwell. In relation to the Haynes licensing programme, early indications are thatsales are performing well, with the new Haynes gift range being widelydistributed through the direct to retail and independent gift market sectors.The development of the Haynes brand continues to provide the Group withpromising opportunities. In the UK, contracts have now been signed with a software supplier to implementa new integrated IT system for the UK business. The new system implementation isexpected to begin in March and be completed before the end of the calendar year. In the US, development of a new Haynes.com website is well advanced and work isunderway on the development of a website for use by professional installers. Itis our hope that the new sites will be functional by the end of the financialyear. With the Group's cash position enhanced following the disposal of SuttonPublishing, Haynes will continue to pursue new opportunities for expansion,whether through organic development or complimentary acquisition as and whensuch opportunities arise. J H Haynes, OBEChairman31 January 2007 Consolidated Income Statement (unaudited) 6 months to Year ended 30 Nov 2006 30 Nov 2005 31 May 2006 £'000 £'000 £'000Continuing operationsRevenue (note 2) 14,492 16,101 30,572Cost of sales (5,321) (5,577) (9,830)Gross profit 9,171 10,524 20,742Other operating income 17 23 40Distribution costs (3,549) (3,976) (7,115)Administrative expenses (2,493) (2,309) (4,814)Operating profit 3,146 4,262 8,853Finance income (note 4) 528 417 804Finance costs (note 5) (579) (571) (1,127) Profit before taxation 3,095 4,108 8,530Taxation (note 6) (1,042) (1,419) (2,772) Profit for the period from continuing operations 2,053 2,689 5,758 Discontinued operationsLoss for the period from discontinued operations (note 7) (2,945) (156) (194) (Loss)/profit for the period (892) 2,533 5,564 (Loss)/earnings per share from all operations - pence (note 8) * - On basic earnings (5.5) 15.5 34.0 Earnings per share from continuing operations (note 8) * - On basic earnings 12.6 16.4 35.2 * As there were no potentially dilutive shares in issue on either of theCompany's two classes of shares during the periods under review, no separatediluted earnings per share has been shown. Consolidated Statement of Recognised Income and Expense (unaudited) 6 months to Year ended 30 Nov 2006 30 Nov 2005 31 May 2006 £000 £000 £000 Exchange differences on translation of foreign operations (822) 774 (569)Actuarial (losses)/gains on retirement benefit obligation (3,157) 514 1,048Deferred tax on retirement benefit obligation 939 (154) (327)Net (expense)/income recognised directly in equity (3,040) 1,134 152 (Loss)/profit for the financial period (892) 2,533 5,564 Total recognised (expense)/income for the financial period (3,932) 3,667 5,716 Consolidated Balance Sheet (unaudited) 30 Nov 2006 30 Nov 2005 31 May 2006 £'000 £'000 £'000Non-current assetsProperty, plant and equipment 6,838 7,705 7,209Goodwill 4,383 6,430 6,055Deferred tax assets 4,378 3,379 3,482 15,599 17,514 16,746Current assetsInventories 11,008 12,683 13,371Trade and other receivables 10,231 12,856 10,961Cash and cash equivalents 3,761 2,436 4,854Total current assets 25,000 27,975 29,186Assets classified as held for sale 2,762 - - 27,762 27,975 29,186 Total assets 43,361 45,489 45,932 Current liabilitiesTrade and other payables (4,665) (5,105) (4,248)Current tax liabilities (698) (898) (1,486)Bank overdrafts (1,974) (1,559) (1,777)Total current liabilities (7,337) (7,562) (7,511)Liabilities directly associated with assets (14) - -classified as held for sale (7,351) (7,562) (7,511) Non-current liabilitiesOther creditors (203) (327) (214)Deferred tax liabilities (506) (407) (472)Retirement benefit obligation (11,650) (9,124) (8,517)Total non-current liabilities (12,359) (9,858) (9,203) Total liabilities (19,710) (17,420) (16,714) Net assets 23,651 28,069 29,218 Equity (note 13)Share capital 3,270 3,270 3,270Share premium 638 638 638Foreign currency translation reserve (1,224) 1,002 (402)Retained earnings 20,967 23,159 25,712Total equity 23,651 28,069 29,218 Consolidated Cash Flow Statement (unaudited) 6 months ended Year ended 30 Nov 2006 30 Nov 2005 31 May 2006 £'000 £'000 £'000 Net cash generated from operating activities - Continuing operations (note 10) 3,789 2,491 8,433 - Discontinued operations (note 10) (861) (182) (686) Tax paid (1,809) (1,467) (2,485) Interest received 58 11 33 Interest paid (4) (2) (14) Retirement benefit obligation (34) (86) (164) Net cash generated from operation activities 1,139 765 5,117 Investing activities Proceeds on disposal of property, plant and equipment - 7 9 Purchases of property, plant and equipment (184) (529) (671) Acquisition costs - deferred consideration (122) (81) (307) Sale of investments - - 2 Net cash used in investing activities (306) (603) (967) Financing activities Dividends paid (1,635) (1,553) (2,453) Net cash used in financing activities (1,635) (1,553) (2,453) Net (decrease)/increase in cash and cash equivalents (802) (1,391) 1,697 Cash and cash equivalents at beginning of year 3,077 1,772 1,772 Effect of foreign exchange rate changes (488) 496 (392) Cash and cash equivalents at end of period 1,787 877 3,077 Notes to the Interim Results 1. Basis of accounting The financial statements for the six months ended 30 November 2006 and 30November 2005 and for the twelve months ended 31 May 2006 do not constitutestatutory accounts for the purposes of Section 240 of the Companies Act 1985.The results for the year end 31 May 2006 and the balance sheet as at that dateare abridged from the Company's Annual Report and Financial Statements 2006which have been delivered to the Registrar of Companies. The auditors' reporton those accounts was unqualified and did not contain a statement under Section237(2) or (3) of the Companies Act 1985. The 30 November 2006 statements wereapproved by a duly appointed and authorised committee of the Board of Directorson 31 January 2007 and are unaudited. The financial statements have been prepared in accordance with the accountingpolicies set out in the 2006 Annual Report and Accounts and which are expectedto be followed in the preparation of the full financial statements for thefinancial year ended 31 May 2007. The interim financial statements have been prepared in accordance withInternational Financial Reporting Standards as endorsed by the European Unionand comply with the requirements of the Listing Rules issued by the FinancialServices Authority. The Group has chosen not to adopt IAS 34 'Interim financialstatements' in preparing the interim consolidated financial statements. 2. Revenue 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000Turnover by geographical destination on continuing operations :United Kingdom 4,282 4,065 8,838Rest of Europe 1,104 1,097 2,089United States of America 7,863 9,629 16,949Rest of World 1,243 1,310 2,696Total consolidated turnover 14,492 16,101 30,572 3. Segmental analysis For management purposes, the Group is currently organised into two geographicaloperating segments. These geographical segments are the basis on which theGroup reports its primary segment information. The principal activities of the two primary segments are as follows :- • The origination, production and sale of automotive repair manuals in the UK and Europe • The origination, production and sale of automotive repair manuals in North America and Australia Analysis of results by geographical segment : 6 months to 6 months to Year ending 30 Nov 30 Nov 30 Nov 30 Nov 31 May 31 May 2006 2006 2005 2005 2006 2006 £000 £000 £000 £000 £000 £000 Revenue - continuing operationsUS - External 8,575 8,575 10,333 10,333 19,431 19,431US - Inter-segmental * 383 352 352 8,958 10,685 19,783 UK - External 5,917 5,917 5,768 5,768 11,141 11,141UK - Inter-segmental * 108 109 245 6,025 5,877 11,386 Total revenue 14,492 16,101 30,572 * Inter-segmental sales are charged at the prevailing market rates. Result - continuing operationsUS - Segmental profit 2,659 3,352 7,017UK - Segmental profit 558 803 1,756 3,217 4,155 8,773 Unallocated head office expense less (71) 107 80incomeFinance income 528 417 804Finance costs (579) (571) (1,127) Profit before taxation 3,095 4,108 8,530 4. Finance income 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000 Interest receivable on bank deposits 58 11 33Expected return on pension scheme assets 470 406 771 528 417 804 5. Finance costs 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000 Interest payable on bank loans and overdrafts - 2 4Interest charge on pension scheme liabilities 579 569 1,123 579 571 1,127 6. Taxation The charge for taxation for the six months ending 30 November 2006 has beenbased on the estimated effective tax rate of 33.7% (12 months to 31 May 2006:32.5%) of which £54,000 (2005: £189,000) relates to the UK and £988,000 (£2005:£1,230,000) to overseas operations. 7. Discontinued operations 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000 Revenue 2,038 1,770 3,605Cost of sales (1,138) (1,024) (2,014)Gross profit 900 746 1,591Distribution costs (770) (691) (1,339)Administrative expenses (220) (211) (436)Operating profit (90) (156) (184)Finance costs (4) - (10)Profit before taxation (94) (156) (194)Taxation - - -Profit after taxation (94) (156) (194) Costs of terminating French operations (535) - -Write-down of net assets held for sale to fair value less - -expected costs of sale (2,316) (2,945) (156) (194) On 24 January 2007, the Group announced the sale of Sutton Publishing Limited toa UK based publisher for £3.0 million, excluding debt in the business at thedate of disposal. 8. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing :- 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000Earnings :Profit after tax - continuing operations 2,053 2,689 5,758Profit after tax - discontinuing operations (2,945) (156) (194)Profit after tax - all operations (892) 2,533 5,564 No. No. No.Number of shares :Weighted average number of shares 16,351,540 16,351,540 16,351,540 As at 30 November 2006, 31 May 2006 and 30 November 2005 there were nopotentially dilutive shares in issue on either of the Company's two classes ofshares. Accordingly, there is no difference between the weighted average numberof shares used in the basic and diluted earnings per share calculation. 9. Dividends 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000Amounts recognised as distributions to equity holders : Final dividend of 10.0p per share (2005: 9.5p) 1,635 1,553 1,554Interim dividend of 5.5p per share - - 899 1,635 1,553 2,453 An interim dividend of 5.5p per share (2005: 5.5p) amounting to £899,335 (2005:£899,335) has been declared during the period but has not been reflected in theinterim accounts. The payment of the interim dividend will be made on 24 April2007 to shareholders on the register at the close of business on 23 March 2007.The shares will be declared ex-dividend on 21 March 2007. 10. Cash flow analysis 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000Cash flows from operating activities - continuing Profit after tax 2,053 2,689 5,758 Adjusted for :Income tax expense 1,042 1,419 2,772Interest payable and similar charges - 2 4Interest receivable (58) (11) (33)IAS 19 pension charge for defined benefit scheme 109 163 352Operating profit 3,146 4,262 8,853Depreciation on property, plant and equipment 374 377 759Gain/(loss) on disposal of property, plant and equipment - (7) 5 3,520 4,632 9,617Changes in working capital :(Increase)/decrease in inventories (116) (272) (690)(Increase)/decrease in receivables (204) (1,691) (53)Increase/(decrease) in payables 589 (178) (441) 3,789 2,491 8,433 Cash flows from operating activities - discontinuing Loss after tax (2,945) (156) (194) Adjusted for :Interest payable and similar charges 4 - 10Operating profit (2,941) (156) (184)Depreciation on property, plant and equipment 20 24 47Gain/(loss) on disposal of property, plant and equipment - - (5)Write-down of assets for sale to fair value less costs to sell 2,316 - - (605) (132) (142)Changes in working capital :(Increase)/decrease in inventories (266) (187) (457)(Increase)/decrease in inventories 57 (268) (11)Increase/(decrease) in payables (47) 405 (76) (861) (182) (686) 11. Analysis of the changes in net funds As at As at 1 June Exchange 30 Nov 2006 Cashflow movements 2006 £'000 £'000 £'000 £'000 Cash at bank and in hand 4,854 (605) (488) 3,761Bank overdrafts (1,777) (197) - (1,974) 3,077 (802) (488) 1,787 12. Retirement Benefit Obligation The Group operates a number of different retirement programmes in the countrieswithin which it operates. The principal pension programmes are a contributorydefined benefit scheme in the UK and a non contributory defined benefit plan inthe US. The assets of all schemes are held independently of the Group and itssubsidiaries. During the period the financial position of the above pension arrangements havebeen updated in line with the anticipated annual cost for current service, theexpected return on scheme assets, the interest on scheme liabilities and cashcontributions made to the schemes. The last full IAS 19 actuarial valuation was carried out by a qualifiedindependent actuary as at 31 May 2006 and this valuation has been updated by theScheme's actuaries on an approximate basis to 30 November 2006. The movements in the retirement benefit obligation were as follows :- 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000 Retirement benefit obligation at beginning of period (8,517) (9,438) (9,438) Movement in the period :- Total expenses charged in the income statement (692) (681) (1,412)- Contributions paid 617 604 1,224- Actuarial (losses)/gains taken directly to reserves (3,157) 514 1,048- Foreign currency exchange rates 99 (123) 61 Retirement benefit obligation at end of period (11,650) (9,124) (8,517) 13. Consolidated Statement of Changes in Equity 6 months to Year ending 30 Nov 30 Nov 31 May 2006 2005 2006 £000 £000 £000 Opening shareholders' equity 29,218 25,955 25,955Profit for the period attributable to shareholders (892) 2,533 5,564Dividends (1,635) (1,553) (2,453)Actuarial gains/(losses) on retirement benefit obligations net of tax (2,218) 360 721Currency translation adjustments (822) 774 (569)Closing shareholders' equity 23,651 28,069 29,218 14. Other information A copy of this half-year report will be distributed to all shareholders and willalso be available to members of the public from the Company's registered officeat Sparkford, Near Yeovil, Somerset BA22 7JJ. A copy of the interim report willalso be available on the UK website at www.haynes.co.uk/investor. Independent Review Report to Haynes Publishing Group P.L.C. Introduction We have been instructed by the company to review the financial information forthe six months ended 30 November 2006 which comprises a consolidated incomestatement, consolidated statement of recognised income and expense, consolidatedbalance sheet, consolidated cash flow statement and related notes. We have readthe other information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. Our report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. No person is entitled to rely on thisreport unless such a person is a person entitled to rely upon this report byvirtue of and for the purpose of our terms of engagement or has been expresslyauthorised to do so by our written consent. Save as above, we do not acceptresponsibility for this report to any other person or for any other purpose andwe hereby expressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with Listing Rules ofthe Financial Services Authority which require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Auditing Standards (UK and Ireland)and therefore provides a lower level of assurance than an audit. Accordingly wedo not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 November 2006. BDO Stoy Hayward LLPChartered AccountantsSouthampton31 January 2007 This information is provided by RNS The company news service from the London Stock Exchange