Notes 4, 5 and 6
4. Analysis of Net Operating Expenses
| |
2006
£m |
2005
£m |
| Analysis of net operating expenses |
|
|
| Marketing, selling and distribution costs |
29.2 |
27.0 |
| Research, development and engineering costs (1) |
8.7 |
7.8 |
| Administrative expenses |
|
|
| - restructuring costs |
1.5 |
0.9 |
| - amortisation of acquired intangible assets |
0.6 |
0.2 |
| - other administrative expenses |
30.1 |
24.5 |
| |
32.2 |
25.6 |
| Net operating expenses |
70.1 |
60.4 |
(1) No development costs have been capitalised in accordance with the Group accounting policies. Engineering costs are incurred as part of active product development programmes in the manufacturing companies.
5. Significant Items
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.
Other operating income
Other operating income of £0.4 million relates to profit on the sale of property fixed assets (Broadcast Systems division).
Prior year other operating income of £0.3 million relates to profit on the sale of property fixed assets (Imaging & Staging division).
Operating expenses Of the significant items included in net operating expenses, £0.6 million relates to the amortisation of intangible assets acquired as part of the acquisitions, and £1.5 million relates to the ongoing restructuring costs in Broadcast Systems (primarily inventory write off, relocation and severance in connection with the actions taken to enable the business to operate in a more integrated manner).
Prior year significant items included £0.2 million of amortisation of intangible assets acquired as part of the Kata acquisition, and £0.9 million of ongoing restructuring costs in Broadcast Systems (primarily severance in connection with the actions taken to enable the business to operate in a more integrated manner).
Other financial income/(expense) Significant items included in other financial expense comprise the following items:
The Group uses options as part of its hedging of future foreign exchange cash flows. As such options are held to maturity, the ultimate net amount charged to the income statement in respect of any option will always equate to the initial premium paid for that option. However, as a result of the time value of such options being marked-to-market at each balance sheet date, volatile income and expenses can be introduced between periods and such amounts are therefore identified as significant other financial expense. A £nil amount (2005: £0.3 million loss) relating to this volatile premium on options was recorded in significant items within other financial expense. An expense of £0.2 million (2005: £0.5 million) relating to the amortisation of options was recorded as a non-significant item within other financial expense.
Currency translation differences arising on long term intra-Group funding loans that are similar in nature to equity are charged/credited to reserves. Currency translation gain of £0.2 million (2005: £0.2 million loss) arising on certain other intra-Group funding balances that do not meet this strict criteria but are very similar in nature are recorded in significant items within other financial expense.
6. Operating Profit
| |
2006
£m |
2005
£m |
| The following items are included in operating profit |
|
|
| Amortisation of acquired intangible assets |
0.6 |
0.2 |
| Amortisation of capitalised software and development costs |
1.1 |
1.0 |
| Depreciation |
8.9 |
8.9 |
| Net gain on disposal of property, plant and equipment |
(1.5) |
(1.6) |
| Employee share based incentive schemes |
1.5 |
0.3 |
| Operating lease rental expense |
|
|
| Plant, machinery and vehicles |
0.3 |
0.3 |
| Property |
3.5 |
3.1 |
| Fees payable to the Company's auditors for the audit of the Company's annual financial statements |
0.1 |
0.1 |
| Fees payable to the Company's auditors and its associates for other services: |
|
|
| The audit of the Company's subsidiaries pursuant to legislation |
0.4 |
0.3 |
| Other services relating to taxation |
0.2 |
0.2 |
| Other services relating to corporate financial transactions |
0.1 |
0.1 |
| All other services |
- |
0.1 |
Information correct at 23/04/2007