Statement re International Financial Reporting ...
BISICHI MINING PLC
Bisichi Mining PLC announces that the effect of International Financial
Reporting Standard on its financial reporting are as follows:
Introduction
On 7 June 2002, the European Parliament approved a Regulation requiring all
listed companies in the European Union to prepare consolidated financial
statements under International Financial Reporting Standards ('IFRS') for
financial periods beginning on or after 1 January 2005. Bisichi Mining PLC
('Bisichi') will report its results under IFRS for the year ending 31 December
2005; its first results to be reported under the new standards will be for the
six months ended 30 June 2005.
In order to comply with IFRS, Bisichi will need to provide comparative numbers.
The purpose of this paper is to show how balance sheets and income statements
previously prepared under UK generally accepted accounting practice ('UK GAAP')
will change under IFRS, and to explain the adjustments to reconcile the figures
from one basis of accounting to the other. The main reconciling items and their
effects on the balance sheet and income statement are set out as follows:
Appendix 1 - Balance Sheet at 31 December 2004
Appendix 2 - Income Statement for the year ended 31 December 2004
Appendix 3 - Balance Sheet at 30 June 2004
Appendix 4 - Income Statement for the six months ended 30 June 2004
Basis of Preparation
The figures have been restated on the basis of our interpretation of all IFRS
currently applicable, and are unaudited. It is possible that conventions which
differ from our current interpretation will evolve within our sector, and
International Financial Reporting Standards are subject to ongoing amendment;
accordingly, the amounts disclosed in this paper may be subject to revision.
Key Changes
The main differences between UK GAAP and IFRS for the financial statements
under
review are:
* Property revaluations - surpluses or deficits on investment property
revaluations are shown on the face of the income statement rather than as a
movement in reserves; only a valuation movement above the cost of a
development property is still taken direct to the revaluation reserve;
* Financial instruments - the fair value of derivatives are recorded in the
balance sheet and the movement in their value is taken to reserves or to
the income statement;
* Share based payments - In accordance with IFRS 2 'Share Based Payment',
Bisichi has recognised a charge to the income statement representing the
fair value of outstanding share options granted. The fair value of
outstanding share options granted has been calculated using the Binomial
options valuation model. The fair value is charged to income over the
relevant option's vesting period, adjusted to reflect actual and expected
levels of vesting;
* Events after the balance sheet date - a proposed dividend is no longer
considered to be an adjusting post-balance sheet event, but is instead a
deduction from reserves in the year in which it is paid; and
* Deferred tax - contingent capital gains tax implicit within a property
valuation is accrued as a deferred tax liability.
Transitional arrangements
IFRS 1 'First-time Adoption of International Financial Reporting Standards'
sets out the procedures that the Group must follow when it adopts IFRS for the
first time as the basis for preparing its consolidated financial statements. In
general, the Group is required to determine its IFRS accounting policies and
apply these retrospectively to determine its opening balance sheet as at 1
January 2004 ('the transition date') under IFRS. The standard allows a number
of exceptions to this general principle to assist groups in the transition to
reporting under IFRS. Where Bisichi has taken advantage of these exemptions
they are noted below.
* Business Combinations that occurred before the opening IFRS balance sheet
date (IFRS 3 'Business Combinations').
Bisichi has elected not to apply IFRS 3 retrospectively to business
combinations that took place before the date of 1 January 2004. As a result,
all prior business combination accounting has been frozen at the transition
date. This includes any goodwill that was previously recognised as a deduction
from equity.
* Share-based Payments (IFRS 2 'Share-based Payment')
Bisichi has elected only to apply IFRS 2 to all share option schemes where
options have been granted since 7 November 2002 and were not fully vested at 1
January 2005.
* Exchange differences arising on consolidation (IAS 21 'Foreign Currencies')
Bisichi has elected to deem the cumulative amount of exchange differences
arising on consolidation of the net investments in subsidiaries at 1 January
2004 to be zero.
* Financial Instruments: Recognition and Measurement (IAS 39)
The comparative periods have not been restated for IAS39, particularly in
respect of derivative financial instruments. The fair value of these
instruments at the start of 2005 was passed through reserves, and the
subsequent movement in the first half of 2005 is reported in the group income
statement. The group has not applied the hedge accounting treatment that would
allow such movements to be deferred in equity.
Presentation of Financial Statements
Under IFRS, the profit and loss account is renamed the income statement, but
there is no set format or layout of financial statements prepared under IFRS
akin to those of Schedule 4 Companies Act 1985; these will develop over time
through industry practice. Accordingly, the presentations set out in Appendices
1 to 4 do not necessarily represent how the income statements and balance
sheets will look, but have been designed to demonstrate as clearly as possible
the specific differences between UK GAAP and IFRS.
Performance Reporting
The effect of adopting IFRS as at 31 December 2004, and for the year then
ended, on our key performance measures are set out below:
Cash Flow
The introduction of IFRS will not affect the cash flows of the business. The
presentation of the cash flow statement for Bisichi will not differ
significantly from that under UK GAAP and, therefore, an analysis of the cash
flow statement does not fall within the scope of this paper.
Taxation
As the financial statements of Bisichi and each of its subsidiary undertakings
will continue to be prepared under UK GAAP or South African GAAP as
appropriate, the introduction of IFRS will have no impact on the taxation
status or tax payments of the Group.
Contact:
Bisichi Mining plc
Robert Corry 020 7415 5030
Bisichi Mining Plc Appendix 1
Adoption of IFRS
Consolidated balance sheet
31 December 2004 IFRS Notes 31 December
2004
UK GAAP Adjustments IFRS
£'000 £'000 £'000
Assets
Non-current assets
Value of properties 14,990 14,990
attributable to group
Fair value of head - 343 2 343
lease
Property 14,990 343 15,333
Plant and equipment 5,046 5,046
Investments in joint 1,536 8 1,536
ventures
Other investments 384 384
Deferred tax 243 3 243
______ ______
Total non-current 21,956 22,542
assets
Current assets
Inventories 36 36
Trade and other 2,776 (243) 3 2,533
receivables
Financial assets - 403 403
held for trading
investments
Cash and cash 950 950
equivalents
4,165 3,922
Liabilities
Current liabilities
Financial liabilities
- Borrowings (1,490) (1,490)
Trade and other (3,838) 209 5 (3,629)
payables
Current tax (315) (315)
liabilities
(5,643) (5,434)
Non-current
liabilities
Financial liabilities
- borrowings (5,580) (5,580)
Provisions - (343) 2 (343)
Deferred tax (58) (1,990) 3 (2,048)
Net assets 14,840 (1,781) 13,059
Equity
Share capital 1,045 1,045
Revaluation reserve 9,663 (9,663) 2 -
Share option reserve - 6 6 6
Translation reserve - 278 7 278
Other reserves 86 86
Retained earnings 3,712 7,598 11,310
14,506 (1,781) 12,725
Minority interest 334 ______ 334
14,840 (1,781) 13,059
Bisichi Mining Plc Appendix 2
Adoption of IFRS
Income statement for the year ended 31 December 2004
Year ended IFRS Notes Year ended
31 December Adjustments 31 December
2004 2004
UK GAAP IFRS
£'000 £'000 £'000
Group & share of joint 13,267 13,267
venture turnover
Less: joint ventures (1,719) (1,719)
Group turnover 11,548 11,548
Operating costs (9,164) 47 1 (9,117)
Operating profit before 2,384 2,431
adjustments
Increase in value of - 1,868 2 1,868
investment property - Group
- Joint venture 192 2 192
Share based payments charge - (6) 6 (6)
Share of operating (loss)/ (34) (34)
profit in joint venture
Interest receivable 25 25
Interest payable (399) (399)
Profit before taxation 1,976 2,101 4,077
Taxation - Group (300) (488) 3 (788)
- Joint venture (7) - (7)
Profit after taxation 1,669 1,613 3,282
Minority interest (437) - (437)
Profit for the financial 1,232 1,613 2,845
year
Dividend (209) 209 5 -
Retained profit for the 1,023 1,822 2,845
financial year
Bisichi Mining Appendix 3
Adoption of IFRS
Consolidated balance sheet
30 June 2004 IFRS Notes 30 June 2004
UK GAAP Adjustments IFRS
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 5 (5) 1 -
Value of properties 13,092 13,092
attributable to group
Fair value of head lease - 359 2 359
Property 13,092 359 13,451
Plant and equipment 3,814 3,814
Investments in joint 1,442 8 1,442
ventures
Other investments 352 352
Deferred tax - 232 3 232
______ ______
Total non-current assets 18,705 19,291
Current assets
Inventories 33 33
Trade and other 2,259 (232) 3 2,027
receivables
Financial assets - held 453 453
for trading investments
Cash and cash equivalents 246 246
2,991 2,759
Liabilities
Current liabilities
Financial liabilities
- borrowings (608) (608)
Deferred tax liabilities - -
Trade and other payables (4,214) (4,214)
Current tax liabilities (621) (621)
______ ______
(5,443) (5,443)
Non-current liabilities
Financial liabilities
- Borrowings (4,523) (4,523)
Provisions - (359) 2 (359)
Deferred tax (56) (1,524) 3 (1,580)
Net assets 11,674 (1,529) 10,145
Capital & reserves
Share capital 1,045 1,045
Revaluation reserve 7,573 (7,573) 2 -
Share option reserve - -
Translation reserve - 147 7 147
Other reserves 86 86
Retained earnings 3,110 5,897 9,007
Total shareholders' equity 11,814 1,529 10,285
Minority interest (140) _____ _ (140)
11,674 (1,529) 10,145
Bisichi Mining Plc Appendix 4
Adoption of IFRS
Income statement for the six months ended 30 June 2004
Six months IFRS Notes Six months
ended ended
Adjustments
30 June 2004 30 June 2004
UK GAAP IFRS
£'000 £'000 £'000
Group & share of joint 5,117 5,117
venture turnover
Less: joint ventures - -
Group Turnover 5,117 5,117
Operating costs (4,234) 42 1 (4,192)
Operating profit 883 925
Share of operating 45 45
(loss)/profit in joint
venture
Interest receivable 8 8
Interest payable (210) (210)
Profit before taxation 726 42 768
Taxation - Group (234) (234)
- Joint venture (10) (10)
Profit after Taxation 482 42 524
Minority interest 16 16
Profit for the Financial 498 42 540
Year
Dividend - (188) 5 (188)
Retained Profit for the 498 (146) 352
financial year
Bisichi Mining Plc
Adoption of IFRS
Notes
1 Goodwill
On the transition to International Financial Reporting Standards, the company
reviewed the carrying value of its goodwill at 1 January 2004 and determined
that the unamortized balance should be written down to zero as at that date.
2 Revaluation surplus reported in the group income statement
IAS40, Investment Property, requires that the surplus or deficit on the
revaluation of investment properties is reported in the group income statement.
This includes the revaluation of the group's investment properties, and, for
2004, the group's share of the revaluation surplus on a property held in a
joint venture
The group balance sheet in appendices 1 and 3 show the consequent
reclassification of the UK GAAP revaluation reserve to the retained profit
reserve. This change in accounting will not affect distributable reserves.
Previously, revaluation surpluses or deficits, to the extent that any deficit
was not permanent, were reported as a movement in the revaluation reserve.
Deferred tax previously classified as debtors falling due in more than one year
are reported as non-current assets.
3 Deferredtax on the revaluation surplus reported as part of the tax charge
IAS12, Income Taxes, requires a provision for the tax that would be payable if
the portfolio was sold. This is included within deferred tax and is a reduction
in net assets. The movement in this provision in any reporting period is
reported as part of the tax charge in the group income statement.
Previously under UK GAAP, FRS19, Deferred Tax, specifically prohibited this
provision being made.
4 Fair value of derivative financial instruments
IAS39, Financial Instruments: Recognition and Measurement, requires the
interest rate hedging instruments, which the group uses to manage interest rate
risk, to be carried at fair value. Movements in fair value are reported in the
group income statement. The hedge accounting treatment that would allow such
movements to be deferred in equity has not been applied.
Previously, the fair value of these financial instruments was only disclosed in
the notes to the financial statements.
Listed investments which were previously held at cost have been revalued under
the requirements of IAS 39 to fair value at the balance sheet date.
The group has taken advantage of the provisions of IAS 39 which permit
prospective application of this standard from 1 January 2005.
5 Dividends not declared by the period end
IAS10, Events after the Balance Sheet Date, requires that dividends not
declared by the end of the accounting period are excluded from the results.
Previously, dividends declared after the end of the accounting period were
included as a deduction from profit for the period.
6 Share option expense
IFRS2, Share-based Payment, requires an expense to be reported in the group
income statement, based on the fair value of the options granted to directors
and employees of the group, to be spread over the vesting period of the
options. The group has taken advantage of the exemption allowed by IFRS1,
First-time adoption of IFRS, to only apply this to options granted after 7th
November 2002 and which were not fully vested at 1 January 2005.
7 Foreign currency translation
IAS 21, The effects of changes in foreign exchange rates, requires net exchange
differences arising on the translation of foreign entities to be separately
tracked within equity and the cumulative amounts disclosed. The group has taken
advantage of the exemption allowed by IFRS 1 to deem the cumulative exchange
adjustment at 1 January 2004 to be zero.
8 Joint ventures single line equity accounting
This is a presentational change only. The interest in, and share of results of,
joint ventures is shown as a single line in the income statement and on the
group balance sheet, including the group's share of the revaluation surplus.
Latest directors dealings
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago The Renewables Infrastructure Group Limited
- 1 day ago Smurfit Westrock (DI)
- 1 day ago Menhaden Resource Efficiency
- 1 day ago BP