IFRS Restatement
Diploma PLC
25 January 2006
FOR IMMEDIATE RELEASE 25 January 2006
DIPLOMA PLC
THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS')
Restatement of 2005 Financial Information
On 14 November 2005, Diploma PLC ('Diploma') announced its results for the year
ended 30 September 2005 using UK Generally Accepted Accounting Principles (UK
GAAP). This Announcement ('Announcement') restates those results under
International Financial Reporting Standards ('IFRS').
The Group will prepare financial statements for the year ending 30 September
2006 and for the half year ending 31 March 2006 in accordance with IFRS. The
results for the comparative year (ended 30 September 2005) will therefore be
restated. This Announcement shows the impact of this restatement and explains
the primary differences.
The move to IFRS will not impact the Group's underlying business performance, it
will not change the way the Group is managed and it will have no impact on cash
flows.
The financial information in this Announcement is unaudited. It is also subject
to possible change as the definition and interpretation of IFRS continues to
evolve and be amended by the relevant authorities.
SUMMARY FINANCIAL INFORMATION
The impact on the Group's consolidated financial results for the year ended 30
September 2005 is as follows:
2005 IFRS 2005 UK GAAP Variance
(unaudited) (audited)
£m £m £m
Turnover 111.3 111.3 -
Profit before financing and tax 16.4 14.6 +1.8
Finance income 0.7 0.7 -
Profit before tax 17.1 15.3 +1.8
Free cash flow 11.9 11.9 -
Cash and cash equivalents 25.7 25.7 -
Trading capital employed 51.4 48.5 +2.9
Total shareholders' equity 75.4 72.5 +2.9
Basic earnings per share 52.0p 46.6p +5.4p
Adjusted PBT £16.9m £16.6m +£0.3m
Adjusted EPS 52.9p 52.4p +0.5p
As highlighted in the 2005 Annual Report, the most significant effects of IFRS
on the Group's financial statements include accounting for defined benefit
pension schemes, dividends, goodwill and deferred tax.
The principal measures of underlying performance in the Income Statement has, in
the past, been the profit before tax, goodwill amortisation and exceptional
items ('Adjusted PBT') and earnings per share before goodwill amortisation and
exceptional items ('Adjusted EPS'). In the year ended 30 September 2005 Adjusted
PBT was £16.6m on a UK GAAP basis, whereas under IFRS Adjusted PBT is £16.9m.
The difference is due to a change in accounting for defined benefit pension
schemes and share-based payments. Calculated on the same basis, Adjusted EPS
increase from 52.4p under UK GAAP to 52.9p under IFRS, an increase of 1.0%.
On the Balance Sheet, total shareholders' equity at 30 September 2005 increases
by £2.9m from £72.5m under UK GAAP to £75.4m under IFRS. The main differences
are the movement of the accrual for the final dividend for the year ended 30
September 2005 into the following year (+£2.9m), the gross provision for the
defined benefit pension scheme deficits (-£3.8m), the removal of goodwill
amortisation (+£1.3m) and recognition of deferred tax assets (+£2.5m).
The Company has substantial distributable reserves under both UK GAAP and IFRS.
Cash flow is unchanged from that previously reported under UK GAAP.
Enquiries:
Nigel Lingwood, Group Finance Director Diploma PLC 020 7448 4875
Gustav Rober, Financial Controller Diploma PLC 020 7448 4878
This statement is published on the corporate website at www.diplomaplc.com
INTRODUCTION
The European Union has approved the application of International Financial
Reporting Standards ('IFRS') for all listed companies for accounting periods
commencing on or after 1 January 2005. For Diploma, the financial statements
for the year ending 30 September 2006 will be the first to be prepared in
accordance with IFRS. In these financial statements, the results for the
comparative year (ended 30 September 2005) will be restated.
The transition date to IFRS for Diploma is 1 October 2004.
The move to IFRS will not change how Diploma is managed and will have no impact
on cash flow. As with most companies, it may however, lead to increased
volatility in the Income Statement and Balance Sheet, with the presentation of
the financial statements also affected.
Against this background, Diploma will continue to focus on the measures of
Adjusted PBT and Adjusted EPS as it believes this will greatly assist the
understanding of the underlying performance of the business. Management will
focus on these measures while complying with the reporting requirements of IFRS.
Free cash flow is not affected by the transition to IFRS and remains a key
performance indicator, both internally and for shareholders.
This Announcement summarises:
• the major changes to the Income Statement from the transition from UK GAAP
to IFRS;
• the definition of Adjusted PBT and Adjusted EPS;
• the material transitional adjustments to the Balance Sheet at 1 October
2004 and 30 September 2005 (Attachment 1); and
• the unaudited summarised consolidated results of Diploma for the year ended
30 September 2005 on an IFRS basis, together with reconciliations from UK
GAAP to IFRS (Attachments 1 and 2).
1. BASIS OF PREPARATION
The financial information presented in this Announcement has been prepared on
the basis of the application of all IFRS that have been published to date that
are applicable to the Group, including International Accounting Standards (IAS)
and interpretations issued by the International Accounting Standards Board
(IASB) and all its committees. These are subject to ongoing amendment by the
IASB and subsequent endorsement by the European Commission and are therefore
subject to possible change. This could result in the need to change the basis
of accounting or presentation of certain financial information from that
presented in this Announcement. It is possible, therefore, that further changes
will be required to this information before it is published as comparative
information for the year ending 30 September 2006. The financial information
presented in this Announcement is unaudited.
2. FIRST-TIME ADOPTION OF IFRS (IFRS 1)
IFRS 1, First-time Adoption of IFRS (revised 2004), permits companies adopting
IFRS for the first time to adopt alternative accounting treatments for certain
areas of the financial statements during the transition period. In preparing
the financial information in this Announcement, Diploma has taken the following
exemptions:
Business combinations
Business combinations prior to the transition date, 1 October 2004, have not
been restated to an IFRS basis. As a result, in the transition Balance Sheet as
at 1 October 2004, goodwill arising from past business combinations remains as
stated under UK GAAP at £23.5m.
Employee benefits
IFRS requires that a balance sheet asset or liability must be shown in respect
of defined benefit pension schemes. Actuarial gains and losses arise when the
actual returns on scheme assets and liabilities differ from those anticipated at
the time of valuation. The Group will adopt the exemption in IFRS 1 allowing all
actuarial gains and losses arising before 1 October 2004 to be shown in the
opening Balance Sheet at 1 October 2004. In the future, actuarial gains and
losses will be included in the Statement of Recognised Income and Expense.
Cumulative translation differences
In the Group financial statements the results of overseas subsidiaries are
translated into Sterling at the average exchange rate. The Balance Sheet is
translated at the closing rate. This leads to exchange gains and losses being
generated on consolidation. IFRS requires translation differences on the
retranslation of the assets and liabilities of overseas subsidiaries to be taken
directly to a separate translation reserve. On the disposal of an overseas
entity, exchange differences previously taken to reserves will be transferred to
the Income Statement as part of the profit/loss on disposal of that entity.
The elective exemption in IFRS 1 means that any translation differences prior to
the date of transition (1 October 2004) do not need to be analysed
retrospectively and so the deemed cumulative translation differences at this
date can be set to £nil. Thus, any cumulative translation differences arising
prior to the date of transition are excluded from any future profit/loss on
disposal of any entities. The Group will adopt this exemption.
Financial instruments (IAS 32 and 39)
As permitted, the implementation of IAS 32, Financial Instruments: Disclosure
and Presentation, and IAS 39, Financial Instruments: Recognition and
Measurement, will be first applied to the financial year ending 30 September
2006. As a result, financial instruments will continue to be accounted and
presented in accordance with UK GAAP for the year ended 30 September 2005.
3. SHARE-BASED PAYMENT (IFRS 2)
At the transition date, the Group had no equity settled share-based awards
relating to awards made before 7 November 2002. The Group did have awards
outstanding at 1 October 2004 where part of the awards comprised a cash settled
share-based transaction. However, all of the performance conditions for these
awards had been completed by the transition date and the awards had vested, as
defined by IFRS. Hence no adjustments in respect of these awards are necessary
on transition.
The impact of IFRS on equity settled share based awards relating to awards made
after 7 November 2002 is discussed further below.
4. PRESENTATION OF FINANCIAL STATEMENTS (IAS 1)
The primary statements within the financial information contained in this Report
have been presented in accordance with IAS 1, Presentation of Financial
Statements. However, this format and presentation may require modification as
practice develops and in the event of further guidance being issued.
5. SEGMENT REPORTING (IAS 14)
IAS 14, Segment Reporting does not change the Group's reportable segments from
those reported under UK GAAP. The Group's existing business segments under UK
GAAP will be the primary reporting segments under IAS 14. The Group's existing
geographical segments under UK GAAP will be the secondary reporting segments
under IAS 14. IAS 14 requires additional disclosures to be made for the primary
reporting segments compared to UK GAAP.
6. ADJUSTED PBT AND ADJUSTED EPS
Diploma has identified Adjusted PBT as being profit before:
- amortisation of acquisition intangible assets;
- exceptional items; and
- taxation.
Adjusted EPS takes Adjusted PBT less taxation (attributable to Adjusted PBT) and
minority interests, divided by the weighted average number of shares in issue
(excluding own shares held in the Employee Benefit Trust).
EXPLANATION OF IFRS ADJUSTMENTS
The following paragraphs explain the key adjustments made to the financial
results for the year ended 30 September 2005, in order to reflect IFRS.
1. Share-based Payment (IFRS 2)
The Group currently maintains share-based incentive schemes comprising a
Long-Term Incentive Plan (LTIP) and a closed Matching Share Bonus Scheme (MSB).
Under UK GAAP, companies were required to recognise an expense over the
performance period based on the intrinsic value of the share-based award. This
value was the difference between the exercise price and the fair value of the
share at the date of the award (typically the market price), adjusted to reflect
expected and actual levels of vesting and the actual cost of the shares acquired
to satisfy the award.
Under IFRS 2, Share-based Payment, an expense is also recognised in the Income
Statement for all share-based payments over the vesting period. Where
performance conditions for the Group's LTIP and MSB are partly based on growth
in earnings per share, which under IFRS is a 'non-market based' measure, the
expense is adjusted each year to reflect expected and actual levels of vesting.
However, under the Group's LTIP, the performance conditions are also partly
based on total shareholder return ('TSR') relative to the FTSE mid-250 Index
(excluding Investment Trusts). Under IFRS this is a 'market based' measure and
the expense is determined at commencement of the award and not adjusted, other
than for forfeitures.
The IFRS expense in respect of this 'market based' measure of the LTIP is based
on the fair value of the award at the date of grant; IFRS requires companies to
use a simulation model, such as a Monte Carlo model, to simulate future share
price movements for the Company and its comparator group.
In the opinion of the Directors, the cost of preparing such a model to simulate
the share price, outweighs the benefit of the results of using this model.
Accordingly for the purposes of applying IFRS 2, the Directors have assumed that
the Company's total share performance relative to its comparator group over the
three year performance period will be such that 80% of the award relating to
this performance condition will vest.
There are two potential principal differences in the accounting methods for
share-based payments under UK GAAP and IFRS. These relate to:
• the cost of the shares acquired by the Group to meet the awards, on the
assumptions set out above, which has been used under UK GAAP to determine
the fair value of the awards and is being charged to profit over the
performance period. Under IFRS, the cost of acquiring shares over and
above the fair value at the date of grant is charged directly to retained
earnings and not the income statement.
• the MSB which (subject to achieving a 'non-market based' performance
condition) gives participants matching shares after two years, if they
invest their annual cash bonus in Diploma shares. Although the total
charge over time is the same under UK GAAP and IFRS, the phasing is
different. Under UK GAAP, all the expense of a grant was taken in the year
in which the performance was measured. Under IFRS, the expense is spread
over a three year period starting in the year when the bonus on which it is
based is earned.
The operating expense arising from the adoption of IFRS 2 for the year ended 30
September 2005 is £0.4m compared to a UK GAAP expense of £0.5m. The ongoing
annual operating expense under IFRS is expected to be in the region of £0.6m,
although the actual charge each year will be influenced by the likelihood of
performance conditions being met in respect of the Group's LTIP awards.
2. Employee Benefits (IAS 19)
Under UK GAAP, the Group accounts for pensions in accordance with SSAP 24. This
Standard adopted an income statement driven approach which spread the cost of
providing benefits over the estimated average service lives of employees. This
results in a stable, regular charge to income. The SSAP 24 discount rate is
based on the long-term estimate of the scheme's investment return. Typically,
under SSAP 24, pension costs are reviewed triennially.
Under UK GAAP, the Group also provided the required disclosures in accordance
with FRS 17 which set out the pension fund deficits and the assets and
liabilities based on the valuation methodologies of that Standard. FRS 17 is
fundamentally different to SSAP 24 and adopts a balance sheet driven approach
with market based measures. The discount rate under FRS 17 is based on the
market yield of high quality corporate bonds at the valuation date. Valuations
are updated annually.
IAS 19 Employee Benefits adopts a similar valuation approach to FRS 17.
Furthermore, an amendment to IAS 19 also provides an option that allows
actuarial gains and losses to be accounted for through the Statement of
Recognised Income and Expense, similar to FRS 17, from date of transition to
IFRS (1 October 2004). Diploma has chosen to adopt this option.
Set out below is a comparison of the impact of accounting for the Group's
defined benefit pension schemes under SSAP 24, FRS 17 and IAS 19, in the Income
Statement for the year ended 30 September 2005 and the Balance Sheet as at 30
September 2005:
Balance sheet
Income Statement 2005 30 September 2005
SSAP 24 FRS 17 IAS 19 SSAP 24 FRS 17 IAS 19
£m £m £m £m £m £m
Schemes:
PLC (0.1) - - (0.1) (0.9) (0.9)
Anachem* (0.3) (0.2) (0.2) (0.5) (3.5) (3.5)
Pre-tax charge / net
deficit (0.4) (0.2) (0.2) (0.6) (4.4) (4.4)
Deferred
tax asset 0.2 1.3 1.3
Net liability (0.4) (3.1) (3.1)
* before exceptional curtailment gain of £0.2m (paragraph 3 below)
IAS 19 compared to SSAP 24
Under SSAP 24, there was a charge in the Income Statement amounting to £0.4m.
Under IAS 19, this charge (before exceptional curtailment gain of £0.2m) is
reduced to £0.2m for the year ended 30 September 2005 increasing operating
profit by £0.2m. IAS 19 does not require the interest cost and expected return
on assets to be presented separately as a finance cost/(income). Consequently,
the impact on net income has been included in arriving at operating profit, in
line with SSAP 24.
The impact of IAS 19 on the UK GAAP (SSAP 24) Balance Sheet at 30 September 2005
is to reduce net assets by £2.7m, including the impact of deferred tax. The
impact excluding deferred tax is £3.8m, which arises as a result of including
the pension scheme deficit on the Balance Sheet which was not required under
SSAP 24.
The net pension deficit (after deferred tax) of the Group's defined benefit
pension schemes under IFRS at 30 September 2005 was £3.1m.
IAS 19 compared to FRS 17
IAS 19 has some minor differences from FRS 17 which do not result in a
significant difference in the Income Statement impact of these two Standards.
In addition, IAS 19 is not specific in a number of areas and is therefore open
to interpretation. In particular:
• IAS 19 is not specific with respect to the inclusion of scheme expenses
when calculating scheme liabilities. Diploma has included an allowance for
the cost of future scheme expenses in calculating scheme liabilities. Such
an allowance was not required under FRS 17.
• IAS 19 is silent on the treatment of non-service related benefits, for
example death in service lump sum payments. The Group has adopted the
treatment of apportioning the cost between the past service liability and
the service cost. This is slightly different to the method under FRS 17.
The impact of these two areas of interpretation at the transition date and at 30
September 2005 was to slightly increase the pension scheme liabilities, compared
to that disclosed under FRS 17. These numbers are not significant and do not
impact the reported numbers.
3. Termination of Defined Benefit Pension Scheme (IAS 19)
During the year the Group negotiated the termination of the defined benefit
scheme of one of its subsidiary companies, namely the Anachem Pension Scheme.
The negotiations resulted in the cessation of future accrual of benefits and as
such represents a curtailment under IAS 19 since the Group is demonstrably
committed to making a material reduction in the benefits for future service.
Under SSAP 24 in UK GAAP, no gain or loss is recognised in the Income Statement
from a decision to close a pension scheme to future accrual.
Under IFRS, the curtailment gain arising from the termination of this Scheme is
the aggregate of the change in the present value of the defined obligation, the
change in the fair value of the Scheme's assets and any related actuarial gains
and losses. Hence in the year ended 30 September 2005, under IFRS the Group has
recognised an exceptional curtailment gain of £0.2m, being the aggregate
reduction in the present value of the defined benefit obligation less the
reduction in the unrecognised actuarial loss.
4. Business Combinations and Goodwill
A business combination occurs when one entity gains control of another. The
acquired assets and liabilities should be stated at fair value in the books of
the acquirer (if appropriate) or in the Group accounts. The excess of the
purchase price over the cost is classified as goodwill on the face of the
Balance Sheet in the Group accounts.
Under UK GAAP, goodwill is amortised over its estimated useful life, which
Diploma has determined to be between 5 and 20 years in respect of the businesses
acquired where goodwill has been capitalised.
Under IFRS, goodwill is considered to have an indefinite life and therefore
goodwill should not be amortised but should be reviewed, at least annually, for
impairment and carried in the Balance Sheet at cost less any accumulated
impairment losses.
Goodwill already in existence at the transition date to IFRS will not be
adjusted. The impact on the Income Statement for the year ending 30 September
2005 is that goodwill amortisation of £1.3m that was previously charged under UK
GAAP, is now removed under IFRS. The annual impairment test under IFRS during
the year ended 30 September 2005 did not result in any reduction in the carrying
value of goodwill.
5. Intangible Assets
Under UK GAAP, all capitalised computer software is included within tangible
fixed assets as plant and equipment. Under IFRS, only computer software that is
integral to a related item of hardware should be included as plant and
equipment. All other computer software should be recorded as an intangible
asset. This means that application software costs that have been capitalised as
tangible fixed assets must now be reclassified as intangible assets.
Accordingly, a reclassification of the net book amount of capitalised computer
software of £0.6m has been made in the transition Balance Sheet (at 1 October
2004) and also £0.6m in the Balance Sheet as at 30 September 2005 between
property, plant and equipment and intangible assets. There is no impact on the
Income Statement as a result of this reclassification since, under both UK GAAP
and IFRS, computer software is depreciated over its estimated useful economic
life.
6. Income Taxes (IAS 12)
Under UK GAAP, deferred taxation is recognised on the basis of timing
differences, being the difference between accounting profit and taxable profit.
IFRS requires deferred taxation to be based on temporary differences, being the
difference between the carrying value of an asset or liability and its tax base.
As a result of the accounting treatment of defined benefit pension schemes
under IFRS, the Group has recognised an additional £1.2m of deferred tax asset
in the transition Balance Sheet. In addition, a further £1.9m of deferred tax
assets has been recognised in the transition Balance Sheet which primarily
relates to goodwill, in respect of which the Group receives a tax benefit on the
amortisation thereof.
Where required, deferred tax has been provided on the IFRS adjustments.
Under IFRS, deferred tax assets and deferred tax liabilities are, in certain
circumstances, disclosed separately on the balance sheet as non-current assets
and non-current liabilities, respectively.
The impact of IFRS on the total tax charge for the year ended 30 September 2005
is to increase the tax charge by £0.6m to £5.0m, representing an effective tax
rate of 29.2% on profit before tax on an IFRS basis.
The impact of IFRS on deferred tax in the Balance Sheet at transition and at 30
September 2005 is as follows:
2005 2004
£m £m
Net deferred tax asset at 30 September - UK GAAP 0.6 -
IFRS adjustments:
Deferred tax on pension deficit 1.1 1.2
Deferred tax on goodwill 1.2 1.5
Other timing differences 0.2 0.4
Net deferred tax asset at 30 September - IFRS 3.1 3.1
7. Provisions Reclassification (IAS 1)
IFRS requires the elements of provisions which are expected to be paid within
one year of the Balance Sheet date to be presented on the Balance Sheet within
current liabilities as short term provisions. This has resulted in £1.0m of
provisions relating principally to deferred consideration, being reclassified as
short term provisions in the Balance Sheet at 30 September 2005.
8. Events After the Balance Sheet Date (IAS 10)
Under UK GAAP, ordinary dividends are accounted for in the period to which they
relate even if the approval of that dividend takes place after the balance sheet
date. Under IFRS, proposed ordinary dividends do not meet the definition of a
liability until such time as they have been approved. In the case of a final
ordinary dividend this approval is by shareholders at the Annual General
Meeting. The approval of an interim dividend takes place at a meeting of the
Board of Directors. This means that each dividend will be charged in the period
in which it is approved rather than in the period to which it relates.
Under IFRS, ordinary dividends are no longer disclosed on the face of the Income
Statement but shown as a movement in equity.
The final dividend for the year ended 30 September 2004 of £2.4m has been
reversed in the transition Balance Sheet and charged to equity in the half year
ended 31 March 2005. The interim dividend for the six months ended 31 March
2005 of £1.6m will be reversed and charged to equity in the half year ended 30
September 2005. The final dividend for the year ended 30 September 2005 of
£2.9m has been reversed and charged to equity following approval at the Annual
General Meeting held on 11 January 2006.
9. Financial Instruments (IAS 32 and 39)
As permitted, the implementation of IAS 32, Financial Instruments: Disclosure
and Presentation, and IAS 39, Financial Instruments: Recognition and
Measurement, will be first applied to the financial year ending 30 September
2006. As a result, financial instruments will continue to be accounted and
presented in accordance with UK GAAP for the year ended 30 September 2005.
Accordingly, there will be an adjustment as at 1 October 2005 to reflect the
transition from UK GAAP to IFRS.
The most significant financial instruments for Diploma are its forward purchases
of foreign currencies to hedge the value of transactions carried out in the UK
relating to purchases from overseas. The impact on the financial statements of
Diploma is unlikely to be material.
It is expected that all of the Group's derivatives will qualify for hedge
accounting under IFRS and therefore no significant gains or losses on these
contracts from market movements will be charged or credited to the Income
Statement.
10. Cash and Cash Equivalents (IAS 7)
Under IAS 7 (Cash Flow Statements), for a short term deposit to qualify as a
cash equivalent, it must be readily convertible to a known amount of cash.
Therefore, a short term deposit normally only qualifies as cash when it has a
maturity of three months or less from the date of acquisition.
The Group has reclassified short term deposits with a maturity of less than
three months from short term deposits to 'cash and cash equivalents'. The
overall impact is to reclassify £19.6m from short term deposits to cash and cash
equivalents as at 30 September 2005.
An IFRS Cash Flow Statement is similar to UK GAAP but presents various cash
flows in different categories and in a different order from UK GAAP.
The entire IFRS adjustments net out within cash generated from operations except
for the intangible assets reclassification where the cash used to purchase
computer software has been reclassified from purchase of plant and equipment to
purchase of intangible assets.
The transition from UK GAAP to IFRS does not change the reported cash flows of
the Group.
11. Other Changes
There are a number of other minor changes. These have no material effect on
either reported profits or net assets.
12. Distributable Reserves
Diploma PLC has considerable distributable reserves under both UK GAAP and IFRS.
ATTACHMENT 1
RECONCILIATION OF THE FINANCIAL INFORMATION
FROM UK GAAP TO IFRS
Adjusted PBT of £16.9m is £0.3m higher than the UK GAAP equivalent of £16.6m.
The table below sets out a summary reconciliation of UK GAAP to IFRS for the
year ended 30 September 2005:
Year ended 30 September 2005 £m
Profit before goodwill amortisation, exceptional items and tax
under UK GAAP 16.6
Share based payments 0.1
Pension costs 0.2 0.3
Adjusted PBT under IFRS 16.9
The equivalent of Group profit after tax under IFRS is higher in 2005. The
table below sets out a summary reconciliation of Group profit after tax under UK
GAAP to Group profit after tax under IFRS:
Year ended 30 September 2005 £m
Group profit after tax under UK GAAP 10.9
Share based payments and pension costs (as above) 0.3
Exceptional pension curtailment gain 0.2
Reversal of goodwill amortisation 1.3
Deferred taxation (0.6) 1.2
Group profit after tax under IFRS 12.1
The table set out below provides a summary reconciliation between UK GAAP and
IFRS GAAP for the Balance Sheets as at 1 October 2004 (the transition date) and
30 September 2005.
At 30 At 1 October
September 2005 2004
£m £m
Total shareholders' equity under UK GAAP 72.5 64.0
Pension liabilities, gross (3.8) (3.6)
Reversal of UK GAAP goodwill amortisation charged after
transition 1.3 -
Deferred taxation 2.5 3.1
Dividends 2.9 2.4
Total shareholders' equity under IFRS 75.4 65.9
Total shareholders' equity increased at 30 September 2005 by 4.0% under IFRS,
compared with that reported under UK GAAP.
ATTACHMENT 2a
Income Statement
for the year ended 30 September 2005 (unaudited)
IFRS ADJUSTMENTS
Share-based
pmts
CONTINUING OPERATIONS UK GAAP Pension Good- Taxation
will IFRS
£m £m £m £m £m £m
Revenue 111.3 111.3
Cost of Sales (71.8) (71.8)
Gross Profit 39.5 39.5
Distribution expenses (3.5) (3.5)
Administration expenses (20.1) 0.1 0.2 - (19.8)
Amortisation of goodwill (1.3) - - 1.3 -
Exceptional items - - 0.2 - 0.2
Profit before financing and tax 14.6 0.1 0.4 1.3 - 16.4
Finance income 0.7 0.7
Profit before tax 15.3 0.1 0.4 1.3 - 17.1
Tax expense (4.4) - (0.1) - (0.5) (5.0)
Profit after tax for the year 10.9 0.1 0.3 1.3 (0.5) 12.1
Attributable to:
Equity shareholders of the parent
company 10.5 0.1 0.3 1.3 (0.5) 11.7
Minority interests 0.4 - - - - 0.4
Earnings per 5p share:
Basic and diluted earnings 46.6p 0.5p 1.3p 5.8p (2.2)p 52.0p
Adjusted PBT £16.6m £0.1m £0.2m - - £16.9m
Adjusted EPS 52.4p 0.5p 0.9p - (0.9)p 52.9p
ATTACHMENT 2b
Consolidated Balance Sheet
as at 30 September 2005 (unaudited)
UK IFRS ADJUSTMENTS IFRS
GAAP
Other
Pension Goodwill Dividend Taxation reclassifi
-cation
£m £m £m £m £m £m £m
Assets
Non-current assets
Goodwill 23.3 - 1.3 - - - 24.6
Intangible assets - - - - - 0.6 0.6
Property, plant and equipment 10.4 - - - - (0.6) 9.8
Deferred tax assets - 1.1 - - 1.4 0.6 3.1
33.7 1.1 1.3 - 1.4 0.6 38.1
Current assets
Inventories 21.3 21.3
Trade and other receivables 20.3 - - - - (0.6) 19.7
Cash and cash equivalents 25.7 25.7
67.3 - - - - (0.6) 66.7
Liabilities
Current liabilities
Trade and other payables (19.4) (19.4)
Current tax liabilities (2.9) (2.9)
Dividends (2.9) - - 2.9 - - -
Other liabilities - - - - - (1.0) (1.0)
(25.2) - - 2.9 - (1.0) (23.3)
Net current assets 42.1 - - 2.9 - (1.6) 43.4
Total assets less current 75.8 1.1 1.3 2.9 1.4 (1.0) 81.5
liabilities
Non-current liabilities
Retirement benefit obligations - (4.4) - - - - (4.4)
Provisions (1.6) 0.6 - - - 1.0 -
(1.6) (3.8) - - - 1.0 (4.4)
Net assets 74.2 (2.7) 1.3 2.9 1.4 - 77.1
Shareholders' equity
Share capital 1.1 1.1
Capital redemption reserve 0.2 0.2
Translation reserve - - - - - 2.2 2.2
Retained earnings 71.2 (2.7) 1.3 2.9 1.4 (2.2) 71.9
Total shareholders' equity 72.5 (2.7) 1.3 2.9 1.4 - 75.4
Equity minority interest 1.7 1.7
74.2 (2.7) 1.3 2.9 1.4 - 77.1
ATTACHMENT 2c
Consolidated Statement of Recognised Income and Expense
for the year ended 30 September 2005 (unaudited)
UK IFRS ADJUSTMENTS IFRS
GAAP
Share-based
pmts Pension Goodwill Dividend Taxation
£m £m £m £m £m £m £m
Exchange rate adjustments on foreign
currency net investments 2.2 2.2
Actuarial losses on defined benefit
pension schemes - - (0.6) - - - (0.6)
Net income recognised directly in
equity 2.2 - (0.6) - - - 1.6
Profit for the financial year 10.5 0.1 0.3 1.3 - (0.5) 11.7
Total recognised income and expense for
the year 12.7 0.1 (0.3) 1.3 - (0.5) 13.3
Reconciliation of Movements in Total Shareholders' Equity
for the year ended 30 September 2005 (unaudited)
UK IFRS ADJUSTMENTS IFRS
GAAP
Share-based
pmts Pension Goodwill Dividend Taxation
£m £m £m £m £m £m £m
Profit for the financial year 10.5 0.1 0.3 1.3 - (0.5) 11.7
Dividends (4.5) - - - 0.5 - (4.0)
Profit after tax for the year 6.0 0.1 0.3 1.3 0.5 (0.5) 7.7
Exchange rate adjustments on foreign
currency net investments 2.2 - - - - - 2.2
Actuarial losses on defined pension
schemes - - (0.6) - - - (0.6)
Purchase of own shares (0.5) - - - - - (0.5)
Cost of employee share schemes 0.8 (0.1) - - - - 0.7
Net increase in shareholders' equity 8.5 - (0.3) 1.3 0.5 (0.5) 9.5
Total shareholders' equity at beginning
of year 64.0 - (2.4) - 2.4 1.9 65.9
Total shareholders' equity at end of
year 72.5 - (2.7) 1.3 2.9 1.4 75.4
The Reconciliation of Movements in Total Shareholders' Equity is not a required
primary statement under IFRS; it has been shown here to provide an explanation
of the movement in total shareholders' equity from those shown in the transition
balance sheet.
ATTACHMENT 2d
Consolidated Group Cash Flow Statement
for the year ended 30 September 2005 (unaudited)
UK IFRS ADJUSTMENTS IFRS
GAAP Share
based
pmts Pension Goodwill Dividend Taxation Other
£m £m £m £m £m £m £m £m
Cash flow from operating activities
Cash generated from operations 16.4 16.4
Interest received 0.7 0.7
Tax paid (3.7) (3.7)
Net cash from operating activities 13.4 13.4
Cash flow from investing activities
Acquisition of subsidiaries (0.3) (0.3)
Proceeds from the sale of property,
plant and equipment 0.4 0.4
Purchase of property, plant and
equipment (1.4) (0.6) (0.8)
Purchase of intangibles - 0.6 (0.6)
Net cash used in investing activities (1.3) - (1.3)
Cash flow from financing activities
Dividends paid to shareholders (4.1) (4.1)
Dividends paid to minority interest - -
Purchase of own shares (0.5) (0.5)
Net cash used in financing activities (4.6) (4.6)
Net increase in cash and cash
equivalents 7.5 7.5
Cash and cash equivalents at 1 October
2004 17.9 17.9
Effect of exchange rates on cash and
cash equivalents 0.3 0.3
Cash and cash equivalents at 30
September 2005 25.7 - - - - - - 25.7
The Group's consolidated cash flow statement above has been reformatted in
accordance with IFRS. Compared to UK GAAP, cash generated from operating
activities and cash is unchanged. Cash and cash equivalents include all short
term deposits and are £25.7m.
This information is provided by RNS
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