IFRS Statement
MS International PLC
24 November 2005
MS INTERNATIONAL plc
IFRS
MS INTERNATIONAL plc provides the following restatement of financial information
for the half year ended 30th October 2004, the full year ended 30th April 2005
and the opening balance sheet at 1st May 2004 under International Financial
Reporting Standards in accordance with investor relations best practice.
The Group currently prepares its primary financial statements under UK Generally
Accepted Accounting Practice (UK GAAP). From 2005 onwards the Group will be
required to prepare its consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union. This change applies to all financial reporting for accounting periods
beginning on or after 1st January 2005 and consequently, the Group's first
published IFRS results will be its interim results for the half year ended 29th
October 2005. The Group's first Annual Report under IFRS will be for the year
ending 29th April 2006. The date for transition to IFRS is 1st May 2004, which
is the start of the earliest period of comparative information.
The financial information in this statement has been prepared in accordance with
the IFRS, including the interpretative guidance issued by the International
Accounting Authority Standards Board (IASB) and the International Financial
Reporting Interpretations Committee (IFRIC), expected to be applicable as at
31st December 2005. The financial information for the full year ended 30th April
2005 and the opening balance sheet at 1st May 2004 has been audited by Ernst &
Young LLP.
To explain how the Group's reported performance and financial position are
affected by this change, information previously published under UK GAAP has been
re-presented under IFRS and then restated under the Group's IFRS accounting
policies in the attached appendices as follows:
Appendix 1 Accounting policies revised under IFRS
Appendix 2 Financial information for the full year ended 30th
April 2005 and the half year ended 30th October 2004, together with
reconciliations of profit and equity.
Appendix 3 Balance sheet at the transition date of 1st May 2004
Appendix 4 Movement on reserves and reconciliation of movement
in shareholders' funds from 1st May 2004 to 30th April 2005.
Appendix 5 Audit Report of Ernst & Young LLP to the Group
UK numbers have been re-presented under IFRS.
The main changes are as follows:-
1. Dividends are not deducted from profit after taxation but are
deducted from equity in the period in which the shareholder's right to receive
the payment is established.
2. The balance sheet shows assets and liabilities analysed between non
current and current.
3. 'Shareholder's funds' are called equity.
As noted below, this financial information has been prepared on the basis of the
IFRS expected to be applicable at 31st December 2005 and the interpretation of
those standards. IFRS are subject to ongoing review and endorsement by the EU or
possible amendment by interpretative guidance issued by the IASB or the IFRIC
and are therefore still subject to change. This financial information may,
therefore, require amendment before inclusion in the IFRS statements for the 12
months to 29th April 2006.
Basis of Preparation
The financial information has been prepared in accordance with the IFRS
accounting policies as set out in appendix 1. The accounting policies assume
that all IFRS, including the interpretation of those standards, issued by the
IASB effective for 2005 reporting will be endorsed by the European Commission.
The financial information for the full year ended 30th April 2005 and the
opening balance sheet at 1 May 2004 has been audited by Ernst & Young LLP.
Their audit report to the Group is set out in Appendix 5. The information for
the half year ended 30th October 2004 is unaudited. Subject to EU endorsement of
outstanding standards and no further changes from the IASB, this information is
expected to form the basis for comparatives when reporting financial results for
2006, and for subsequent reporting periods.
The rules for first time adoption of IFRS are set out in IFRS 1 'First-time
Adoption of International Financial Reporting Standards'. In general a company
is required to determine its IFRS accounting policies and apply these
retrospectively to determine its opening balance sheet under IFRS. The standard
allows a number of exceptions to this general principle to assist companies as
they change to reporting under IFRS. A previous GAAP revaluation of land and
buildings has been taken as deemed costs and is the only exception taken.
IFRS Restatement Highlights - 2004/2005 Results
As previously Adjustment IFRS
reported
£'000 £'000 £'000
Revenue 32,195 - 32,195
Profit before taxation 3,343 (54) 3,289
Equity 9,115 (3,561) 5,554
The reduction in equity essentially stems from the change in accounting for the
Group's defined benefit pension scheme. Under IFRS, the pension deficit at the
period end is recognised as a liability in the balance sheet of the Group. The
impact of the change in accounting for the pension deficit is a reduction in
recognised equity of £3,536,000 as at 1st May 2004, being the amount of the
pension fund liability £5,051,000, net of related deferred taxation of
£1,515,000.
Pensions Cost
Under SSAP 24, the pension scheme contributions and variations in pension costs,
resulting from actuarial valuations, were spread over the average future working
lifetime of the active members. Under IFRS service costs, interest costs and the
expected return on net assets for the year, which amounts to £415,000 in 2004/
2005, are charged to the income statement. The Group's policy is to recognise
actuarial gains and losses immediately in the Statement of Recognised Income and
Expense.
Deferred Taxation
Deferred taxation recoverable has been provided at 30% on the amount of the
pension liability. Additionally deferred taxation payable has been provided at
30% on the difference between the tax base and the carrying amount of buildings.
Equity
30th April 2005 30th October 1st May 2004
2004
£'000 £'000 £'000
UK GAAP 13,762 13,324 13,161
Less Group pension scheme prepayment (net of deferred (4,647) (4,559) (4,457)
taxation)
Equity as previously reported 9,115 8,765 8,704
IFRS adjustments:
Pension liability (5,039) (4,787) (5,051)
Deferred taxation on pension liability 1,511 1,436 1,515
Deferred taxation on buildings revaluation (309) (309) (309)
Taxation - 38 -
Dividends 276 88 250
IFRS 5,554 5,231 5,109
APPENDICES
1. Accounting policies
2. Financial information for FY 2004/2005 and H1 2004/2005
2.1. Consolidated income statement for FY 2004/2005 and H1 2004/2005.
2.2. Consolidated income statement IFRS adjustments for FY 2004/2005 and H1
2004/2005.
2.3. Statement of recognised income and expense for FY 2004/2005 and H1
2004/2005.
2.4. Consolidated balance sheet at 30th April 2005 and 30th October 2004.
2.5. Consolidated balance sheet IFRS adjustments at 30th April 2005.
2.6. Consolidated balance sheet IFRS adjustments at 30th October 2004.
2.7. Consolidated cash flow statement for FY 2004/2005 and H1 2004/2005
3. Transitional balance sheet
3.1. Consolidated balance sheet at 1st May 2004.
3.2. Consolidated balance sheet IFRS adjustments at 1st May 2004.
4. Movement on reserves and reconciliation of movements in equity from
1st May 2004 to 30th April 2005.
5. Auditors' Report
Accounting Policies
Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for freehold properties and pension assets and liabilities, that
have been measured at fair value. The consolidated financial statements are
presented in pounds sterling and all values are rounded to the nearest thousand
(£000) except when otherwise indicated.
Statement of compliance
The consolidated financial statements of MS INTERNATIONAL plc have been prepared
in accordance with International Financial Reporting Standards (IFRSs).
Basis of consolidation
The consolidated financial statement comprises the financial statements of MS
INTERNATIONAL plc and its subsidiaries as at the last Saturday nearest to the
30th April each year. The financial statements of the subsidiaries are prepared
for the same reporting year as the parent company, using consistent accounting
policies.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised in assets,
are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date
on which the Group obtains control, and continue to be consolidated until the
date that such control ceases.
Interest in a joint venture
The Group has an interest in a joint venture which is a jointly owned entity and
is accounted for using the equity method. Under the equity method, the
investment in joint venture is carried in the balance sheet at the Group's share
of net assets less any impairment in value. The income statement reflects the
Group's share of the results of operations of the joint venture.
Foreign currency translation
The consolidated financial statements are presented in pounds sterling which is
the Company's functional and presentation currency. Each entity in the group
determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional
currency rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the functional
currency rate of exchange ruling at the balance sheet date. All differences are
taken to profit or loss with the exception of differences on foreign currency
borrowings that provide a hedge against a net investment in a foreign entity.
These are taken directly to equity until the disposal of the net investment, at
which time they are recognised in the consolidated income statement. Tax charges
and credits attributable to exchange differences on those borrowings are also
dealt with in equity. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates as
at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined.
The main functional currency of the Group's overseas subsidiaries is the US$.
As at the reporting date, the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency of the Group at the
rate of exchange ruling at the balance sheet date and, their income statements
are translated at the weighted average exchange rates for the year. The
exchange differences arising on the retranslation are taken directly to a
separate component of equity. On disposal of a foreign entity, the deferred
cumulative amount recognised in equity relating to that particular foreign
operation is recognised in the income statement.
Property, plant and equipment
Plant and equipment is stated at cost, excluding the costs of day-to-day
servicing, less accumulated depreciation and accumulated impairment in value.
Such cost includes the cost of replacing part of such plant and equipment when
that cost is incurred if the recognition criteria are met. Land and buildings
are measured at valuation in 1989, together with subsequent cost, less
accumulated depreciation on buildings and impairment charged.
Depreciation is calculated on a straight-line basis over the useful life of the
assets. The principal annual rates used for this purpose are: Freehold
buildings 2%, Plant and equipment 12.5%, Motor vehicles 33.3%
The carrying values of plant and equipment are reviewed for impairment when
events or changes in circumstances indicate that the carrying value may not be
recoverable.
Any revaluation surplus is credited to the asset revaluation reserve included in
the equity section of the balance sheet, except to the extent that it reverses a
revaluation decrease of the same asset previously recognised in profit or loss,
in which case the increase is recognised in profit or loss. A revaluation
deficit is recognised in profit or loss, except that a deficit directly
offsetting a previous surplus on the same asset is directly offset against the
surplus in the asset revaluation reserve.
An annual transfer from the asset revaluation reserve to retained earnings is
made for the difference between depreciation based on the revalued carrying
amount of the assets and depreciation based on the assets original cost.
Additionally, accumulated depreciation as at the revaluation date is eliminated
against the gross carrying amount of the asset and the net amount is restated to
the revalued amount of the asset. Upon disposal, any revaluation reserve
relating to the particular asset being sold is transferred to retained earnings.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in
the income statement in the year the asset is derecognised.
The asset's residual values, useful lives and methods are reviewed, and adjusted
if appropriate, at each financial year end.
Goodwill
Goodwill, all of which relates to acquisitions prior to 1st May, 1999, has been
set off directly against reserves.
Intangible assets
Intangible assets acquired are capitalised at cost as at the date of
acquisition. Following initial recognition the intangible asset is carried at
its cost less any accumulated amortisation and accumulated impairment losses.
Software costs are amortised over 3 to 5 years.
Intangible assets, excluding, development costs, created within the business are
not capitalised and expenditure is charged against profits in the year in which
the expenditure is incurred.
Recoverable Amount of Non-Current Assets
At each reporting date, the Group assesses whether there is any indication that
an asset may be impaired. Where an indicator of impairment exists, the Group
makes a formal estimate of recoverable amount. Recoverable amount is the higher
of an assets or cash generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other
assets or groups of assets. Where the carrying amount of an asset exceeds its
recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Research and development costs
Research costs are expensed as incurred. An intangible asset arising from
development expenditure on an individual project is recognised only when the
Group can demonstrate the technical feasibility of completing the intangible
asset so that it will be available for use or sale, its intention to complete
and its ability to use or sell the asset, how the asset will generate future
economic benefits, the availability of resources to complete and the ability to
measure reliably the expenditure during the development. Following the initial
recognition of the development expenditure, the cost model is applied requiring
the asset to be carried at cost less any accumulated amortisation and
accumulated impairment losses. Any expenditure capitalised is amortised over the
period of expected future sales from the related project.
The carrying value of development costs is reviewed for impairment annually when
the asset is not yet in use or more frequently when an indication of impairment
arises during the reporting year.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition is
accounted for as follows:
Raw materials - purchase cost on a first-in, first-out basis;
Finished goods and work in progress - cost of direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity but
excluding borrowing costs
Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs necessary to make the sale.
Progress payments received and receivable are deducted from the value of stocks
and work in progress to which they relate. Any excess progress payments are
included in trade and other payables.
Trade and other receivables
Trade receivables, which generally have 30 days terms, are recognised and
carried at original invoice amount less an allowance for any uncollectable
amounts. Provision is made when there is objective evidence that the Group will
not be able to collect the debts. Bad debts are written off when identified.
Own shares
Own shares which are reacquired are deducted from equity. No gain or loss is
recognised in the consolidated income statement on the purchase, sale, issue or
cancellation of the Group's own equity instruments.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in
hand.
For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts and finance leases.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in net profit or loss when the liabilities are
derecognised or impaired as well as through the amortisation process.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. Where the
Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only
when the reimbursement is virtually certain. The expense relating to any
provision is presented in the income statement net of any reimbursement. If the
effect of the time value of money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a borrowing cost.
Pension Scheme
The Group operates a defined contribution pension scheme. Contributions are
charged in the income statement as they become payable in accordance with the
rules of the scheme.
Until 6th April, 1997 the scheme provided defined benefits and these liabilities
continue in respect of service prior to 6th April, 1997. The regular annual
cost relating to the defined benefits liabilities is assessed in accordance with
the advice of a qualified actuary using the projected unit method which
calculates the cost of fully providing for members' pension entitlements
accruing over the next twelve months. Actuarial gains and losses are recognised
immediately through the statement of Recognised Income and Expense.
The excess, as estimated by a qualified independent actuary, of the present
value of the liabilities over the assets, of the defined benefits pension scheme
is included as a non current liability in the balance sheet.
Leases
Finance leases, which transfer to the Group substantially all the risks and
benefits incidental to ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated
useful life of the asset and the lease term, if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the income statement on
a straight-line basis over the lease term.
Revenue
Revenue represents the turnover, net of discounts, derived from services
provided to customers and sales of products applicable to the period.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured. The
following specific recognition criteria must also be met before revenue is
recognised
Revenue, other than for contract sales, is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer and the amount of
revenue can be measured reliably, this is usually on despatch.
Contract sales are recognised on the value of work completed in the year and
determined where appropriate by reference to the total estimated contract sales
value.
Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attaching conditions will be complied with. When
the grant relates to an expense item, it is recognised as income over the period
necessary to match the grant on a systematic basis to the costs that it is
intended to compensate. Where the grant relates to an asset, the fair value is
credited to a deferred income account and is released to the income statement
over the expected useful life of the relevant asset by equal annual instalments.
Taxes
Current tax
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred income tax is provided using the liability method on temporary
differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences,
except:
• where the deferred tax liability arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, where the timing of
the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry-forward of unused tax
credits and unused tax losses can be utilised except
• where the deferred income tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss;
and
• in respect of deductible temporary differences associated with investments
in subsidiaries, associates and interests in joint ventures, deferred tax assets
are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised. Unrecognised deferred income tax assets are
reassessed at each balance sheet date and are recognised to the extent that it
has become probable that future taxable profit will allow the deferred tax asset
to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income tax relating to items recognised directly in equity is recognised in
equity and not in the income statement.
Deferred tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority.
Appendix 2.1
Consolidated Income Statement for FY2004/2005 and HI 2004/2005
Audited Unaudited
52 weeks ended 26 weeks ended
30th April 2005 30th October 2004
UK GAAP Adj. IFRS UK GAAP Adj. IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Group revenue 32,195 - 32,195 16,408 - 16,408
Profit before interest 2,975 (54) 2,921 1,155 138 1,293
Interest receivable 37 - 37 35 - 35
Interest payable (38) - (38) (20) - (20)
Share of profit of joint venture 369 - 369 236 - 236
Profit before taxation 3,343 (54) 3,289 1,406 138 1,544
Taxation (1,061) (15) (1,046) (478) (41) (519)
Profit attributable to equity holders of the 2,282 (39) 2,243 928 97 1,025
parent
Earnings per share - basic 12.7p 12.4p 5.0p 5.4p
Earnings per share - fully diluted 11.8p 11.5p 4.8p 5.0p
Appendix 2.2
Consolidated Income Statement IFRS Adjustments for FY 2004/2005 and H1 2004/2005
Audited Unaudited
52 weeks ended 26 weeks ended
30th April, 2005 30th October 2004
IAS 19 IAS 12 Total IAS 19 IAS 12 Total
Employee Income Employee Income
benefits tax Benefits tax
£'000 £'000 £'000 £'000 £'000 £'000
Revenue - - - - - -
Costs and overheads (54) - (54) 138 - 138
Profit before interest (54) - (54) 138 - 138
Interest - - - - - -
Share of profit of joint venture - - - - - -
Profit before taxation (54) - (54) 138 - 138
Taxation - 15 15 - (41) (41)
Profit attributable to equity (54) 15 (39) 138 (41) 97
holders of the parent
Appendix 2.3
Statement of Recognised Income and Expenses for the FY 2004/2005 and H1 2004/
2005
Audited Unaudited
52 weeks ended 26 weeks ended
30th April 2005 30th October 2004
UK GAAP Adj. IFRS UK GAAP Adj. IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Actuarial (losses)/profits on defined benefit pension - (203) (203) - 23 23
scheme
Deferred taxation on actuarial losses on defined - 61 61 - (7) (7)
benefit pension scheme
Currency translation differences on foreign 7 - 7 (8) - (8)
investments
Profit for the period 2,282 (39) 2,243 928 97 1,025
Total recognised income and expenses for the period 2,289 (181) 2,108 920 113 1,033
Appendix 2.4
Consolidated Balance Sheet at 30 April 2005 and 30 October 2004
Audited at Unaudited at
30th April 2005 30th October 2004
UK GAAP Adj. IFRS UK GAAP Adj. IFRS
£'000 £'000 £'000 £'000 £'000 £'000
ASSETS
Non current assets
Property, plant and equipment 8,342 (43) 8,299 8,076 (46) 8,030
Intangible assets 280 43 323 280 46 326
Investment in joint venture 708 - 708 596 - 596
Deferred income tax asset - 514 514 - 505 505
9,330 514 9,844 8,952 505 9,457
Current assets
Inventories 5,511 - 5,511 5,190 - 5,190
Trade and other receivables 5,030 - 5,030 6,552 - 6,552
Pension prepayment 6,638 (6,638) - 6,470 (6,470) -
Prepayments 360 - 360 102 - 102
Cash and cash equivalent 1,013 - 1,013 1,454 - 1,454
18,552 (6,638) 11,914 19,768 (6,470) 13,298
TOTAL ASSETS 27,882 (6,124) 21,758 28,720 (5,965) 22,755
EQUITY AND LIABILITIES
Equity
Issued capital 1,886 - 1,886 1,969 - 1,969
Capital redemption reserve 855 - 855 772 - 772
Revaluation reserve 1,853 (309) 1,544 1,853 (309) 1,544
Special reserve 1,629 - 1,629 1,629 - 1,629
Foreign exchange reserve 3,967 (4,145) (178) 4,053 (4,238) (185)
Own shares (738) - (738) (738) - (738)
Retained earnings 4,310 (3754) 556 3,786 (3,546) 240
13,762 (8,208) 5,554 13,324 (8,093) 5,231
Non current liabilities
Pension liability - 5,039 5,039 - 4,787 4,787
Loans and borrowings 5 - 5 42 - 42
Provisions 178 - 178 243 - 243
Government grants 52 - 52 60 - 60
Deferred income tax liability 2,679 (2,679) - 2,533 (2,533) -
2,914 2,360 5,274 2,878 2,254 5,132
Current liabilities
Dividends payable 276 (276) - 88 (88) -
Trade and other payables 10,145 - 10,145 11,373 - 11,373
Loans and borrowings 249 - 249 422 - 422
Provisions 65 - 65 164 - 164
Government grants 13 - 13 13 - 13
Income tax payable 458 - 458 458 (38) 420
11,206 (276) 10,930 12,518 (126) 12,392
TOTAL EQUITY AND LIABILITIES 27,882 (6,124) 21,758 28,720 (5,965) 22,755
Appendix 2.5
Consolidated Balance Sheet IFRS Adjustments at 30 April 2005
Dividends IAS 12 IAS 19 IAS 21 IAS 38 Total
Income tax Employee The effect of Intangible
benefits changes in assets
foreign
exchange rates
£'000 £'000 £'000 £'000 £'000 £'000
ASSETS
Non current assets
Property, plant and equipment - - - - (43) (43)
Intangible assets - - - - 43 43
Investment in joint venture - - - - - -
Deferred income tax asset - 514 - - - 514
- 514 - - - 514
Current assets
Inventories - - - - - -
Pension prepayment - - (6,638) - - (6,638)
Trade and other receivables - - - - - -
Prepayments - - - - - -
Cash and cash equivalents - - - - - -
- - (6,638) - - (6,638)
TOTAL ASSETS - 514 (6,638) - - (6,124)
EQUITY LIABILITES
Equity
Issued capital - - - - - -
Capital redemption reserve - - - - - -
Revaluation reserve - (309) - - - (309)
Special reserve - - - - - -
Foreign exchange reserve - 1,991 (6,448) 312 - (4,145)
Own shares - - - - - -
Retained earnings 276 1,511 (5,229) (312) - (3,754)
276 3,193 (11,677) - - (8,208)
Non current liabilities
Pension liability - - 5,039 - - 5,039
Loans and borrowings - - - - - -
Provisions - - - - - -
Government grants - - - - - -
Deferred income tax liability - (2,679) - - - (2,679)
- (2,679) 5,039 - - 2,360
Current liabilities
Dividends payable (276) - - - - (276)
Trade and other payables - - - - - -
Loans and borrowings - - - - - -
Governments grants - - - - - -
Income tax payable - - - - - -
Provisions - - - - - -
(276) - - - - (276)
TOTAL EQUITY AND IABILITIES - 514 (6,638) - - (6,124)
Appendix 2.6
Consolidated Balance Sheet IFRS Adjustments at 30 October 2004
Dividends IAS 12 IAS 19 IAS 21 IAS 38 Total
Income tax Employee benefits The effect of Intangible
changes in assets
foreign
exchange rates
£'000 £'000 £'000 £'000 £'000 £'000
ASSETS
Non current assets
Property, plant and equipment - - - - (46) (46)
Intangible assets - - - - 46 46
Investment in joint venture - - - - - -
Deferred income tax asset - 505 - - - 505
- 505 - - - 505
Current assets
Inventories - - - - - -
Trade and other receivables - - - - - -
Pension prepayment - - (6,470) - - (6,470)
Prepayments - - - - - -
Cash and cash equivalents - - - - - -
- - (6,470) - - (6,470)
TOTAL ASSETS - 505 (6,470) - - (5,965)
EQUITY LIABILITES
Equity
Issued capital - - - - - -
Capital redemption reserve - - - - - -
Revaluation reserve - (309) - - - (309)
Special reserve - - - - - -
Foreign exchange reserve - 1,911 (6,470) 321 - (4,238)
Own shares - - - - - -
Retained earnings 88 1,436 (4,749) (321) - (3,546)
88 3,038 (11,219) - - (8,093)
Non current liabilities
Pension liability - - 4,787 - - 4,787
Loans and borrowings - - - - - -
Provisions - - - - - -
Government grants - - - - - -
Deferred income tax liability - (2,533) - - - (2,533)
- (2,533) 4,787 - - 2,254
Current liabilities
Dividends payable (88) - - - - (88)
Trade and other payables - - - - - -
Loans and borrowings - - - - - -
Governments grants - - - - - -
Income tax payable - - (38) - - (38)
Provisions - - - - - -
(88) - (38) - - (126)
TOTAL EQUITY AND LIABILITIES - 505 (6,470) - - (5,895)
Appendix 2.7
Consolidated Cash Flow Statement for FY 2004/2005 and H1 2004/2005
Audited Unaudited
52 weeks ended 26 weeks ended
30th April 2005 30th October 2004
UK Adj. IFRS UK Adj. IFRS
GAAP GAAP
£'000 £'000 £'000 £'000 £'000 £'000
Cash flows from operating activities
Cash generated by operations 2,030 - 2,030 361 - 361
Interest (paid)/received (2) - (2) 13 - 13
Corporation tax paid (763) - (763) (361) - (361)
Net Cash Inflow from Operating Activities 1265 - 1,265 13 - 13
Investing activities
Dividends received from joint venture 200 - 200 200 - 200
Purchase of intangible fixed assets - (46) (46) - (46) (46)
Purchase of tangible fixed assets (1,250) 46 (1,204) (489) 46 (443)
Sale of tangible fixed assets 22 - 22 - - -
Net Cash Used in Investing Activities (1,028) - (1,028) (289) - (289)
Financing activities
Purchase of own shares (1,325) - (1,325) (669) - (669)
Dividends paid (338) - (338) (250) - (250)
Repayment of bank loan (333) - (333) (167) - (167)
Repayment of capital element of finance leases (147) - (147) (103) - (103)
Net Cash Flow from Financing Activities (2,143) (2,143) (1,189) - (1,189
Movement in cash and cash equivalents (1,906) - (1,906) (1,465) - (1,465)
Opening cash and cash equivalents 2,919 - 2,919 2,919 - 2,919
Closing cash and cash equivalents 1,013 - 1,013 1,454 - 1,454
Appendix 3.1
Consolidated Balance Sheet at 1st May 2004
Audited
As at 1 May 2004
UK GAAP Adj. IFRS
£'000 £'000 £'000
ASSETS
Non current assets
Property, plant and equipment 7,995 (15) 7,980
Intangible assets 280 15 295
Investment in joint venture 616 - 616
Deferred income tax asset - 584 584
8,891 584 9,475
Current assets
Inventories 4,143 - 4,143
Pension prepayment 6,368 (6,368) -
Trade and other receivables 6,156 - 6,156
Prepayments 398 - 398
Cash and cash equivalents 2,919 - 2,919
19,984 (6,368) 13,616
TOTAL ASSETS 28,875 (5,784) 23,091
EQUITY AND LIABILITIES
Equity
Issued capital 2,096 - 2,096
Capital redemption reserve 645 - 645
Revaluation reserve 1,853 (309) 1,544
Special reserve 1,629 - 1,629
Foreign exchange reserve 3,959 (4,144) (185)
Own shares (738) - (738)
Retained earnings 3,717 (3,599) 118
13,161 (8,052) 5,109
Non current liabilities
Pension liability - 5,051 5,051
Loans and borrowings 245 - 245
Provisions 195 - 195
Government grants 65 - 65
Deferred income tax liability 2,533 (2,533) -
3,038 2,518 5,556
Current liabilities
Dividends payable 250 (250) -
Trade and other payables 11,332 - 11,332
Loans and borrowings 479 - 479
Provisions 197 - 197
Government grants 13 - 13
Income tax payable 405 - 405
12,676 (250) 12,426
TOTAL EQUITY AND LIABILITIES 28,875 (5,784) 23,091
Appendix 3.2
Consolidated Balance Sheet IFRS Adjustments at 1 May 2004
Foreign IAS 12 IAS 19 IAS 38 Total
Dividend Exchange Income Tax Employee Intangible
benefits assets
£'000 £'000 £'000 £'000 £'000 £'000
ASSETS
Non current assets
Property, plant and equipment - - - - (15) (15)
Intangible assets - - - - 15 15
Investment in joint venture - - - - - -
Deferred income tax asset - - 584 - - 584
- - 584 - - 584
Current assets
Inventories - - - - - -
Pension prepayment - - - (6,368) - (6,368)
Trade and other receivables - - - - - -
Prepayments - - - - - -
Cash and cash equivalent - - - - - -
- - - (6,368) - (6,368)
TOTAL ASSETS - - 584 (6,368) - (5,784)
EQUITY AND LIABILITIES
Equity
Issued capital - - - - - -
Capital redemption reserve - - (309) - - (309)
Revaluation reserve - - - - - -
Special reserve - - - - -
Foreign exchange reserve - 313 1,911 (6,368) - (4,144)
Own shares - - - - - -
Retained earnings 250 (313) 1,515 (5,051) - (3,599)
250 - 3,117 (11,419) - (8,052)
Non current liabilities
Pension liability - - - 5,051 - 5,051
Loans and borrowings - - - - - -
Provisions - - - - - -
Government grants - - - - - -
Deferred income tax liability - - (2,533) - - (2,533)
- - (2,533) 5,051 - 2,518
Current liabilities
Dividends payable (250) - - - - (250)
Trade and other payables - - - - - -
Loans and borrowings - - - - - -
Government grants - - - - - -
Income tax payable - - - - - -
Provisions - - - - - -
(250) - - - - (250)
TOTAL EQUITY AND LIABILITIES - - 584 (6,368) - (5,784)
Appendix 4
Movement on Reserves and Reconciliation of Movement in Equity
Share Capital Revaluation Foreign Special Own Retained Total
exchange
capital Redemption reserve reserve reserve Shares Earning
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1st May 2004 as 2,096 645 1,853 3,959 1,629 (738) 3,717 13,161
previously reported
IFRS Adjustments
Dividend - - - - - - 250 250
Foreign Exchange - - - 313 - - (313) -
Pension prepayment - - - (6,368) - - (6,368)
Deferred tax on building - - (309) - - - - (309)
revaluation
Deferred tax on pension - - - 1,911 - - 1,911
prepayment
Pension liability - - - - - - (5,051) (5,051)
Deferred tax on pension - - - - - - 1,515 1,515
liability
Restated 1st May 2004 2,096 645 1,544 (185) 1,629 (738) 118 5,109
Profit Attributable to - - - - - - 2,243 2,243
Members
Dividends - - - - - - (338) (338)
Actuarial losses on deferred - - - - - - (203) (203)
benefit pension scheme
Deferred taxation on - - - - - - 61 61
actuarial losses
Foreign exchange adjustments - - - 7 - - - 7
in retranslation of overseas
investment
Repurchase of own shares (210) 210 - - - - (1,325) (1,325)
At 30th April 2005 1,886 855 1,544 (178) 1,629 (738) 556 5,554
Appendix 5
Independent Auditors' Report to the Company on the preliminary IFRS Financial
Statements for the year ended 30 April 2005
We have audited the accompanying preliminary International Financial Reporting
Standards ('IFRS') consolidated financial statements of MS International plc ('
the Company') for the year ended 30 April 2005 which comprise the opening IFRS
Balance Sheet as at 1 May 2004, the Income Statement and the Statement of
Recognised Income and Expenses for the year ended 30 April 2005 and the Balance
Sheet as at 30 April 2005, together with the related accounting policies note
set out on pages 1 to 20 inclusive.
This report is made solely to the Company in accordance with our engagement
letter dated 27 September 2005. Our audit work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
auditors' report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility or liability to anyone other than
the Company for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
These preliminary IFRS financial statements are the responsibility of the
Company's directors and have been prepared as part of the Company's conversion
to IFRS. They have been prepared in accordance with the basis set out in the
accounting policies note.
Our responsibility is to express an independent opinion on the preliminary IFRS
financial statements based on our audit. We read the other information
accompanying the preliminary IFRS financial statements and consider whether it
is consistent with the preliminary IFRS financial statements. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the preliminary IFRS financial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
preliminary IFRS financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the preliminary IFRS financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the preliminary
IFRS financial statements. We believe that our audit provides a reasonable
basis for our opinion.
Emphasis of matter
Without qualifying our opinion, we draw attention to the fact that page 2
explains why there is a possibility that the preliminary IFRS financial
statements may require adjustment before constituting the final IFRS financial
statements. Moreover, we draw attention to the fact that, under IFRSs only a
complete set of financial statements with comparative financial information and
explanatory notes can provide a fair presentation of the Company's financial
position, results of operations and cash flows in accordance with IFRSs.
We also draw your attention to the fact that we have not audited the
consolidated preliminary IFRS balance sheet of the Company, the related
preliminary IFRS income statement, statement of recognised income and expense
and cash flow statement for the half year ended 31 October 2004.
Opinion
In our opinion, the preliminary IFRS financial statements for the year ended 30
April 2005 have been prepared, in all material respects, in accordance with the
basis set out in the accounting policies note, which describes how IFRS have
been applied under IFRS 1, including the assumptions management has made about
the standards and interpretations expected to be effective, and the policies
expected to be adopted, when management prepares its first complete set of IFRS
financial statements as at 30 April 2006.
ERNST & YOUNG LLP
Date
Leeds
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