IFRS RESTATEMENT
Nichols PLC
30 July 2007
IFRS RESTATEMENT
Nichols plc today publishes its analysis of the impact of International
Financial Reporting Standards (IFRS) on its results for 2006, together with a
reconciliation from UK Generally Accepted Accounting Principles (UK GAAP) to
IFRS.
In Summary
• Profit before taxation on continuing activities for the year ended 31
December 2006 has increased by £512,000 from £4,961,000 to £5,473,000.
• Basic earnings per share for the year ended 31 December 2006 has
increased from 15.94p to 17.10p
• There is no impact on underlying cash flow.
Restatement of financial information for 2006 under International Financial
Reporting Standards (IFRS)
Contents
1. Introduction
2. Basis of Preparation
3. First time adoption of IFRS
4. Review of the main changes arising from the transition from UK GAAP to
IFRS
5. Restated unaudited preliminary comparative financial information
6. Statement of compliance
7. Accounting policies
The following information is unaudited and may be subject to change.
1. Introduction
Historically Nichols plc has prepared its consolidated financial statements in
accordance with UK Generally Accepted Accounting Principles (UK GAAP). As a
result of AIM rule changes, Nichols plc needs to prepare consolidated financial
statements in accordance with International Financial Reporting Standards
(IFRS).
This change applies to all accounting periods beginning on or after 1 January
2007 for AIM listed companies. The group's first Interim Report under IFRS will
be for the six months ended 30 June 2007 and its first Annual Report under IFRS
will be for the year ended 31 December 2007. Prior period comparatives will be
restated to comply with IFRS. These are shown in section 5 of this report.
Summary of the financial effects of IFRS
The main impact on the group's income statement is that goodwill is no longer
amortised. Instead goodwill is to be reviewed for impairment annually.
There have been a number of other effects but these are balance sheet
reclassifications only.
2. Basis of Preparation
The unaudited financial information presented in this document has been prepared
on the basis of all International Financial Reporting Standards (IFRS) expected
to be applicable for the group's 2007 reporting period. These are subject to
ongoing review and possible amendment. Further standards and/ or
interpretations may be issued that could apply to 2007. If any such amendments,
new standards or new interpretations are issued these may require the financial
information provided in this document to be modified accordingly.
The group will also continue to review its accounting policies in light of
emerging industry consensus on the practical application of IFRS. This could
also mean that the financial information provided in this document may require
modification until the first complete set of audited IFRS financial statements
are completed for the year ended 31 December 2007.
3. First Time Adoption of IFRS
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 define its IFRS accounting policies and apply them
retrospectively. IFRS 1, does however, allow a company to take advantage of a
number of exemptions from restating historical data in certain instances. The
only exemption affecting the group is IFRS 3, which is set out below.
i. IFRS 3 Business Combinations
IFRS 3 prohibits merger accounting and the amortisation of goodwill. The
standard requires goodwill to be carried at cost with impairment reviews both
annually and when there are indications that the carrying value may not be
recoverable.
Under the transitional arrangements of IFRS 1 a company has the option of
applying IFRS 3 prospectively from the IFRS transition date. Nichols plc has
chosen this option rather than to restate all previous business combinations.
Accordingly acquisitions prior to 1 January 2006 have not been restated for the
effects of IFRS 3. The impacts of IFRS 3 and associated transition arrangements
on Nichols plc are as follows:
• All prior business combination accounting is frozen at the transition
date and
• The value of goodwill is frozen at 1 January 2006 and amortisation
previously reported under UK GAAP is added back for 2006 IFRS restatements.
The operating profit impact in 2006 is a reduction in the amortisation charge of
£512,000. There is a corresponding deferred tax adjustment of £86,000.
ii. IAS 19 Retirement Benefits
The rules for IAS 19 are similar to those of FRS 17. The main difference is the
accounting treatment of the deferred tax asset/ liability relating to the
pension scheme asset/ liability.
Under FRS 17 the pension scheme surplus or deficit is shown net of the related
deferred tax. Under IAS 19 the pension surplus or deficit is shown separately
from other net assets on the balance sheet and the deferred tax is shown with
other deferred tax balances.
iii. Presentation of the Financial Statements
The financial information provided in this document has been presented in a
manner consistent with the requirements of IFRS and thus the format of primary
schedules such as the income statement (profit and loss account) and the balance
sheet differ from those under UK GAAP. Generally the presentation rules of IFRS
are less prescriptive than those under UK GAAP. The group has therefore
endeavoured to interpret the IFRS requirements in a manner that provides users
with clear and concise information.
iv. Cash
There is no impact upon the underlying cash balances within the business as a
result of the adoption of IFRS.
4. Review of the Main Changes arising from the Transition from UK GAAP to
IFRS
The following explains the major adjustments from the transition to IFRS. It
does not attempt to explain all adjustments, only those having a significant
effect on the group's financial performance or financial position.
i. IFRS 3 - Business Combinations
Requirements of IFRS
a) Under IFRS 3 goodwill is no longer amortised but is instead subject to
annual impairment testing.
b) IFRS 3 requires intangible assets to be identified separately from goodwill
provided they meet the IFRS definition of an intangible asset and provided their
fair value can be measured reliably. There are no significant separately
identifiable assets within Nichols plc.
Impact on the Group
a) The group has reversed the goodwill amortisation charged in the UK GAAP
accounts for the year ended 31 December 2006.
Impact £'000s
June 2006 December 2006
Impact on profit before tax +256 +512
Deferred tax -43 -86
Impact on profit for the year +213 +426
ii. IAS 19 - Retirement Benefits
Requirements of the IFRS
Under IAS 19 the pension deficit is no longer shown net of deferred tax and the
deferred tax is shown with the other deferred tax balances.
Impact on the Group
Impact £'000s
December 2005 June December 2006
2006
Impact on deferred tax +2,102 +2,102 +1,951
Impact on pension liability -2,102 -2,102 -1,951
5. Restated Preliminary Comparative Financial Information - Unaudited
Consolidated Income Statement - Reconciliation
For the half year ended 30 June 2006 UK GAAP Goodwill Pension IFRS
2006 ADJ ADJ 2006
£'000 £'000 £'000 £'000
Revenue 26,188 26,188
Cost of sales (12,050) (12,050)
Gross profit 14,138 14,138
Operating expenses (14,058) 256 (13,802)
Operating profit 80 256 0 336
Profit on disposal of non-current assets 128 128
Finance income 86 86
Finance charges (121) (121)
Profit before tax 173 256 0 429
Taxation (336) (43) (379)
Profit from continuing activities (163) 213 0 50
Profit on disposal of discontinued operations 2,038 2,038
Profit for the period 1,875 0 0 2,088
Earnings per share - basic 5.11p 5.69p
Earnings per share - diluted 5.09p 5.67p
Consolidated Income Statement - Reconciliation
For the year ended 31 December 2006 UK GAAP Goodwill Pension IFRS
2006 ADJ ADJ 2006
£'000 £'000 £'000 £'000
Revenue 52,296 52,296
Cost of sales (24,764) (24,764)
Gross profit 27,532 27,532
Operating expenses (22,757) 512 (22,245)
Operating profit 4,775 512 0 5,287
Profit on disposal of non-current assets 128 128
Finance income 156 156
Finance charges (98) (98)
Profit before tax 4,961 512 0 5,473
Taxation (1,152) (86) (1,238)
Profit from continuing activities 3,809 426 0 4,235
Profit on disposal from discontinued operations 2,038 2,038
Profit for the period 5,847 426 0 6,273
Earnings per share - basic 15.94p 17.10p
Earnings per share - diluted 15.92p 17.08p
2006 Interim Consolidated Balance Sheet - Reconciliation
As at 30 June 2006 UK GAAP Goodwill Pension IFRS
2006 ADJ ADJ 2006
£'000 £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 4,053 4,053
Goodwill 9,248 256 9,504
Deferred tax asset - (43) 2,168 2,125
Total non-current assets 13,301 213 2,168 15,682
Current assets
Inventories 3,053 3,053
Trade and other receivables 17,599 17,599
Cash and cash equivalents 2,448 2,448
Total current assets 23,100 23,100
Total assets 36,401 213 2,168 38,782
LIABILITIES
Current liabilities
Trade and other payables 11,979 11,979
Current tax payable 1,118 1,118
Total current liabilities 13,097 0 0 13,097
Non-current liabilities
Retirement benefit obligations 4,406 2,102 6,508
Deferred tax liabilities (66) 66 0
Provisions 2,353 2,353
Total non-current liabilities 6,693 0 2,168 8,861
Total liabilities 19,790 0 2,168 21,958
Net assets 16,611 213 0 16,824
EQUITY
Share capital 3,697 3,697
Share premium 3,255 3,255
Other reserves 511 511
Retained earnings 9,148 213 9,361
Total equity 16,611 213 0 16,824
2006 Consolidated Balance Sheet - Reconciliation
As at 31 December 2006 UK GAAP Goodwill Pension IFRS
2006 ADJ ADJ 2006
£'000 £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 3,179 3,179
Goodwill 9,112 512 9,624
Deferred tax asset - (86) 1,978 1,892
Total non-current assets 12,291 426 1,978 14,695
Current assets
Inventories 2,169 2,169
Trade and other receivables 12,364 12,364
Cash and cash equivalents 7,460 7,460
Total current assets 21,993 0 0 21,993
Total assets 34,284 426 1,978 36,688
LIABILITIES
Current liabilities
Trade and other payables 8,366 8,366
Current tax payable 598 598
Total current liabilities 8,964 0 0 8,964
Non-current liabilities
Retirement benefit obligations 4,553 1,951 6,504
Deferred tax liabilities (27) 27 0
Provisions 1,211 1,211
Total non-current liabilities 5,737 0 1,978 7,715
Total liabilities 14,701 0 1,978 16,679
Net assets 19,583 426 0 20,009
EQUITY
Share capital 3,697 3,697
Share premium 3,255 3,255
Other reserves 722 722
Retained earnings 11,909 426 12,335
Total equity 19,583 426 0 20,009
2005 Consolidated Balance Sheet - Reconciliation
As at 1 January 2006 UK GAAP Goodwill Pension IFRS
2005 ADJ ADJ 2005
£'000 £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 13,563 13,563
Goodwill 9,504 9,504
Deferred tax asset - 1,305 1,305
Total non-current assets 23,067 1,305 24,372
Current assets
Inventories 3,972 3,972
Trade and other receivables 14,592 14,592
Cash and cash equivalents 0 0
Total current assets 18,564 18,564
Total assets 41,631 1,305 42,936
LIABILITIES
Current liabilities
Bank overdraft 2,886 2,886
Loans and borrowings 2,672 2,672
Trade and other payables 11,202 11,202
Current tax payable 772 772
Total current liabilities 17,532 17,532
Non-current liabilities
Loans and borrowings 750 750
Retirement benefit obligations 4,906 2,102 7,008
Deferred tax liabilities 797 (797) 0
Provisions 655 655
Total non-current liabilities 7,108 1,305 8,413
Total liabilities 24,640 1,305 25,945
Net assets 16,991 0 16,991
EQUITY
Share capital 3,697 3,697
Share premium 3,255 3,255
Other reserves 551 551
Retained earnings 9,488 9,488
Total equity 16,991 0 16,991
6. Statement of Compliance
IFRS 1 First Time Adoption of IFRS Adopted
IFRS 2 Share Based Payments Adopted
IFRS 3 Business Combinations Adopted
IFRS 4 Insurance Contracts No impact on the financial
statements
IFRS 5 Non-current assets held for sale and Discontinued Operations No impact on the financial
statements
IFRS 6 Exploration and Evaluation of Mineral Resources No impact on the financial
statements
IFRS 7 Financial Instruments: Disclosures Adopted
IAS 1 Presentation of Financial Statements Adopted
IAS 2 Inventories Adopted
IAS 7 Cash flow statements Adopted
IAS 8 Accounting Policies, changes in accounting estimates and errors Adopted
IAS 10 Events after the balance sheet date Adopted
IAS 11 Construction Contracts Adopted
IAS 12 Income taxes Adopted
IAS 14 Segmental Reporting Adopted
IAS 16 Property, Plant and Equipment Adopted
IAS 17 Leases Adopted
IAS 18 Revenue Adopted
IAS 19 Employee Benefits Adopted
IAS 20 Accounting for Government Grants and Disclosure of Government Adopted
Assistance
IAS 21 The effects of changes in Foreign Exchange rates Adopted
IAS 23 Borrowing costs No impact on the financial
statements
IAS 24 Related party Disclosures Adopted
IAS 26 Accounting and reporting of Retirement Benefit Plans Adopted
IAS 27 Consolidation and Separate Financial Statements Adopted
IAS 28 Investments in Associates No impact on the financial
statements
IAS 29 Financial Reporting in Hyperinflationary Economies No impact on the financial
statements
IAS 31 Interests in Joint Ventures No impact on the financial
statements
IAS 32 Financial Instruments: Presentation Adopted
IAS 33 Earnings per share Adopted
IAS 34 Interim Financial Reporting Adopted
IAS 36 Impairment of Assets Adopted
IAS 37 Provisions, Contingent Liabilities and Contingent Assets Adopted
IAS 38 Intangible Assets Adopted
IAS 39 Financial Instruments: Recognition and Measurement Adopted
IAS 40 Investment Property No impact on the financial
statements
IAS 41 Agriculture No impact on the financial
statements
The following International Financial Reporting Interpretations Committee
(IFRIC) pronouncements are effective but have not been adopted early by the
group:
IFRIC 8 Scope of IFRS 2
IFRIC 10 Interim financial reporting and impairment
The following IFRIC pronouncements are not yet effective and have not been
adopted early by the group:
IFRIC 11 IFRS 2 group and treasury share transactions
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14 The limit on a defined benefit asset, minimum funding
requirements and their interaction.
7. Accounting Policies
Basis of preparation
Year end consolidated financial statements will be prepared in accordance with
International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board (IASB).
The financial statements have been prepared on the historical cost basis.
Historically Nichols plc has prepared its consolidated financial statements in
accordance with UK Generally Accepted Accounting Principles (UK GAAP). As a
result of AIM rule changes, Nichols plc needs to prepare consolidated financial
statements in accordance with International Financial Reporting Standards. The
comparative information has been restated in accordance with IFRS. The date of
transition to IFRS is 1st January 2006.
The accounting policies have been applied consistently by the group.
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from the estimates. The key estimates and assumptions
applied by management are set out below:
(i) future cash flows and discount rates used in the 'value in use' goodwill
impairment test.
(ii) assumptions on the expected life of share options, volatility of shares,
risk free yield to maturity and expected dividend yield on shares used in the
IFRS fair value of share options.
(iii) for the defined benefit scheme, the main assumptions used by the actuary
are the rate of increase in salaries, the rate of increase in pensions in
payment, the discount rate and the rate of inflation.
(iv) expected useful life of non-current assets.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
Basis of consolidation
The group financial statements consolidate those of the company and all of its
subsidiary undertakings drawn up to 31 December 2007. Subsidiaries are entities
over which the group has the power to control the financial and operating
policies so as to obtain benefits from their activities.
Intra-group balances, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial
statements. All group companies have coterminous year ends.
Acquisitions of subsidiaries are dealt with by the purchase method. The
purchase method involves the recognition at fair value of all identifiable
assets and liabilities at the acquisition date, regardless of whether or not
they were recorded in the financial statements of the subsidiary prior to
acquisition. On initial recognition, the assets and liabilities of the
subsidiary are included in the consolidated balance sheet at their fair values,
which are also used as the bases for subsequent measurement in accordance with
group accounting policies. Goodwill is stated after separating out identifiable
assets. Goodwill represents the excess of acquisition costs over the fair value
of the group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition.
The group has elected not to apply IFRS 3 Business Combinations retrospectively
to business combinations prior to 1st January 2006.
First time application of IFRS
IFRS 1 'First Time Adoption of IFRS' 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.
The group has established its IFRS accounting policies as at 31 December 2007,
and has applied these retrospectively to determine the IFRS opening balance
sheet at its date of transition, 1 January 2006. This standard provides a
number of optional and mandatory exemptions to this general principle. The only
exemption adopted by the group is IFRS 3, which is set out below.
Business combinations (IFRS 3)
The group has elected not to apply IFRS 3 to the business combinations that took
place before the date of transition. Accordingly, combinations prior to 1
January 2006 have not been restated. As a result the carrying value of goodwill
is frozen as at 1 January 2006, but accounted for thereafter in accordance with
IFRS.
Revenue
Revenue from the sale of goods is measured at the fair value of the
consideration received or receivable, net of returns and allowances, trade
discounts, volume discounts and excluding VAT. Revenue is recognised when the
significant risks and rewards of ownership have been transferred to the buyer,
recovery of the consideration is probable, the associated costs and possible
return of goods can be estimated reliably and there is no continuing management
involvement with the goods.
Transfer of risks and rewards vary depending on the individual term of the
contract of sale. For sales of soft drinks in the UK, transfer occurs when the
product is despatched to the customer. However, for some international
shipments transfer occurs either upon loading the goods onto the relevant
carrier or when the goods have arrived in the overseas port.
Share based payments
The group issues equity-settled share based payments to certain employees. The
fair value, determined at the date of grant, is recognised as an expense. The
total amount to be expensed over the vesting period is determined with reference
to the fair value of options granted, excluding the impact of any non market
vesting conditions. Non market vesting conditions are included in the
assumptions about the number of options expected to vest. At each balance sheet
date the group revises its estimate of the number of options expected to vest.
It recognises the impact of revisions to original estimates, if any, in the
income statement, with a corresponding adjustment to equity. The proceeds
received, net of any directly attributable transactions costs, are credited to
share capital and share premium when the options are exercised.
Foreign currency transactions
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the income statement in the period in which
they arise.
Exceptional items
Exceptional items are material items which individually, or if of a similar
type, in aggregate, need to be disclosed by virtue of their size or incidence
because of their reference to understanding the group's financial performance.
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the income statement except to the extent that it relates to items
recognised directly to equity, in which case it is recognised in equity.
Current tax
Current tax is the expected tax payable on the taxable income for the year,
using rates, which are enacted or substantively enacted at the balance sheet
date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised using the liability method, with no discounting,
providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is measured at the tax rates that are expected to be
applied to the temporary differences when they reverse, provided they are
enacted or substantively enacted at the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which temporary differences can be
utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related deferred
tax benefit will be realised.
Goodwill
Goodwill representing the excess of the cost of acquisition over the fair value
of the group's share of the identifiable assets acquired, is capitalised and
reviewed annually for impairment. Goodwill is carried at cost less accumulated
impairment losses. Negative goodwill is recognised immediately after
acquisition in the income statement.
Goodwill written off to reserves prior to the date of transition to IFRS remains
in reserves. There is no re-instatement of goodwill previously amortised on the
transition to IFRS. Goodwill previously written off to reserves is not written
back to the income statement on subsequent disposal.
Impairment
The carrying values of the group's non-current assets are reviewed at each
reporting date to determine whether there is any indication of impairment.
Goodwill is reviewed for impairment annually. All other non-current assets are
tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. If any such indication of
impairment exists then the asset's recoverable amount is estimated.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash generating
units). As a result, some assets are tested individually for impairment and
some are tested at a cash-generating unit level.
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. The recoverable amount is
the higher of fair value, reflecting market conditions less costs to sell, and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using the cost of capital that reflects the
current market assessments of the time value of money and the risks specific to
the asset. Impairment losses recognised in respect of cash-generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the
units and then to reduce the carrying amount of the other assets in the unit on
a pro rata basis. Impairment losses are recognised in the income statement.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated
depreciation and any provision for impairment.
Cost includes expenditures that are directly attributable to the acquisition of
the asset.
The cost of replacing part of an item of plant, property and equipment is
recognised in the carrying amount of the item if it is probable that the future
economic benefits of the part will flow to the group and its costs can be
measured reliably. The costs of the day-to-day servicing of the property, plant
and equipment are recognised in the income statement as incurred.
Depreciation is recognised in the income statement on a straight line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. Leased assets are depreciated over the shorter of the lease and
their useful lives. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as
follows:
Buildings 50 years
Plant and equipment 4-10 years
Material residual value estimates are updated at least annually.
An impairment review will be performed on property, plant and equipment if it is
believed that there is a significant difference between the recoverable amount
and the measured cost less accumulated depreciation.
Inventories
Inventories are measured at the lower of cost and net realisable value. The
cost of inventories is based on the first-in first-out principle, and includes
expenditure incurred in acquiring the inventories and bringing them to their
existing location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the costs of completion and
selling expenses.
Financial assets
The group's financial assets comprise primarily cash, bank deposits and trade
receivables that arise from its operations.
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provisions
for impairment. A provision for impairment of trade receivables is established
when there is evidence that the group will not be able to collect all amounts
due according to the original terms of the receivable.
Financial liabilities
The group's financial liabilities comprise trade payables. Financial
liabilities are obligations to pay cash or other financial assets and are
recognised when the group becomes a party to the contractual provisions of the
instruments. Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective interest rate
method.
Other financial instruments
The group primarily uses forward currency contracts to manage its exposure to
fluctuating foreign exchange rates. Upon initial recognition, attributable
transaction costs are recognised in the income statement when incurred. These
instruments are measured at fair value and any material movement is shown in the
income statement.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
deposits with banks and bank and cash balances.
Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Lease payments
Finance
The economic ownership of a leased asset is transferred to the lessee if the
lessee bears substantially all the risks and rewards related to the ownership of
the leased asset. The related asset is recognised at the time of inception of
the lease at the fair value of the leased asset or, if lower, the present value
of the minimum lease payments plus incidental payments, if any, to be borne by
the lessee. A corresponding amount is recognised as a finance leasing
liability. The finance expense is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining
balance of the liability.
Rent Payments
All other leases are regarded as operating leases and the payments are
recognised in the income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised as an integral part of the
total lease expense, over the term of the lease.
Pensions
Defined contribution pension schemes
Obligations for contributions to the group's defined contribution pension plan
are recognised as an expense in the income statement when they are due.
Defined benefit pension scheme
Scheme assets are measured at fair values. Scheme liabilities are measured on
an actuarial basis using the projected unit method and are discounted at
appropriate high quality bond rates. The surplus or deficit is presented within
net assets on the balance sheet. The related deferred tax element is shown
within other deferred tax balances. A surplus is recognised only to the extent
that it is recoverable by the group. The current service cost and costs from
settlements and curtailments are charged against operating profit. Past service
costs are spread over the period until the benefit increases vest. Interest
amounts on the scheme liabilities are included in finance income/ charges.
Actuarial gains and losses are recognised immediately through the statement of
recognised income and expense (SORIE).
This information is provided by RNS
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