IFRS Restatement
Tribal Group PLC
28 October 2005
IFRS RESTATEMENT
Tribal Group plc today publishes an analysis of the impact of International
Financial Reporting Standards (IFRS) on its results for the year ended 31 March
2005, together with a detailed reconciliation from UK Generally Accepted
Accounting Practice (UK GAAP) to IFRS. In summary:
• Adjusted profit before tax* for the year ended 31 March 2005 has
decreased from £17.9m to £17.8m
• Statutory loss before tax for the year ended 31 March 2005 of £0.2m has
become a profit before tax of £9.0m
• Adjusted diluted earnings per share* for the year ended 31 March 2005
decreased from 15.6p to 15.3p
• Basic loss per share for the year ended 31 March 2005 of 8.2p has become
a basic earnings per share of 4.55p
• Net assets at 31 March 2005 increased from £151.3m under UK GAAP to
£160.8m under IFRS
• There is no impact on underlying cash flow
• Covenants in respect of borrowings have been written on the basis of UK
GAAP. They are not significantly affected by the transition to IFRS
• Net assets will reduce by £16.8m on 1 April 2005 to £144.0m after
adoption of IAS 32/39, reclassifying shares to be issued (£16.5m) and
recognising liabilities under derivative financial instruments (£0.3m)
• A discounted swap does not qualify as a hedge and the change in the fair
value of circa £0.5m will be a non-cash charge for the period ended 30
September 2005
The attached information is subject to change. It is available on the Company's
web site www.tribalgroup.co.uk
* Adjusted profit before tax and adjusted diluted earnings per share are stated
before IFRS 3 intangible amortisation, goodwill impairment, share option charges
and exceptional Mercury bid costs
Simon Lawton, Group Finance Director, can be contacted on 01285 886020 to answer
questions on this IFRS restatement.
Tribal Group plc
Transition to International Financial Reporting Standards
This announcement provides details of Tribal Group's transition to IFRS and
shows the restated financial information for the year ended 31 March 2005
Introduction
Tribal Group plc ('the Group' or 'the Company'), has previously prepared its
financial statements under UK Generally Accepted Accounting Practice ('UK
GAAP'). For periods beginning on or after 1 January 2005, all listed companies
in the European Union ('EU') are required to prepare their consolidated
financial statements in accordance with International Financial Reporting
Standards ('IFRS') and International Accounting Standards ('IAS') as adopted by
the European Commission.
The consolidated financial statements for the year ending 31 March 2006 will be
prepared for the Group under IFRS principles. In order to comply with EU
regulations the interim results for the half year to 30 September 2005 will be
also presented under IFRS.
This document explains the differences that will arise when the Group's
financial statements are prepared under IFRS rather than UK GAAP. Specifically
this document sets out the reconciliations of the Group's balance sheets, as
prepared under UK GAAP, to those prepared in accordance with IFRS as at 1 April
2004 (the opening balance sheet as at the date of transition to IFRS), 30
September 2004 and 31 March 2005. In addition this document includes
reconciliations of the Group's consolidated profit and loss accounts prepared
under UK GAAP to the consolidated Income Statements prepared in accordance with
IFRS for the six months ended 30 September 2004 and for the year ended 31 March
2005.
There is no change to the Group's underlying performance under IFRS and, in
particular, there is no impact on the Group's cash flow.
The restatements result in:-
- the loss before tax of £0.2m under UK GAAP becoming a profit before tax
of £9.0m under IFRS for the year ended 31 March 2005, and a reduction
of £4.4m to a loss of £0.1m for the six months ended 30 September 2004;
- an increase in net assets of £9.5m to £160.8m for the year ended 31
March 2005, and an increase of £3.1m to £152.4m for the six months
ended 30 September 2004.
Restatements and changes in disclosure arise primarily as a result of:-
- goodwill no longer being amortised;
- reclassification of certain assets from goodwill to intangible assets;
- recognition of all employee benefit related obligations; defined
benefit pension schemes and holiday pay;
- inclusion of a fair value charge in relation to share-based payment;
- dividend liability recognised when approved and
- reclassification of shares to be issued.
Basis of preparation
For the year ended 31 March 2006 the Company will be required to prepare
consolidated financial statements under 'International Accounting Standards' as
adopted by the European Commission. These will be those IAS, IFRS and related
Interpretations (SIC-IFRIC interpretations), subsequent amendments to those
standards and related interpretations, future standards and related
interpretations issued or adopted by the International Accounting Standards
Board ('IASB') that have been endorsed by the European Commission (collectively
referred to as IFRSs). These are subject to on going review and endorsement by
the European Commission or possible amendment by interpretive guidance from the
IASB and the International Financial Reporting Interpretations Committee
('IFRIC') and are therefore still subject to change. Moreover, under IFRSs, only
a complete set of financial statements comprising a balance sheet, income
statement, statement of changes in equity, cash flow statement, together with
comparative financial information and explanatory notes can provide a fair
presentation of the Group's financial position, results of operations and cash
flow. Accordingly, the financial information cannot be described as compliant
with IFRS but has been prepared in accordance with the policies expected to be
in place at 31 March 2006.
The UK GAAP information in this document does not comprise statutory accounts
within the meaning of section 240 of the Companies Act 1985. The information for
the year ended 31 March 2004 and 31 March 2005 is an extract from the statutory
accounts to those dates which have been delivered to the Registrar of Companies.
Those accounts included audit reports which were unqualified and which did not
contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
First time adoption of IFRS
IFRS 1 'First time adoption of International Financial Reporting Standards'
allows a number of exemptions from the full requirements of IFRS for those
companies adopting IFRS for the first time. The Group has elected to take
advantage of the following exemptions/options:
Share-based payments
The Group will take advantage of the exemptions allowed regarding IFRS 2
'Share-based Payments'. The Group will apply the exemptions for share-based
payments granted on or before 7 November 2002 and for equity settled
transactions granted after 7 November 2002, vesting before 1 January 2005. The
Group has retrospectively applied IFRS 2 to non-vested equity instruments
granted on or after 7 November 2002.
Business combinations
The Group will adopt IFRS 3 'Business Combinations' to the extent that it
applies to acquisitions post 1 April 2004. Business combinations prior to that
date will be treated under previous accounting standards in accordance with the
optional exemption permitted under IFRS 1. Under IFRS 3, the identification of
assets and liabilities within acquired businesses includes intangible assets not
previously recognised under UK GAAP. These intangibles will be valued for each
acquisition after 1 April 2004 and will be amortised over their estimated
economic lives. All goodwill and intangibles will be tested for impairment as
required by IAS 36 'Impairment of Assets' on an annual basis.
Employee benefits
The Group will take advantage of the exemption which allows cumulative actuarial
gains and losses in defined benefit pension schemes up to the date of transition
to IFRS to be recognised immediately. Going forward, the Group will apply the
rules of the amendment to IAS 19 which allows actuarial gains and losses to be
recognised immediately in the Statement of Recognised Income and Expense. This
approach is consistent with the treatment required by FRS 17, the effect of
which we have previously disclosed in our UK GAAP accounts.
Financial instruments
As permitted by IFRS 1, the Group adopted IAS 32 'Financial Instruments:
disclosure and presentation' and IAS 39 'Financial instruments: recognition and
measurement', prospectively from 1 April 2005. Therefore until 31 March 2005,
the Group continued to account for interest rate swaps in accordance with UK
GAAP, and hence the comparative financial statements exclude the impact of these
standards. Shares to be issued have also been reclassified as a financial
liability rather than equity in accordance with IAS 32. Details of the impact of
adopting these standards at 1 April 2005 are set out later in this document
under heading 'IAS 32/39 Financial Instruments -impact on net assets at 1 April
2005'.
Summary of major impacts of adoption of IFRS
IFRS 2 - Share-based payments
Under UK GAAP the Group applies UITF 17 'Employee Share Schemes' in so far as it
applies to the Group's share schemes. The cost recognised in respect of share
options is based on the share price of the underlying shares at date of grant.
The cost was spread over the period of the employee's related performance. Under
IFRS 2 all share awards are measured at fair value at grant date and recognised
as an expense over the vesting period.
Advice has been taken from external valuation specialists and all relevant
options have been valued using a Black-Scholes model.
The following adjustments to the 2005 accounts result from these changes:
• an increase to net assets at 31 March 2005 of £0.8m to reflect the
accumulated accrual in respect of IFRS 2 charges net of the release of the
UK GAAP accrual
• an increase in the charge to the income statement for the year ended 31
March 2005 of £0.4m
IFRS 3 - Business Combinations
The standard deals with accounting for business combinations including goodwill
and intangible assets. Goodwill will be recognised as an asset and reviewed for
impairment at least annually. Any impairment is recognised immediately and will
not subsequently reverse. Goodwill amortisation has ceased at the date of
transition to IFRS.
Other intangible assets arising from acquisitions after 1 April 2004 will be
separately identified and amortised over their estimated useful economic lives,
which may be over shorter periods than goodwill has previously been amortised.
The following adjustments to the 2005 accounts result from these changes:
• £10.0m of annual goodwill amortisation charged under UK GAAP for the
year ended 31 March 2005 is credited back to income and increases net assets
• £2.7m of goodwill arising on acquisitions made during the year ended 31
March 2005 has been identified as separately acquired intangible assets in
accordance with IAS 38 'Intangible Assets' resulting in an amortisation
charge to the income statement of £0.3m for the year ended 31 March 2005.
IAS 19 - Employee Benefits
The standard covers all forms of employee benefits, but the major impact for the
Group is in accounting for defined pension schemes. Under UK GAAP, the Group
accounted for these schemes using SSAP 24 'Accounting for Pension Costs' and
also complied with the transitional rules of FRS 17 'Retirement Benefits'.
Accruals for holiday pay are also recognised.
The following adjustments to the 2005 accounts result from these changes:
• Net assets and total equity are reduced by £0.8m
IAS 32/39 - Financial Instruments
The Group adopted IAS 39 'Financial Instruments: Recognition and Measurement' on
1 April 2005; the standard therefore had no effect on the Group's financial
statements prior to that date. Adoption of IAS 39 resulted in a £0.2m reduction
in opening net assets on 1 April 2005. This represents the net effect of marking
to market the interest rate swaps held by the Group. Adoption of IAS 32 has
resulted in the reclassification of shares to be issued from equity to
liabilities resulting in a reduction of net assets of £16.5m. The effect on the
opening net assets has been set out later in this document under heading 'IAS 32
/39 Financial Instruments - impact on net assets as at 1 April 2005'.
The interest rate swaps are held to convert floating rate obligations into fixed
rate obligations, and to hedge the Group's obligations under its long term
borrowings.
The Group's discounted swap entered into on 1 April 2004 does not qualify as a
hedge and as a result the change in the fair value during the half year period
of circa £0.5m will be reflected as a non-cash charge to the consolidated income
statement for the period ended 30 September 2005. This charge represents the
increase in the fair value of buying out the swap at market prices prevailing
during the period ended 30 September 2005. This treatment can create volatility
in the charges against profits. The directors do not consider this to be
reflective of the on-going operations of the business; it will therefore be
separately highlighted and excluded from adjusted earnings. The market value of
the instrument will reduce to zero over the life of the instrument.
Significant accounting policies under IFRS
Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Group's financial
statements.
Basis of preparation
The financial information has been prepared in accordance with International
Financial Reporting Standards (IFRSs) for the first time.
The financial information has been prepared on the historical cost basis,
modified to include the revaluation of certain fixed assets.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and all its subsidiary undertakings.
All intra group transactions, balances, income and expenses are eliminated on
consolidation.
Revenue and turnover recognition
Turnover comprises the gross amounts billed to clients in respect of
commission-based income together with the total of other fees earned. Revenue
comprises commission and fees earned in respect of turnover and is measured at
the fair value of the consideration derived from the provision of goods and
services to third party customers in the normal course of business. Turnover and
revenue are stated exclusive of VAT, sales tax and trade discounts. The
particular policies applied are:
- Consultancy - on performance of the contracted services;
- Courses and training - over the provision of the related services;
- Healthcare delivery - on discharge of patients back to NHS care;
- Product sales - on delivery of the related goods; and
- Commission based income - on provision of the service to which the
commission relates.
Direct agency costs comprise media payments and production costs in respect of
commission based income. Cost of sales includes the direct expenditure incurred
in providing the goods and services described above, including the cost of
associates and the salary costs of employed fee earners. Administrative expenses
include the salary cost of non-fee earners.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable.
Acquisitions and disposals
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired is
credited to income and expense in the period of acquisition.
The interests of minority shareholdings is stated at the minority's proportion
of the fair values of the assets and liabilities recognised. Subsequently, any
losses applicable to the minority interest in excess of the minority interest
are allocated against the interest of the parent.
The profit or loss on the disposal or closure of a previously acquired business
includes the attributable amount of any purchased goodwill relating to that
business not previously charged through the profit and loss account.
The results and cash flow relating to a business are included in the
consolidated income statement and the consolidated cash flow statement from the
date of acquisition or up to the date of disposal.
Intangible assets - goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary.
Goodwill is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and
is not subsequently reversed.
Goodwill arising on acquisitions before the date of transition to IFRSs has been
retained at the previous UK GAAP amounts subject to being tested for impairment
at that date.
Where the amount of purchase consideration is contingent on one or more future
events, the cost of acquisition includes a reasonable estimate of the fair value
of amounts expected to be payable in the future. The cost of acquisition is
adjusted when revised deferred consideration estimates are made, with
consequential adjustments continuing to be made to goodwill until the ultimate
deferred consideration is known.
On disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the profit and loss on disposal.
Acquired intangibles
Intangibles assets acquired in business combinations are accounted for in
accordance with IFRS 3 'Business combinations'. Such intangible assets are
recognised separately if they meet the criteria for recognition, and are
amortised over their expected useful economic lives unless these are indefinite
in which case they are reviewed regularly for impairment in accordance with IAS
38 'Intangible assets'.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment (if any). Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. An intangible
asset with an indefinite useful life is tested for impairment annually and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and the value
in use. The estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Corporate information systems
In accordance with IAS 38, the Group's corporate information systems are treated
as an intangible asset. Costs included are those directly attributable to the
design, construction and testing of new systems (including major enhancements)
from the point of inception to the point of satisfactory completion where the
probable future economic benefits arising from the investment could be assessed
with reasonable certainty at the time the costs are incurred. Maintenance and
minor modifications are expensed against the income statement as incurred.
Internally generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in
which it is incurred.
An internally-generated intangible asset arising from the Group's product
development is recognised only if all of the following conditions are met:
- an asset is created that can be identified;
- it is probable that the asset created will generate future economic
benefits; and
- the development cost of the asset can be measured reliably.
Internally-generated intangible assets are amortised on a straight-line basis
over their useful lives. Where no internally-generated intangible asset can be
recognised, development expenditure is recognised as an expense in the period in
which it is incurred.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any
recognised impairment loss. Depreciation is charged so as to write off the cost
of each asset, other than properties in the course of construction, by equal
instalments over their estimated useful economic lives as follows:
Freehold land and buildings - 2 per cent.
Short term leases - life of the lease.
Fixtures, fittings and other equipment - 15-33 per cent.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets or, where shorter, over the term of the
relevant lease.
Assets in the course of construction relate to Mercury Health sites and are not
depreciated until brought into use by the business.
Leases
Assets acquired under finance leases are capitalised at their fair value or, if
lower, at the present value of the minimum lease payments, each determined at
the inception of the lease. The outstanding future lease obligations are shown
in the balance sheet as a finance lease obligation. The finance charges are
allocated over the period of the lease in proportion to the capital amount
outstanding and are charged directly against income.
Operating lease rentals are charged against income on a straight line basis over
the period of the lease.
Borrowing costs
Borrowing costs directly attributable to the construction of qualifying assets
and long-term contract costs are capitalised as part of the cost of those
assets. The commencement of capitalisation begins when both finance costs and
expenditures for the asset are being incurred and activities that are necessary
to get the assets ready for use are in progress. Capitalisation ceases when
substantially all the activities that are necessary to get the asset ready for
use are complete. All other borrowing costs are recognised in income or expense
in the period in which they are incurred.
Investment properties
Investment property, which is property held to earn rentals and/or capital
appreciation, is stated at its fair value at the balance sheet date. Gains or
losses arising from changes to the fair value of investment property are
included in income or expense for the period in which they arise.
Investments
Investments are initially measured at cost, including transaction costs.
Investments are classified as either held-for-trading or available-for-sale.
They are measured at subsequent reporting dates at cost where they relate to
unquoted equity investments where fair value cannot be readily determined and at
fair value otherwise.
Inventories
Inventories, other than long-term contracts, are stated at the lower of cost and
net realisable value. Cost comprises materials, direct labour and a share of
production overheads appropriate to the relevant stage of production. Net
realisable value is based on estimated selling price less all further costs to
completion and all relevant marketing, selling and distribution costs.
Long-term contracts
Long-term contracts balances represent costs incurred on specific contracts, net
of amounts transferred to cost of sales in respect of work recorded as turnover,
less foreseeable losses and payments on account not matched with turnover.
Contract work in progress is recognised as turnover by reference to the cost of
work carried out to date.
Profits are recognised on long-term contracts where the final outcome can be
assessed with reasonable certainty. In calculating this, the percentage of
completion method is used to calculate the profit based upon the proportion of
costs incurred to the total estimated costs. Cost includes direct staff, outlays
and an appropriate proportion of overheads. Full provision is made for all known
losses immediately such losses are forecast on each contract.
Amounts recoverable on contracts are included within debtors and are valued at
the proportion of the anticipated net sales value of the work done to date,
including uncertified amounts where the directors have satisfied themselves that
entitlement has been established less billed on account. Advance payments are
included in creditors to the extent that they exceed the related work in
progress.
Directly attributable pre-contract costs incurred after the point when there is
a virtual certainty that the contract will be awarded are capitalised within
inventories and amortised over the contract period. All other pre-contract costs
are expensed as incurred.
Retirement benefit costs
The Group operates various defined contribution pension schemes that are
established in accordance with employment terms set by the subsidiary
undertakings. The assets of these schemes are held separately from those of the
Group in independently administered funds. The amount charged against profits
represents the contributions payable to the scheme in respect of the accounting
period.
A small number of employees participate in various defined benefit schemes. The
expected cost of providing benefits is determined using the Projected Unit
Credit Method, with actuarial valuations being carried out at each balance sheet
date. Actuarial gains and losses are recognised in full in the period in which
they occur. They are recognised in the statement of recognised income and
expense.
Past service cost is recognised immediately to the extent that the benefits are
already vested, and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the
present value of the defined benefit obligation as adjusted for unrecognised
past service cost, and as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus the
present value of available refunds and reductions in future contributions to the
plan.
Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based payments'. In
accordance with transitional provisions IFRS 2 has been applied to all grants of
equity instruments after 7 November 2002 that were unvested as of 1 January 2005.
No charge is made in respect of instruments awarded before this date because
under the terms of IFRS 2 the Group is not permitted to apply the standard to
these instruments. The Group issues equity-settled share-based payments to
certain employees. Equity settled share based payments are measured at fair
value at the date of grant. This is expensed on a straight-line basis over the
vesting periods of the instruments based on the Group's estimate of shares that
will vest.
Fair value is measured by use of a Black-Scholes model.
There is no liability in relation to national insurance on share options at the
year end as the Company has obtained tax indemnities from employees in relation
to employers' national insurance.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax is provided at amounts expected to be paid or recovered using the
tax rates and laws that have been enacted or substantially enacted by the
balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying values of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
The carrying value of deferred tax assets is reviewed at each balance sheet date
and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax in
the income statement tax is charged or credited, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Convertible loan notes
In accordance with IAS 32 'Financial Instruments: Disclosure and Presentation'
shares to be issued are recognised as a financial liability as they relate to
obligations to settle acquisition related deferred consideration in Tribal
shares. The number of shares to be issued will vary depending upon the share
price at the date of settlement.
Cash and liquid resources
Cash, for the purpose of the cash flow statement, comprises cash in hand,
collateralised cash and deposits repayable on demand, less overdrafts payable on
demand.
Derivative financial instruments
The Group's activities expose it primarily to the financial risks of changes in
interest rates. The Group uses interest rate swap contracts to hedge these
exposures.
The use of financial derivatives is governed by the Group's policies approved by
the board of directors, which provides written principles on the use of
financial derivatives.
Changes in the fair value of derivative financial instruments that are
designated and effective as hedges of future cash flows are recognised directly
in equity and the ineffective portion is recognised immediately in the income
statement. If the cash flow hedge of a firm commitment or forecasted transaction
results in the recognition of an asset or a liability, then, at the time the
asset or liability is recognised, the associated gains or losses on the
derivative that had previously been recognised in equity are included in the
initial measurement of the asset of liability. For hedges that do not result in
the recognition of an asset or a liability, amounts deferred in equity are
recognised in the income statement in the same period in which the hedged item
affects net profit or loss.
For an effective hedge of an exposure to changes in fair values, the hedged item
is adjusted for changes in fair value attributable to the risk being hedged with
the corresponding entry in income or expense. Gains or losses from re-measuring
the derivative are recognised in income or expense.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as they
arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualifies for hedge accounting. At that
time, any cumulative gain or loss on the hedging instrument recognised in equity
is retained in equity until the forecasted transaction occurs. If a hedging
transaction is no longer expected to occur, the net cumulative gain or loss
recognised in equity is transferred to net income or expense for the period.
Derivatives embedded in other financial instruments or other host contracts are
treated as separate derivatives when their risks and characteristics are not
closely related to those of host contracts and the host contracts are not
carried at fair value with unrealised gains or losses reported in the income
statement.
Accounting for PFI contracts
In March 2005, IFRIC issued a draft interpretation on accounting for service
concession arrangements (PFI/PPP). IFRIC is currently considering the comments
received on this draft guidance, with the final guidance expected to be issued
over coming months.
Until the final guidance is issued the potential effect on the Group is
uncertain.
Tribal Group plc
Reconciliation of equity
at 1 April 2004 (date of transition to IFRS)
UK GAAP IAS 19 IAS 12 IAS 10 Derecognise IFRS 2 Restated
in IFRS Employee Deferred Dividends UITF 17 Share under
format benefits tax liability based IFRS
payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Note 1 1 2 3 3
Non-current
assets
Goodwill 200,798 - - - - - 200,798
Other
intangible
assets 557 - - - - - 557
Property,
plant and
equipment 6,267 - - - - - 6,267
Investment
property 89 - - - - - 89
Available for
sale
investments 190 - - - - - 190
Deferred tax
assets 378 257 - - - - 635
---------------------------------------------------------------------------------------------------
208,279 257 - - - - 208,536
===================================================================================================
Current assets
Inventories -
work in
progress 2,058 - - - - - 2,058
Trade and
other
receivables 44,867 - - - - - 44,867
Cash and cash
equivalent 41,740 - - - - - 41,740
---------------------------------------------------------------------------------------------------
88,665 - - - - - 88,665
---------------------------------------------------------------------------------------------------
Total
assets 296,944 257 - - - - 297,201
===================================================================================================
Current
liabilities
Trade and
other (55,062) (593) - 1,400 - (969) (55,224)
payables
Tax
liabilities (4,510) - - - - - (4,510)
Obligations
under
finance
leases (44) - - - - - (44)
Bank
overdrafts
and loans (8,168) - - - - - (8,168)
---------------------------------------------------------------------------------------------------
(67,784) (593) - 1,400 - (969) (67,946)
---------------------------------------------------------------------------------------------------
Net current
assets 20,881 (593) - 1,400 - (969) 20,719
Non-current
liabilities
Bank loans (71,423) - - - - - (71,423)
Pension
liabilities - (262) - - - - (262)
Deferred tax
liabilities - - (178) - - - (178)
Obligations
under finance
leases (2) - - - - - (2)
Other
non-current
liabilities (590) - - - - - (590)
---------------------------------------------------------------------------------------------------
(72,015) (262) (178) - - - (72,455)
---------------------------------------------------------------------------------------------------
Total
liabilities (139,799) (855) (178) 1,400 - (969) (140,401)
===================================================================================================
Net assets 157,145 (598) (178) 1,400 - (969) 156,800
===================================================================================================
Equity
Share 3,448 - - - - - 3,448
capital
Share premium
account 79,548 - - - - - 79,548
Equity 42,989 - - - - - 42,989
reserve
Shares to be
issued 27,172 - - - (2,084) - 25,088
Retained
earnings 2,861 (598) (178) 1,400 2,084 (969) 4,600
---------------------------------------------------------------------------------------------------
Equity
attributable
to equity
holders of
the parent 156,018 (598) (178) 1,400 - (969) 155,673
Minority
interest 1,127 - - - - - 1,127
---------------------------------------------------------------------------------------------------
Total equity 157,145 (598) (178) 1,400 - (969) 156,800
===================================================================================================
Tribal Group plc
Reconciliation of equity
at 31 March 2005
Dereco-
IAS 19 IAS 38 gnise IFRS 2 IAS 40
UK Emp- IAS 12 IAS 38 Reclas- UITF Share Invest- Re-
GAAP loyee Defe- IFRS 3 Intan- sify IAS 10 17 based ment stated
in IFRS Bene- rred Good- gible soft- Divid- lia- pay- proper- under
format fits Tax will assets ware ends bility ments ties IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Note 1 1 2 2 3 4 5 5 6
Non-current
assets
Goodwill 197,188 - - 9,971 (1,912) - - - - - 205,247
Other
intangible
assets 740 - - - 2,410 329 - - - - 3,479
Property,
plant and
equipment 12,867 - - - - (329) - - - - 12,538
Investment
property 180 - - - - - - - - - 180
Available for
sale
investments 151 - - - - - - - - - 151
Deferred tax
assets 644 638 - - - - - - - - 1,282
-------------------------------------------------------------------------------------------------------
211,770 638 - 9,971 498 - - - - - 222,877
=======================================================================================================
Current assets
Inventories 9,102 - - - - - - - - - 9,102
Trade and
other
receivables 56,315 - - - - - - - - - 56,315
Cash and cash
equivalent 28,335 - - - - - - - - - 28,335
-------------------------------------------------------------------------------------------------------
93,752 - - - - - - - - - 93,752
-------------------------------------------------------------------------------------------------------
Total assets 305,522 638 - 9,971 498 - - - - - 316,629
=======================================================================================================
Current
liabilities
Trade and
other payables (66,154) (630) - - - - 1,530 - (597) - (65,851)
Tax
liabilities (5,758) - - - - - - - - - (5,758)
Obligations
under finance
leases (20) - - - - - - - - - (20)
Bank
overdrafts and
loans (3,802) - - - - - - - - - (3,802)
-------------------------------------------------------------------------------------------------------
(75,734) (630) - - - - 1,530 - (597) - (75,431)
-------------------------------------------------------------------------------------------------------
Net current
assets 18,018 (630) - - - - 1,530 - (597) - 18,321
Non-current
liabilities
Bank loans (77,518) - - - - - - - - - (77,518)
Pension
liabilities - (1,370) - - - - - - - - (1,370)
Deferred tax
liabilities - - (308) - (723) - - - - (27) (1,058)
Obligations
under finance
leases (26) - - - - - - - - - (26)
Other
non-current
liabilities (945) 534 - - - - - - - - (411)
-------------------------------------------------------------------------------------------------------
(78,489) (836) (308) - (723) - - - - (27) (80,383)
-------------------------------------------------------------------------------------------------------
Total
liabilities (154,223) (1,466) (308) - (723) - 1,530 - (597) (27) (155,814)
=======================================================================================================
Net assets 151,299 (828) (308) 9,971 (225) - 1,530 - (597) (27) 160,815
=======================================================================================================
Equity
Share capital 3,748 - - - - - - - - - 3,748
Share premium
account 86,928 - - - - - - - - - 86,928
Revaluation
reserve 91 - - - - - - - - (91) -
Equity reserve 46,160 - - - - - - - - - 46,160
Shares to be
issued 17,934 - - - - - - (1,417) - - 16,517
Retained
earnings (5,456) (828) (308) 9,971 (225) - 1,530 1,417 (597) 64 5,568
-------------------------------------------------------------------------------------------------------
Equity
attributable
to equity
holders of the
parent 149,405 (828) (308) 9,971 (225) - 1,530 - (597) (27) 158,921
Minority
interest 1,894 - - - - - - - - - 1,894
--------------------------------------------------------------------------------------------------------
Total equity 151,299 (828) (308) 9,971 (225) - 1,530 - (597) (27) 160,815
========================================================================================================
Tribal Group plc
Reconciliation of the consolidated income statement
for the year ended 31 March 2005
UK GAAP IAS 19 IAS 38 Derecognise IFRS 2 IAS 12 IAS 40 IFRS 3 Restated
in IFRS Employee Intangible UITF 17 Share Deferred Investment Goodwill under
format benefits assets charge based tax properties IFRS
payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Note 1 2 3 3 4 5 2
Turnover 229,470 - - - - - - - 229,470
Direct agency
costs (49,613) - - - - - - - (49,613)
Revenue 179,857 - - - - - - - 179,857
Cost of sales (102,772) - - - - - - - (102,772)
---------------------------------------------------------------------------------------------------------------------
Gross profit 77,085 - - - - - - - 77,085
=====================================================================================================================
Net
administrative
expenses (54,707) (178) - - - - 91 - (54,794)
Intangible
amortisation - - (322) - - - - - (322)
Goodwill
amortisation (11,436) - - - - - - 11,436 -
Goodwill
impairment (5,200) - - - - - - (1,465) (6,665)
Share option
charges 244 - - (244) (134) - - - (134)
Exceptional
Mercury bid
costs (1,747) - - - - - - - (1,747)
---------------------------------------------------------------------------------------------------------------------
Total
administrative
expenses (72,846) (178) (322) (244) (134) - 91 9,971 (63,662)
---------------------------------------------------------------------------------------------------------------------
Operating
profit 4,239 (178) (322) (244) (134) - 91 9,971 13,423
Finance income 914 - - - - - - - 914
Finance
charges (5,365) (15) - - - - - - (5,380)
---------------------------------------------------------------------------------------------------------------------
Net finance
costs (4,451) (15) (4,466)
(Loss)/profit
before tax (212) (193) (322) (244) (134) - 91 9,971 8,957
Tax (5,367) 26 97 - - (130) (27) - (5,401)
---------------------------------------------------------------------------------------------------------------------
(Loss)/profit
for the year (5,579) (167) (225) (244) (134) (130) 64 9,971 3,556
=====================================================================================================================
Attributable
to:
Equity holders
of the parent (5,882) (167) (225) (244) (134) (130) 64 9,971 3,253
Minority
interest 303 - - - - - - - 303
---------------------------------------------------------------------------------------------------------------------
(5,579) (167) (225) (244) (134) (130) 64 9,971 3,556
=====================================================================================================================
Earnings per
share
Basic loss per
share (pence) (8.24)p (0.23)p (0.32)p (0.34)p (0.19)p (0.18)p 0.09p 13.96p 4.55p
Adjusted
diluted
earnings per
share (pence) 15.62p (0.21)p - - - (0.17)p 0.08p - 15.32p
Tribal Group plc
Notes to reconciliation of equity
at 1 April 2004 (date of transition to IFRS)
Notes
1. On first time adoption of IFRS, the Group has taken advantage of the
exemption allowed under IFRS1 not to apply full retrospective application of IAS
19 'Employee benefits'. Accordingly, the Group has elected to recognise all
cumulative actuarial losses at the date of transition to IFRS. Consequently, the
full pension liability of £0.2m is recognised under IFRS but was not recognised
under UK GAAP. In addition a holiday pay accrual of £0.6m is recognised.
The deferred tax asset on this pension liability is also recognised in full. A
deferred tax liability is also created in respect of long leasehold and
investment properties.
2. Proposed dividends are not recognised under IFRS until the period when they
are declared and therefore the provision of £1.4m has been written back.
3. The cumulative liability for share based payments of £1.0m is recognised
under IFRS 2 and replaces the UITF 17 liability of £2.1m, formally included in
shares to be issued under UK GAAP.
Notes to reconciliation of equity
at 31 March 2005
Notes
1. The full pension liability of £1.4m is recognised under IFRS but was not
recognised under UK GAAP. In addition a holiday pay accrual of £0.8m is
recognised.
The deferred tax asset on this pension liability is also recognised in full. A
deferred tax liability is also created in respect of long leasehold and
investment properties and for temporary differences arising on amortisation of
purchased goodwill.
2. Goodwill amortisation under UK GAAP of £10.0m is added back. £2.7m of
separately identified intangible assets have been recognised in accordance with
IFRS 3/IAS 38 (derecognised in goodwill) as has the deferred tax liability of
£0.7m in relation to this. Amortisation of these separately identifiable assets
of £0.3m has been charged to the income statement for the period.
3. Under IAS 38, 'Intangible assets' the remaining value of the Group's
corporate information systems has been reclassified on transition as an
intangible asset. Under UK GAAP it was treated as a tangible fixed asset.
4. Proposed dividends are not recognised under IFRS until the period they are
declared and therefore the provision of £1.5m has been written back.
5. The cumulative liability for share based payments of £0.6m is recognised
under IFRS 2 and replaces the UITF 17 liability of £1.4m, formerly included in
shares to issued, under UK GAAP.
6. The revaluation of the investment property under IAS 40 is recognised through
the income statement rather than directly to reserves under UK GAAP.
Tribal Group plc
Notes to income statement reconciliation
at 31 March 2005
Notes
1. The change from accounting for the defined benefit pension schemes under UK
GAAP to IFRS has resulted in an increased charge of £29,000 and a charge for
holiday pay of £164,000 was made.
2. Provision is made for amortisation of £0.3m on separately identifiable
intangible assets.
3. UITF 17 credit of £0.2m is derecognised and replaced by IFRS 2 share based
payment charge. Provision for share based payments of £0.1m is recognised under
IFRS 2.
4. The deferred tax charge arises from the temporary difference resulting from
the differing tax treatment for purchased goodwill.
5. IAS 40 recognises the revaluation of investment properties through the income
statement, rather than directly to reserves under UK GAAP.
6. Goodwill amortisation under UK GAAP of £11.4m is added back, with an
additional impairment of £1.5m being charged for the amortisation previously
recorded.
Earnings per share
Year ended 31 March 2005
Basic weighted average number of shares in issue (thousands) 71,421
Diluted weighted average number of shares in issue (thousands) 78,475
Adjusted Earnings restated under IFRS:
£'000
Basic earnings 3,253
IFRS 3 intangible amortisation (net of tax) 225
Goodwill impairment 6,665
Share option charges 134
Exceptional Mercury bid costs 1,747
Adjusted earnings 12,024
UK IAS 19 IAS 38 Derecognise IFRS 2 IAS 12 IAS 40 IFRS 3 Restated
GAAP Employee Intangible UITF 17 Share Deferred Investment Goodwill under
benefits assets charge based tax properties IFRS
payments
Basic
loss
(£'000) (5,882) (167) (225) (244) (134) (130) 64 9,971 3,253
Basic
loss per
share
(pence) (8.24)p (0.23)p (0.32)p (0.34)p (0.19)p (0.18)p 0.09p 13.96p 4.55p
Adjusted
earnings
(£'000) 12,257 (167) - - - (130) 64 - 12,024
Adjusted
diluted
earnings
per
share
(pence) 15.62p (0.21)p - - - (0.17)p 0.08p - 15.32p
Tribal Group plc
IAS 32/39 Financial Instruments - impact on net assets at 1 April 2005
As permitted by IFRS 1 'First time adoption of IFRS', the Group has adopted IAS
32 and IAS 39 prospectively from 1 April 2005. Net assets will be adversely
affected by the introduction of IAS 32/39. Included within liabilities are
derivative financial instruments totalling £0.2m which represents the total cost
of buying out all the Group's interest rate swaps at market prices prevailing on
1 April 2005.
IAS 32 requires shares to be issued to be included within liabilities whereas
under UK GAAP they were included within equity. Shares to be issued represent
the expected value of future share issues in respect of earn out payments and as
such are not categorised as equity under IFRS.
£'000
Restated net assets at 31 March 2005 160,815
Adoption of IAS 32 and IAS 39: -
Recognition of liabilities under derivative financial instruments (248)
Reclassification of shares to be issued (16,517)
--------
Restated net assets at 1 April 2005 144,050
--------
Group Statement of recognised income and expense
Year ended
31 March 2005
£'000
Attributable profit for the year reported under IFRS 3,253
Actuarial gain on defined benefit plans 105
3,358
Tribal Group plc
Group reconciliation of equity
Share Share Shares to Capital Equity Retained Minority Total
capital premium be issued reserve reserve Earnings interest
account
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1
April 2004
under UK GAAP 3,448 79,548 27,172 9,545 33,444 2,861 1,127 157,145
Equity
dividends
unapproved - - - - - 1,400 - 1,400
Employee
benefits
recognised
(net of tax) - - - - - (598) - (598)
Derecognise
UITF 17
liability - - (2,084) - - 2,084 - -
Recognition
of
IFRS 2 - - - - - (969) - (969)
liability
Deferred tax
(IAS 12) - - - - - (178) - (178)
---------------------------------------------------------------------------------------------
Net changes
relating to
first time
adoption - - (2,084) - - 1,739 - (345)
---------------------------------------------------------------------------------------------
1 April 2004
- as restated 3,448 79,548 25,088 9,545 33,444 4,600 1,127 156,800
Shares
issued 300 7,380 - - 3,171 - - 10,851
Movement in
shares to be
issued - - (8,571) - - - - (8,571)
Share options
cancelled and
exercised - - - - - 506 - 506
Derecognition
of UITF 17
charges - - - - - (578) - (578)
Recognition
of
employee
benefits
acquired - - - - - (168) - (168)
Actuarial
gains on
defined
benefit plans - - - - - 105 - 105
New minority
interests - - - - - - 720 720
Purchase of
minorities - - - - - - (176) (176)
Minority
dividends
paid - - - - - - (80) (80)
----------------------------------------------------------------------------------------------
3,748 86,928 16,517 9,545 36,615 4,465 1,591 159,409
Attributable
profit for
the year - - - - - 3,253 303 3,556
Equity
dividend paid - - - - - (2,150) - (2,150)
----------------------------------------------------------------------------------------------
31 March 2005 3,748 86,928 16,517 9,545 36,615 5,568 1,894 160,815
==============================================================================================
INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF TRIBAL GROUP plc ON
THE IFRS RECONCILIATIONS
We have audited the reconciliations of the consolidated balance sheet at 1 April
2004 and 31 March 2005, the consolidated income statement and the reconciliation
of equity for the year ended 31 March 2005 between UK GAAP and International
Financial Reporting Standards ('IFRS'), (together 'the IFRS Reconciliations').
This report is made solely to the Board of Directors, in accordance with our
engagement letter dated 15 September 2005 and solely for the purpose of
assisting with the transition to IFRS. Our audit work has been undertaken so
that we might state to the company's board of directors 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 will not accept or assume responsibility
to anyone other than the company for our audit work, for our report, or for the
opinions we have formed.
Respective responsibilities of directors and auditors
The company's directors are responsible for ensuring that the Company and the
Group maintains proper accounting records and for the preparation of the IFRS
Reconciliations on the basis set out in the financial information, which
describes how IFRS will be applied under IFRS 1, including the assumptions the
directors have made about the standards and interpretations expected to be
effective, and the policies expected to be adopted, when the company prepares
its first complete set of IFRS financial statements as at 31 March 2006. Our
responsibility is to audit the IFRS Reconciliations in accordance with relevant
United Kingdom legal and regulatory requirements and auditing standards and
report to you our opinion as to whether the IFRS Reconciliations are prepared,
in all material respects, on the basis set out in the financial information.
We read the other information presented with the IFRS Reconciliations and
consider the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the IFRS Reconciliations.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing standards
issued by the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the IFRS
Reconciliations. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the IFRS Reconciliations
and of whether the accounting policies are appropriate to the circumstances of
the group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the IFRS Reconciliations
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the IFRS Reconciliations.
Without qualifying our opinion, we draw attention to the fact that the IFRS
statement explains why there is a possibility that the accompanying IFRS
Reconciliations may require adjustment before constituting the final IFRS
Reconciliations. Moreover, we draw attention to the fact that, under IFRSs, only
a complete set of financial statements comprising a balance sheet, income
statement, statement of changes in equity, cash flow statement, together 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.
Opinion
In our opinion the IFRS Reconciliations are prepared, in all material respects,
on the basis set out in the financial information which describes how IFRS will
be applied under IFRS 1, including the assumptions the directors have made about
the standards and interpretations expected to be effective, and the policies
expected to be adopted, when the company prepares its first complete set of IFRS
financial statements as at 31 March 2006.
Deloitte & Touche LLP
Chartered Accountants
& Registered Auditors
Bristol, UK
27 October 2005
Tribal Group plc
Unaudited reconciliation of equity
at 30 September 2004
Dereco-
IAS 19 IAS 38 gnise IFRS 2
UK Emp- IAS 12 IAS 38 Reclas- UITF Share Re-
GAAP loyee Defe- IFRS 3 Intan- sify IAS 10 17 based stated
in IFRS Bene- rred Good- gible soft- Divid- lia- pay- under
format fits Tax will assets ware ends bility ments IFRS
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Note 1 1 2 2 3 4 5 5
Non-current
assets
Goodwill 192,771 - - 4,896 (74) - - - - 197,593
Other
intangible
assets 623 - - - 95 351 - - - 1,069
Property,
plant and
equipment 7,740 - - - - (351) - - - 7,389
Investment
property 89 - - - - - - - - 89
Available for
sale
investments 190 - - - - - - - - 190
Deferred tax
assets 378 286 - - - - - - - 664
--------------------------------------------------------------------------------------------
201,791 286 - 4,896 21 - - - - 206,994
============================================================================================
Current
assets
Inventories -
work in
progress 4,616 - - - - - - - - 4,616
Trade and
other
receivables 40,645 - - - - - - - - 40,645
Cash and cash
equivalent 27,493 - - - - - - - - 27,493
--------------------------------------------------------------------------------------------
72,754 - - - - - - - - 72,754
--------------------------------------------------------------------------------------------
Total assets 274,545 286 - 4,896 21 - - - - 279,748
============================================================================================
Current
liabilities
Trade and
other payables (45,778) (675) - - - - 750 - (1,710) (47,413)
Tax
liabilities (3,614) - - - - - - - - (3,614)
Obligations
under finance
leases (48) - - - - - - - - (48)
Bank
overdrafts and
loans (3,936) - - - - - - - - (3,936)
----------------------------------------------------------------------------------------------
(53,376) (675) - - - - 750 - (1,710) (55,011)
----------------------------------------------------------------------------------------------
Net current
assets 19,378 (675) - - - - 750 - (1,710) 17,743
Non-current
liabilities
Bank loans (71,423) - - - - - - - - (71,423)
Pension
liabilities - (277) - - - - - - - (277)
Deferred tax
liabilities - - (178) (29) - - - - (207)
Obligations
under finance
leases (38) - - - - - - - - (38)
Other
non-current
liabilities (400) - - - - - - - - (400)
----------------------------------------------------------------------------------------------
(71,861) (277) (178) - (29) - - - - (72,345)
----------------------------------------------------------------------------------------------
Total
liabilities (125,237) (952) (178) - (29) - 750 - (1,710) (127,356)
==============================================================================================
Net assets 149,308 (666) (178) 4,896 (8) - 750 - (1,710) 152,392
==============================================================================================
Equity
Share 3,468 - - - - - - - - 3,468
capital
Share premium
account 79,636 - - - - - - - - 79,636
Equity reserve 43,646 - - - - - - - - 43,646
Shares to be
issued 25,605 - - - - - - (2,584) - 23,021
Retained
earnings (4,396) (666) (178) 4,896 (8) - 750 2,584 (1,710) 1,272
----------------------------------------------------------------------------------------------
Equity
attributable
to equity
holders of the
parent 147,959 (666) (178) 4,896 (8) - 750 - (1,710) 151,043
Minority
interest 1,349 - - - - - - - - 1,349
----------------------------------------------------------------------------------------------
Total equity 149,308 (666) (178) 4,896 (8) - 750 - (1,710) 152,392
==============================================================================================
Tribal Group plc
Unaudited reconciliation of the consolidated income statement
for the six months ended 30 September 2004
UK GAAP IAS 19 IAS 38 Derecognise IFRS 2 IFRS 3 Restated
in IFRS Employee Intangible UITF 17 Share Goodwill under
format benefits assets charge based IFRS
payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Note 1 2 3 4 5
Turnover 107,718 - - - - - 107,718
Direct agency
costs (25,902) - - - - - (25,902)
------------------------------------------------------------------------------------------------------------
Revenue 81,816 - - - - - 81,816
Cost of sales (45,625) - - - - - (45,625)
-----------------------------------------------------------------------------------------------------------
Gross profit 36,191 - - - - - 36,191
===========================================================================================================
-----------------------------------------------------------------------------------------------------------
Net
administrative
expenses (27,266) (89) - - - - (27,355)
Intangible
amortisation - - (11) - - - (11)
Goodwill
amortisation (5,629) - - - - 5,629 -
Goodwill
impairment (3,200) - - - - (733) (3,933)
Share option
charges (500) - - 500 (905) - (905)
Exceptional
Mercury bid
costs (1,991) - - - - - (1,991)
-----------------------------------------------------------------------------------------------------------
Total
administrative
expenses (38,586) (89) (11) 500 (905) 4,896 (34,195)
-----------------------------------------------------------------------------------------------------------
Operating
profit (2,395) (89) (11) 500 (905) 4,896 1,996
Finance income 486 - - - - - 486
Finance
charges (2,536) (8) - - - - (2,544)
-----------------------------------------------------------------------------------------------------------
Net finance
costs (2,050) (8) - - - - (2,058)
Profit before
tax (4,445) (97) (11) 500 (905) 4,896 (62)
Tax (2,062) 29 3 - - - (2,030)
(Loss)/Profit
for the year (6,507) (68) (8) 500 (905) 4,896 (2,092)
===========================================================================================================
Attributable to:
Equity holders
of the parent (6,507) (68) (8) 500 (905) 4,896 (2,092)
(6,507) (68) (8) 500 (905) 4,896 (2,092)
===========================================================================================================
Earnings per share
Basic loss per
share (pence) (9.39)p (0.10)p (0.01)p 0.72p (1.31)p 7.07p (3.02)p
Adjusted
diluted
earnings per
share (pence) 6.49p (0.09)p - - - - 6.40p
Tribal Group plc
Notes to unaudited reconciliation of equity
at 30 September 2004
Notes
1. As noted in the reconciliation of equity at 1 April 2004, the full pension
liability is recognised under IFRS but was not recognised under UK GAAP. In
addition a holiday pay accrual of £0.7m is recognised.
The deferred tax asset on this pension liability is also recognised in full. A
deferred tax liability is also created in respect of long leasehold and
investment properties.
2. Goodwill amortisation under UK GAAP of £4.9m is added back. £0.1m of
separately identified intangible assets have been recognised in accordance with
IFRS 3/IAS 38 (derecognised in goodwill) as has the deferred tax asset in
relation to this. Amortisation of these separately identifiable assets of
£11,000 has been charged to the income statement for the period.
3. Under IAS 38, 'Intangible assets' the remaining net book value of the Group's
corporate information systems has been reclassified on transition as an
intangible asset. Under UK GAAP it was treated as a tangible fixed asset.
4. Proposed dividends are not recognised under IFRS until the period when they
are declared and therefore the provision of £0.8m has been written back.
5. The cumulative liability for share based payments of £1.7m is recognised
under IFRS 2 and replaces the UITF 17 liability of £2.6m, formerly included in
shares to issued, under UK GAAP.
Notes to unaudited income statement reconciliation
at 30 September 2004
Notes
1. The change from accounting for the defined benefit pension schemes under UK
GAAP to IFRS has resulted in an increased charge of £15,000 and a charge for
holiday pay of £82,000 is made.
2. Provision is made for amortisation of £11,000 on separately identifiable
intangible assets.
3. UITF 17 charge of £0.5m is derecognised and replaced by IFRS 2 'Share-based
payments' charge.
4. Provision for share based payments of £0.9m is recognised under IFRS 2.
5. Goodwill amortisation under UK GAAP of £5.6m is added back, with an
additional impairment of £0.7m being charged for the amortisation previously
recorded.
Tribal Group plc
Unaudited earnings per share
Six months ended 30 September 2004
Basic weighted average number of shares in issue (thousands) 69,293
Diluted weighted average number of shares in issue (thousands) 74,169
Adjusted Earnings restated under IFRS:
£'000
Basic loss (2,092)
IFRS 3 intangible amortisation (net of tax) 8
Goodwill impairment 3,933
Share option charges 905
Exceptional Mercury bid costs 1,991
Adjusted earnings 4,745
UK IAS 19 IAS 38 Derecognise IFRS 2 Restated
GAAP Employee Intangible UITF 17 Share based IFRS 3 under
benefits Assets charge payments Goodwill IFRS
Basic
loss
(£'000) (6,507) (68) (8) 500 (905) 4,896 (2,092)
Basic
loss per
share
(pence) (9.39)p (0.10)p (0.01)p 0.72p (1.31)p 7.07p (3.02)p
Adjusted
earnings
(£'000) 4,813 (68) - - - - 4,745
Adjusted
diluted
earnings
per share
(pence) 6.49p (0.09)p - - - - 6.40p
This information is provided by RNS
The company news service from the London Stock Exchange
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