Restatement under IFRS
London Stock Exchange Plc
21 July 2005
21 July 2005
LONDON STOCK EXCHANGE PLC
FINANCIAL STATEMENTS IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING
STANDARDS
YEAR ENDED 31 MARCH 2005
Up until 31 March 2005, London Stock Exchange plc ("the Group") prepared its
financial statements under UK Generally Accepted Accounting Principles (UK
GAAP). From 1 April 2005, the Group consolidated financial statements are
prepared in accordance with International Financial Reporting Standards ("IFRS")
as adopted by the European Union ("EU").
The Group released details of the impact of IFRS on its 2004/05 financial
statements in the Preliminary Results announcement on 19 May 2005. The attached
information provides supplementary information and explains how 2004/05
financial information previously reported under UK GAAP will be restated under
IFRS. The information includes:
• The main accounting policies adopted under IFRS;
• Financial information for the year ended 31 March 2005;
• Financial information for the six months ended 30 September 2004; and
• Explanatory notes on the IFRS adjustments required to the UK GAAP numbers.
The IFRS financial information provided has been prepared on the basis of
current IFRS standards and interpretations issued by the International
Accounting Standards Board ("IASB"). These are subject to ongoing amendment by
the IASB and subsequent endorsement by the EU and are therefore subject to
change. As a result the amounts reported in the 2005/06 financial statements
may vary from those included above.
Further information is available from:
London Stock Exchange Maria Clohessy - Finance 020 7797 3322
Paul Froud - Investor Relations 020 7797 3322
Catherine Mattison - Media 020 7797 1222
Basis of preparation
The financial information has been prepared in accordance with all IFRS that had
been published by 31 March 2005. The standards used are those endorsed by the
EU together with those standards and interpretations that have been issued by
the IASB but had not been endorsed by the EU by 31 March 2005.
These standards and interpretations are subject to ongoing amendment by the IASB
and subsequent endorsement by the EU and are therefore subject to change. The
Group's IFRS financial statements for the six months ending 30 September 2005
and the year ending 31 March 2006 may, therefore, be prepared in accordance with
some different accounting policies from the financial information presented
here.
The IFRS financial information for the six months ended 30 September 2004 and
year ended 31 March 2005 will be presented as the comparative figures for the
first IFRS Interim Report and Annual Report respectively and has been prepared
in accordance with the transitional arrangements of IFRS 1.
IFRS 1 transitional arrangements
IFRS 1 First Time Adoption of International Financial Reporting Standards
permits companies to make certain exemptions from the full requirements of IFRS.
The following exemptions have been applied to the financial information:
a) Business combinations - the Group has chosen not to restate business
combinations prior to the transition date, 1 April 2004;
b) Fair value or revaluation at deemed cost - the Group has chosen to restate
freehold properties, other than the Stock Exchange Tower which has since
been sold, to fair value as deemed cost at the transition date;
c) Employee benefits - the Group has chosen to recognise all cumulative
pension scheme actuarial gains and losses in equity at the transition date;
and
d) Share-based payments - the Group has chosen to apply IFRS 2 Share-based
payments to awards granted after 7 November 2002.
Main accounting policies
The following are the more important accounting policies in the context of the
Group's operations.
Basis of accounting and consolidation
The financial statements are prepared in accordance with applicable
International Financial Reporting Standards under the historical cost convention
modified for the revaluation of property and the revaluation of financial assets
and financial liabilities (including derivative financial instruments) at fair
value. The consolidated financial statements include the accounts of all
subsidiaries using the purchase method.
Revenue
Revenue represents the total amount receivable for the provision of goods and
services, excluding value added tax. Revenue is recognised in the period when
the service or supply is provided:
a) annual fees are recognised over the 12 month period to which the fee
relates;
b) admission fees are recognised at the time of admission to trading;
c) data, transaction and Exchange charges are recognised in the month in which
the data is provided or the transaction is effected.
Foreign currencies
The consolidated financial statements are presented in sterling, which is the
Group's presentational currency. Transactions in foreign currencies and
currency balances at the year end are converted at the rate ruling at the
transaction date or year end date respectively.
Intangible assets
a) Goodwill arising on the acquisition of subsidiaries represents the excess
of consideration paid over the fair value of net assets acquired. Goodwill
is tested annually for impairment and carried at cost less accumulated
impairment losses.
b) Third party software costs for the development and implementation of
systems which enhance the services provided by the Group are capitalised
and amortised over their estimated useful lives, which is an average of
three years.
Property, plant and equipment
a) Freehold properties, including related fixed plant, are included in the
financial statements at deemed cost less accumulated depreciation and any
provision for impairment. Freehold buildings and related fixed plant are
depreciated to residual value, based on deemed cost at the beginning of the
year plus subsequent additions, over their estimated economic lives. The
economic lives of properties are for approximately 50 years, the estimated
useful lives of fixed plant range from five to 20 years;
b) Leasehold properties and improvements are included at cost and depreciated
to residual value over the shorter of the period of the lease or the
economic life of the asset;
c) Plant and equipment is stated at cost and is depreciated to residual value
on a straight line basis over the estimated useful lives of the assets,
which are mainly in the range from three to five years;
d) The Group selects its depreciation rates based on expected economic lives,
taking into account the expected rate of technological developments, market
requirements and expected use of the assets. The selected rates are
regularly reviewed to ensure they remain appropriate to the Group's
circumstances. Residual values and economic lives are reviewed at each
balance sheet date.
Joint ventures
Investments in joint ventures are accounted for under the equity method and are
initially recognised at cost. The Group's share of profits or losses from joint
ventures is included in the consolidated income statement. Cumulative
post-acquisition movements are adjusted against the carrying amount of the
investment in the Group's balance sheet.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the Company's financial
statements.
Financial instruments
a) Investments (other than fixed deposits and interests in joint ventures and
subsidiaries) are designated as available for sale and are recorded on
trade date at fair value with changes in fair value recognised in equity.
Where the fair value is not reliably measurable, the investment is held at
cost.
b) Foreign currency derivatives are recorded at fair value. The method of
recording gains or losses depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item hedged. The
Group designates foreign currency derivatives as cash flow hedges with the
movement in fair value recognised in equity. Amounts recognised in equity
are transferred to the income statement when the hedged item is recognised
in the income statement.
c) The Company's own shares held by the ESOP trust are deducted from equity
until they vest unconditionally in employees.
d) Consideration paid in respect of Treasury shares is deducted from equity
until the shares are cancelled, reissued or disposed of.
Provisions
A provision is recognised where there is a present obligation, whether legal or
constructive, as a result of a past event for which it is probable that a
transfer of economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Operating leases
Rental costs for operating leases are charged to the income statement when
incurred. Lease incentives are spread over the term of the lease. Provision is
made in the accounts for lease commitments, less income from sub-letting, for
property space which is surplus to business requirements.
Pension costs
The Group operates defined benefit and defined contribution pension schemes.
The operating and financing costs are recognised separately in the income
statement with service costs charged systematically over service lives of
employees and financing costs recognised as they arise. For the defined benefit
scheme actuarial gains and losses are recognised at each period end in the
statement of recognised income and expense. The net asset or liability
recognised on the balance sheet for the defined benefit scheme comprises the
present value of future pension obligations and the far value of scheme assets.
For defined contribution schemes, the expense is charged to the income
statement as incurred.
Deferred taxation
Full provision is made, using the liability method, for temporary differences
arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred taxation is determined using tax
rates expected to apply when the asset is realised or liability settled.
Deferred tax assets are recognised to the extent that they are recoverable
against future taxable profits.
Share based compensation
The Group operates a number of equity settled share based compensation plans for
employees. The charge to the income statement is determined by the fair value
of the options granted or shares awarded at the date of grant and recognised
over the vesting period.
IFRS FINANCIAL INFORMATION - YEAR ENDED 31 MARCH 2005
Consolidated income statement
Year ended 31 March 2005
Adjustments
UK GAAP (see attached) IFRS
______________ __________________ ___________
£m £m £m
Revenue 244.4 - 244.4
Expenses (164.4) 4.6 (159.8)
______________ __________________ ___________
Operating profit (before exceptional items) 80.0 4.6 84.6
Exceptional items 0.4 (0.5) (0.1)
______________ __________________ ___________
Operating profit 80.4 4.1 84.5
Finance income
______________ __________________ ___________
Finance income 9.0 10.2 19.2
Finance costs (2.0) (10.7) (12.7)
______________ __________________ ___________
Net finance income 7.0 (0.5) 6.5
Share of profit of joint venture 1.7 (0.6) 1.1
Investment income - 0.1 0.1
______________ __________________ ___________
Profit before taxation 89.1 3.1 92.2
Taxation (27.6) (0.1) (27.7)
______________ __________________ ___________
Profit after taxation 61.5 3.0 64.5
Minority interests 0.7 (0.2) 0.5
______________ __________________ ___________
Profit for the financial year attributable to equity holders 62.2 2.8 65.0
______________ __________________ ___________
Basic earnings per share 23.1p 24.2p
Diluted earnings per share 22.9p 23.9p
Dividend per share (in respect of financial year, excluding
special dividend) 7.0p 7.0p
Consolidated income statement
Year ended 31 March 2005
UK GAAP IFRS Adjustments IFRS
____________________________________________________________________________
Share
As Employee Freehold based Investment Joint Total As
reported benefits properties Leases Goodwill payments income venture Adj. restated
(a) (b) (c) (d) (e) (f) (g)
_________ ____________________________________________________________________ ______ __________
£m £m £m £m £m £m £m £m £m £m
Revenue 244.4 - - - - - - - - 244.4
Expenses (164.4) 2.7 2.2 (1.3) 2.0 (1.0) - - 4.6 (159.8)
_________ ____________________________________________________________________ ______ __________
Operating profit
(before exceptional
items) 80.0 2.7 2.2 (1.3) 2.0 (1.0) - - 4.6 84.6
Exceptional items 0.4 - (0.5) - - - - - (0.5) (0.1)
_________ ____________________________________________________________________ ______ __________
Operating profit 80.4 2.7 1.7 (1.3) 2.0 (1.0) - - 4.1 84.5
Finance income
_________ ____________________________________________________________________ ______ __________
Finance income 9.0 10.2 - - - - - - 10.2 19.2
Finance costs (2.0) (10.7) - - - - - - (10.7) (12.7)
_________ ____________________________________________________________________ ______ __________
Net finance income 7.0 (0.5) - - - - - - (0.5) 6.5
Share of profit of
joint venture 1.7 - - - - - (0.1) (0.5) (0.6) 1.1
Investment income - - - - - - 0.1 - 0.1 0.1
_________ ____________________________________________________________________ ______ __________
Profit before taxation 89.1 2.2 1.7 (1.3) 2.0 (1.0) - (0.5) 3.1 92.2
Taxation (27.6) (0.7) (0.3) 0.4 (0.3) 0.3 - 0.5 (0.1) (27.7)
_________ ____________________________________________________________________ ______ __________
Profit after taxation 61.5 1.5 1.4 (0.9) 1.7 (0.7) - - 3.0 64.5
Minority interests 0.7 - - - (0.2) - - - (0.2) 0.5
_________ ____________________________________________________________________ ______ __________
Profit for the
financial year 62.2 1.5 1.4 (0.9) 1.5 (0.7) - - 2.8 65.0
attributable to
equity holders
_________ ____________________________________________________________________ ______ __________
Consolidated balance sheet
31 March 2005
Adjustments
UK GAAP (see attached) IFRS
___________ _______________ __________
£m £m £m
ASSETS
Non-current assets
Property, plant and equipment 114.9 (43.2) 71.7
Intangible assets 27.5 37.5 65.0
Available for sale investments 0.4 - 0.4
Investment in joint venture 1.6 0.6 2.2
Deferred tax asset 1.4 13.4 14.8
___________ _______________ __________
145.8 8.3 154.1
___________ _______________ __________
Current assets
Trade and other receivables 97.0 (15.1) 81.9
Cash and cash equivalents 124.4 - 124.4
___________ _______________ __________
221.4 (15.1) 206.3
___________ _______________ __________
Total assets 367.2 (6.8) 360.4
___________ _______________ __________
LIABILITIES
Current liabilities
Trade and other payables 59.3 (10.2) 49.1
Current tax 13.0 - 13.0
Borrowings 2.8 - 2.8
Provisions for other liabilities and charges - 11.9 11.9
___________ _______________ __________
75.1 1.7 76.8
___________ _______________ __________
Non-current liabilities
Borrowings 0.5 - 0.5
Retirement benefit obligations - 18.7 18.7
Provisions for other liabilities and charges 40.0 (11.9) 28.1
___________ _______________ __________
40.5 6.8 47.3
___________ _______________ __________
Total liabilities 115.6 8.5 124.1
___________ _______________ __________
NET ASSETS 251.6 (15.3) 236.3
___________ _______________ __________
EQUITY
Equity attributable to the Company's equity holders
Share capital 14.9 - 14.9
Retained earnings 233.6 (13.3) 220.3
Revaluation reserve 2.2 (2.2) -
___________ _______________ __________
250.7 (15.5) 235.2
Minority interest 0.9 0.2 1.1
___________ _______________ __________
Total equity 251.6 (15.3) 236.3
___________ _______________ __________
Consolidated balance sheet
31 March 2005
UK GAAP IFRS adjustments IFRS
_______________________________________________________________________________________
Empl- Free- Share
oyee hold based Joint
As bene- proper- Good- pay- ven- Divi- Soft- Provi- Total As
reported fits ties Leases will ments ture dend ware sions Debtors Adj. restated
(a) (b) (c) (d) (e) (g) (h) (i) (j) (k)
___________ _______________________________________________________________________________ ______ _________
£m £m £m £m £m £m £m £m £m £m £m £m £m
ASSETS
Non-current
assets
Property, plant
and equipment 114.9 - (7.7) - - - - - (35.5) - - (43.2) 71.7
Intangible
assets 27.5 - - - 2.0 - - - 35.5 - - 37.5 65.0
Available for
sale investments 0.4 - - - - - - - - - - - 0.4
Investment in
joint venture 1.6 - - - - - 0.6 - - - - 0.6 2.2
Deferred tax
asset 1.4 10.0 2.5 0.7 (0.3) 0.5 - - - - - 13.4 14.8
___________ _______________________________________________________________________________ ______ _________
145.8 10.0 (5.2) 0.7 1.7 0.5 0.6 - - - - 8.3 154.1
Current assets
Trade and other
receivables 97.0 (14.5) - - - - (0.6) - - - - (15.1) 81.9
Cash and cash
equivalents 124.4 - - - - - - - - - - - 124.4
___________ _______________________________________________________________________________ ______ _________
221.4 (14.5) - - - - (0.6) - - - - (15.1) 206.3
Total assets 367.2 (4.5) (5.2) 0.7 1.7 0.5 - - - - - (6.8) 360.4
___________ _______________________________________________________________________________ ______ _________
LIABILITIES
Current
liabilities
Trade and
other
payables 59.3 - - 2.4 - - - (12.6) - - - (10.2) 49.1
Current tax 13.0 - - - - - - - - - - - 13.0
Borrowings 2.8 - - - - - - - - - - - 2.8
Provisions for
other
liabilities
and charges - - - - - - - - - 11.9 - 11.9 11.9
___________ _______________________________________________________________________________ ______ _________
75.1 - - 2.4 - - - (12.6) - 11.9 - 1.7 76.8
Non-current
liabilities
Borrowings 0.5 - - - - - - - - - - - 0.5
Retirement
benefit
obligations - 18.7 - - - - - - - - - 18.7 18.7
Provisions for
other
liabilities
and charges 40.0 - - - - - - - - (11.9) - (11.9) 28.1
___________ _______________________________________________________________________________ ______ _________
40.5 18.7 - - - - - - - (11.9) - 6.8 47.3
Total
liabilities 115.6 18.7 - 2.4 - - - (12.6) - - - 8.5 124.1
NET ASSETS 251.6 (23.2) (5.2) (1.7) 1.7 0.5 - 12.6 - - - (15.3) 236.3
___________ _______________________________________________________________________________ ______ _________
EQUITY
Equity
attributable
to the
Company's
equity holders
Share
capital 14.9 - - - - - - - - - - - 14.9
Retained
earnings 233.6 (23.2) (3.0) (1.7) 1.5 0.5 - 12.6 - - - (13.3) 220.3
Revaluation
reserve 2.2 - (2.2) - - - - - - - - (2.2) -
___________ _______________________________________________________________________________ ______ _________
250.7 (23.2) (5.2) (1.7) 1.5 0.5 - 12.6 - - - (15.5) 235.2
Minority
interest 0.9 - - - 0.2 - - - - - - 0.2 1.1
___________ _______________________________________________________________________________ ______ _________
Total
equity 251.6 (23.2) (5.2) (1.7) 1.7 0.5 - 12.6 - - - (15.3) 236.3
___________ _______________________________________________________________________________ ______ _________
Consolidated cash flow statement
Year ended 31 March 2005
UK GAAP Adjustments IFRS
______________ __________________ ___________
£m £m £m
Cash flow from operating activities
Cash generated from operations 95.4 - 95.4
Interest received 8.1 - 8.1
Interest paid (0.2) - (0.2)
Corporation tax paid (24.3) - (24.3)
______________ __________________ ___________
Net cash inflow from operating activities 79.0 - 79.0
Cash flow from investing activities
Purchase of property, plant and equipment (40.8) 18.5 (22.3)
Purchase of intangible assets - (18.5) (18.5)
Receipts from disposal of Stock Exchange Tower 32.3 - 32.3
Dividends received from joint venture 1.3 - 1.3
Dividends received from financial assets 0.1 - 0.1
______________ __________________ ___________
Net cash outflow from investing activities (7.1) - (7.1)
Cash flow from financing activities
Dividends paid (177.6) - (177.6)
Issue of ordinary share capital to minority interest 0.2 - 0.2
Loans received from minority shareholder 0.3 - 0.3
Redemption of loan notes (1.5) - (1.5)
Purchase of own shares by ESOP trust (2.5) - (2.5)
Proceeds from own shares on exercise of employee share options 5.7 - 5.7
Decrease/(increase) in term deposits 103.5 (103.5) -
______________ __________________ ___________
Net cash outflow from financing activities (71.9) (103.5) (175.4)
______________ __________________ ___________
Decrease in cash and cash equivalents - (103.5) (103.5)
Cash and cash equivalents at beginning of year 4.9 223.0 227.9
______________ __________________ ___________
Cash and cash equivalents at end of year 4.9 119.5 124.4
______________ __________________ ___________
IFRS FINANCIAL INFORMATION - SIX MONTHS ENDED 30 SEPTEMBER 2004
Consolidated income statement
Six months ended 30 September 2004
Adjustments
UK GAAP (see attached) IFRS
______________ __________________ ___________
£m £m £m
Revenue 118.3 - 118.3
Expenses (80.1) 2.7 (77.4)
______________ __________________ ___________
Operating profit (before exceptional items) 38.2 2.7 40.9
Exceptional items 5.0 (0.5) 4.5
______________ __________________ ___________
Operating profit 43.2 2.2 45.4
______________ __________________ ___________
Finance income
Finance income 5.1 5.1 10.2
Finance costs (1.0) (5.4) (6.4)
______________ __________________ ___________
Net finance income 4.1 (0.3) 3.8
Share of profit of joint venture 0.9 (0.3) 0.6
Investment income - 0.1 0.1
______________ __________________ ___________
Profit before taxation 48.2 1.7 49.9
Taxation (13.7) (0.1) (13.8)
______________ __________________ ___________
Profit after taxation 34.5 1.6 36.1
Minority interests 0.3 (0.1) 0.2
______________ __________________ ___________
Profit for the financial period attributable to equity holders 34.8 1.5 36.3
______________ __________________ ___________
Basic earnings per share 12.2p 12.8p
Diluted earnings per share 12.1p 12.7p
Dividend per share (in respect of financial period, excluding
special dividend) 2.0P 2.0P
Consolidated income statement
Six months ended 30 September 2004
UK GAAP IFRS Adjustments IFRS
____________________________________________________________________________
Share
As Employee Freehold based Investment Joint Total As
reported benefits properties Leases Goodwill payments income venture Adj. restated
(a) (b) (c) (d) (e) (f) (g)
_________ ____________________________________________________________________ ______ __________
£m £m £m £m £m £m £m £m £m £m
Revenue 118.3 - - - - - - - - 118.3
Expenses (80.1) 1.6 1.2 (0.7) 0.9 (0.3) - - 2.7 (77.4)
_________ ____________________________________________________________________ ______ __________
Operating profit
(before exceptional
items) 38.2 1.6 1.2 (0.7) 0.9 (0.3) - - 2.7 40.9
Exceptional items 5.0 - (0.5) - - - - - (0.5) 4.5
_________ ____________________________________________________________________ ______ __________
Operating profit 43.2 1.6 0.7 (0.7) 0.9 (0.3) - - 2.2 45.4
Finance income
_________ ____________________________________________________________________ ______ __________
Finance income 5.1 5.1 - - - - - - 5.1 10.2
Finance costs (1.0) (5.4) - - - - - - (5.4) (6.4)
_________ ____________________________________________________________________ ______ __________
Net finance income 4.1 (0.3) - - - - - - (0.3) 3.8
Share of profit of
joint venture 0.9 - - - - - (0.1) (0.2) (0.3) 0.6
Investment income - - - - - - 0.1 - 0.1 0.1
_________ ____________________________________________________________________ ______ __________
Profit before taxation 48.2 1.3 0.7 (0.7) 0.9 (0.3) - (0.2) 1.7 49.9
Taxation (13.7) (0.4) (0.1) 0.2 (0.1) 0.1 - 0.2 (0.1) (13.8)
_________ ____________________________________________________________________ ______ __________
Profit after taxation 34.5 0.9 0.6 (0.5) 0.8 (0.2) - - 1.6 36.1
Minority interests 0.3 - - - (0.1) - - - (0.1) 0.2
_________ ____________________________________________________________________ ______ __________
Profit for the
financial period
attributable to
equity holders 34.8 0.9 0.6 (0.5) 0.7 (0.2) - - 1.5 36.3
_________ ____________________________________________________________________ ______ __________
Consolidated balance sheet
30 September 2004
Adjustments
UK GAAP (see attached) IFRS
______________ __________________ ___________
£m £m £m
ASSETS
Non-current assets
Property, plant and equipment 115.2 (44.6) 70.6
Intangible assets 29.5 36.8 66.3
Available for sale investments 0.4 - 0.4
Investment in joint venture 1.7 - 1.7
Trade and other receivables - 30.9 30.9
Deferred tax asset 2.6 13.2 15.8
______________ __________________ ___________
149.4 36.3 185.7
______________ __________________ ___________
Current assets
Trade and other receivables 88.9 (45.3) 43.6
Cash and cash equivalents 117.7 - 117.7
______________ __________________ ___________
206.6 (45.3) 161.3
______________ __________________ ___________
Total assets 356.0 (9.0) 347.0
______________ __________________ ___________
LIABILITIES
Current liabilities
Trade and other payables 59.7 (3.3) 56.4
Current tax 13.2 - 13.2
Borrowings 3.2 - 3.2
Provisions for other liabilities and charges - 7.9 7.9
______________ __________________ ___________
76.1 4.6 80.7
______________ __________________ ___________
Non-current liabilities
Borrowings 0.5 - 0.5
Retirement benefit obligations - 18.3 18.3
Provisions for other liabilities and charges 43.9 (7.9) 36.0
______________ __________________ ___________
44.4 10.4 54.8
______________ __________________ ___________
Total liabilities 120.5 15.0 135.5
______________ __________________ ___________
NET ASSETS 235.5 (24.0) 211.5
______________ __________________ ___________
EQUITY
Equity attributable to the Company's equity holders
Share capital 14.9 - 14.9
Retained earnings 217.6 (21.8) 195.8
Revaluation reserve 2.3 (2.3) -
______________ __________________ ___________
234.8 (24.1) 210.7
Minority interest 0.7 0.1 0.8
______________ __________________ ___________
Total equity 235.5 (24.0) 211.5
______________ __________________ ___________
Consolidated balance sheet
30 September 2004
UK GAAP IFRS Adjustments IFRS
________________________________________________________________________________________
Empl- Free- Share
oyee hold based Joint
As bene- proper- Good- pay- ven- Divi- Soft- Provi- Total As
reported fits ties Leases will ments ture dend ware sions Debtors Adj. restated
(a) (b) (c) (d) (e) (g) (h) (i) (j) (k)
_________ ________________________________________________________________________________ ______ ______
£m £m £m £m £m £m £m £m £m £m £m £m £m
ASSETS
Non-current assets
Property, plant
and equipment 115.2 - (8.7) - - - - - (35.9) - - (44.6) 70.6
Intangible
assets 29.5 - - - 0.9 - - - 35.9 - - 36.8 66.3
Available for
sale
investments 0.4 - - - - - - - - - - - 0.4
Investment in
joint venture 1.7 - - - - - - - - - - - 1.7
Trade and other
receivables - - - - - - - - - - 30.9 30.9 30.9
Deferred tax
asset 2.6 9.8 2.7 0.5 (0.1) 0.3 - - - - - 13.2 15.8
_________ ________________________________________________________________________________ ______ ______
149.4 9.8 (6.0) 0.5 0.8 0.3 - - - - 30.9 36.3 185.7
Current assets
Trade and other
receivables 88.9 (14.4) - - - - - - - - (30.9) (45.3) 43.6
Cash and cash
equivalents 117.7 - - - - - - - - - - - 117.7
_________ ________________________________________________________________________________ ______ ______
206.6 (14.4) - - - - - - - - (30.9) (45.3) 161.3
Total assets 356.0 (4.6) (6.0) 0.5 0.8 0.3 - - - - - (9.0) 347.0
_________ ________________________________________________________________________________ ______ ______
LIABILITIES
Current
liabilities
Trade and other
payables 59.7 - - 1.8 - - - (5.1) - - - (3.3) 56.4
Current tax 13.2 - - - - - - - - - - - 13.2
Borrowings 3.2 - - - - - - - - - - - 3.2
Provisions for
other liabilities
and charges - - - - - - - - - 7.9 - 7.9 7.9
_________ ________________________________________________________________________________ ______ ______
76.1 - - 1.8 - - - (5.1) - 7.9 - 4.6 80.7
Non-current
liabilities
Borrowings 0.5 - - - - - - - - - - - 0.5
Retirement
benefit
obligations - 18.3 - - - - - - - - - 18.3 18.3
Provisions for
other
liabilities
and charges 43.9 - - - - - - - - (7.9) - (7.9) 36.0
_________ ________________________________________________________________________________ ______ ______
44.4 18.3 - - - - - - - (7.9) - 10.4 54.8
Total
liabilities 120.5 18.3 - 1.8 - - - (5.1) - - - 15.0 135.5
_________ ________________________________________________________________________________ ______ ______
NET ASSETS 235.5 (22.9) (6.0) (1.3) 0.8 0.3 - 5.1 - - - (24.0) 211.5
_________ ________________________________________________________________________________ ______ ______
EQUITY
Equity
attributable
to the
Company's
equity holders
Share capital 14.9 - - - - - - - - - - - 14.9
Retained
earnings 217.6 (22.9) (3.7) (1.3) 0.7 0.3 - 5.1 - - - (21.8) 195.8
Revaluation
reserve 2.3 - (2.3) - - - - - - - - (2.3) -
_________ ________________________________________________________________________________ ______ ______
234.8 (22.9) (6.0) (1.3) 0.7 0.3 - 5.1 - - - (24.1) 210.7
Minority
interest 0.7 - - - 0.1 - - - - - - 0.1 0.8
_________ ________________________________________________________________________________ ______ ______
Total equity 235.5 (22.9) (6.0) (1.3) 0.8 0.3 - 5.1 - - - (24.0) 211.5
_________ ________________________________________________________________________________ ______ ______
Consolidated cash flow statement
Six months ended 30 September 2004
UK GAAP Adjustments IFRS
______________ __________________ ___________
£m £m £m
Cash flow from operating activities
Cash generated from operations 59.0 - 59.0
Interest received 5.7 - 5.7
Corporation tax paid (11.7) - (11.7)
______________ __________________ ___________
Net cash inflow from operating activities 53.0 - 53.0
Cash flow from investing activities
Purchase of property, plant and equipment (26.2) 10.5 (15.7)
Purchase of intangible assets - (10.5) (10.5)
Receipts from disposal of Stock Exchange Tower 32.9 - 32.9
Dividends received from joint venture 1.3 - 1.3
Dividends received from financial assets 0.1 - 0.1
______________ __________________ ___________
Net cash inflow from investing activities 8.1 - 8.1
Cash flow from financing activities
Dividends paid (172.5) - (172.5)
Loans received from minority shareholder 0.3 - 0.3
Redemption of loan notes (1.5) - (1.5)
Proceeds from own shares on exercise of employee share options 2.4 - 2.4
Decrease/(increase) in term deposits 112.0 (112.0) -
______________ __________________ ___________
Net cash outflow from financing activities (59.3) (112.0) (171.3)
______________ __________________ ___________
(Decrease)/increase in cash and cash equivalents 1.8 (112.0) (110.2)
Cash and cash equivalents at beginning of period 4.9 223.0 227.9
______________ __________________ ___________
Cash and cash equivalents at end of period 6.7 111.0 117.7
______________ __________________ ___________
IFRS FINANCIAL INFORMATION - YEAR ENDED 31 MARCH 2005
IFRS Adjustments
1. Explanation of adjustments between UK GAAP and IFRS
a) IAS 19 Employee benefits
The Group has elected to recognise the defined benefit pension scheme
deficit in full in the Group balance sheet at transition date (1 April
2004). The charge to the income statement is the current period's service
charge and a financing charge for unwinding the discount applied to
liabilities and the expected return on pension scheme assets.
The impact on the income statement is to increase operating profit for the
year ended 31 March 2005 by £2.7m (six months ended 30 September 2004:
£1.6m) and reduce net finance income for the year ended 31 March 2005 by
£0.5m (six months ended 30 September 2004: £0.3m). After the associated
tax there is an increase in net profit for the year ended 31 March 2005 of
£1.5m (six months ended 30 September 2004: £0.9m).
The impact on the balance sheet is to reduce equity shareholders' funds at
31 March 2005 by £23.2m (30 September 2004: £22.9m).
b) IAS 16 Freehold properties
Under the transitional arrangements set out in IFRS 1 the Group has elected
to restate freehold properties other than the Stock Exchange Tower to fair
value at the date of transition, resulting in a reduction in the balance
sheet carrying amount. This lower carrying amount, together with the
requirement to update residual values to reflect current prices, has the
effect of reducing depreciation compared with UK GAAP.
The impact on the income statement is to reduce the depreciation charge in
respect of remaining freehold properties for the year ended 31 March 2005
by £1.7m (six months ended 30 September 2004: £0.7m). In relation to the
Stock Exchange Tower, there is a reduction in depreciation charge and
corresponding reduction to the profit on sale of the Tower for the year
ended 31 March 2005 and six months ended 30 September 2004 of £0.5m. After
the associated tax there is an increase in net profit for the year ended
31 March 2005 of £1.4m (six months ended 30 September 2004: £0.6m).
Equity shareholders' funds are £5.2m lower at 31 March 2005 (30 September
2004: £6.0m) as a result of the restated values of freehold properties as
at 31 March 2004, partly offset by the lower depreciation charge in the
year ended 31 March 2005.
c) IAS 17 Leases
All leases have been reviewed and remain as operating leases. Lease
incentives under IFRS are spread over the term of the lease, whereas, under
UK GAAP, they were spread over the period to the first rent review. This
results in an increased charge to the income statement and consequent
higher balance sheet accrual.
The impact on the income statement is to reduce operating profit for the
year ended 31 March 2005 by £1.3m (six months ended 30 September 2004:
£0.7m). After the associated tax there is a reduction in net profit for
the year ended 31 March 2005 of £0.9m (six months ended 30 September 2004:
£0.5m).
Equity shareholders' funds at 31 March 2005 are £1.7m lower (30 September
2004: £1.3m).
d) IFRS 3 Goodwill
Under IFRS 3, goodwill is not amortised but is tested annually for
impairment. On the balance sheet, under IFRS, goodwill is held at the UK
GAAP carrying value at transition date less any subsequent impairments.
The effect is to increase operating profit for the year ended 31 March 2005
by £2.0m (six months ended 30 September 2004: £0.9m). After the associated
tax and minority interest, the increase in net profit for the year ended
31 March 2005 is £1.5m (six months ended 30 September 2004: £0.7m).
The impact on the balance sheet is to increase equity shareholders' funds
at 31 March 2005 by £1.5m (30 September 2004: £0.7m).
e) IFRS 2 Share based payments
Under IFRS 2, charges to the income statement are based on the fair value
of the instrument granted determined using an option pricing model. Under
UK GAAP, the charge was based on the difference between the market price
on the date of grant and the exercise price. The balance sheet is adjusted
to reflect the additional deferred tax arising from the increased charge to
the income statement.
This reduces operating profit for the year ended 31 March 2005 by £1.0m
(six months ended 30 September 2004: £0.3m). After the associated tax
there is a reduction in net profit for the year ended 31 March 2005 of
£0.7m (six months ended 30 September 2004: £0.2m).
Recognition of deferred tax on the additional charge to the income
statement results in an increase in equity shareholders' funds at 31 March
2005 of £0.5m (30 September 2004: £0.3m).
f) Investment income
Under UK GAAP income from fixed asset investments was reported within Share
of operating profit of joint venture and income from other fixed asset
investments. Under IFRS, it is reported separately.
This results in a reclassification to the Investment income heading for the
year ended 31 March 2005 of £0.1m (six months ended 30 September 2004:
£0.1m) but has no impact on profit.
g) IAS 31 Joint Ventures
There are three presentational changes in respect of joint ventures:
1. The share of joint venture revenue is not reported within Group
revenue although details of joint venture turnover will be reported
within the notes to the accounts.
2. Under UK GAAP the Group's share of joint venture income is reported
pre-tax with the Group's share of joint venture's tax reported within
the Group tax charge. Under IFRS, the Group's share of joint
venture's income is reported net of tax within profit before taxation.
3. As dividends receivable from joint ventures are recognised when
declared rather than in the period to which they relate under UK GAAP,
there is a reduction to trade and other receivables in respect of
dividends declared and a corresponding increase in investment in joint
venture.
The impact on the income statement is to reduce profit before tax for the
year ended 31 March 2005 by £0.5m (six months ended 30 September 2004:
£0.2m) but with a corresponding reduction to the taxation charge such that
there is no overall impact on net profit.
In the balance sheet there is an increase in investment in joint venture
and a corresponding reduction in debtors at 31 March 2005 of £0.6m
(30 September 2004: nil).
h) IAS 10 Dividends
Under IAS 10, dividends are recognised in the financial statements when
declared rather than in the period to which they relate.
The impact on the balance sheet is to increase equity shareholders' funds
by the amount of dividends declared after 31 March 2005 of £12.6m
(30 September 2004: £5.1m)
i) IAS 38 Intangible assets
Under UK GAAP software development costs were capitalised within plant and
equipment but under IFRS are required to be disclosed as intangible assets.
There is no impact on the income statement, but in the balance sheet these
assets are reclassified from property, plant and equipment to intangible
assets. The amount transferred at 31 March 2005 is £35.5m
(30 September 2004: £35.9m).
j) Provisions
Under UK GAAP, provisions are shown as a single amount but under IFRS are
analysed between those amounts due in less than one year and those due in
more than one year.
There is no impact on the income statement. In the balance sheet there is
a reclassification to report separately the amount due within one year
which at 31 March 2005 is £11.9m (30 September 2004: £7.9m).
k) Debtors
Under UK GAAP, all receivables are shown within current assets but under
IFRS receivables due in more than one year are reported within non-current
assets.
In the balance sheet there is a reclassification from current to
non-current assets at 31 March 2005 of nil (30 September 2004: £30.9m)
representing the remaining proceeds from the sale of the Tower due in
December 2005.
2. Explanation of adjustments to the cash flow statement
Under UK GAAP the cash flow statement presented the movement in cash
balances, analysed between nine categories of cash flow. Under IFRS, the
cash flow statement presents the movement in cash and cash equivalents
analysed between operating, investing and financing activities. The
principal consequences of these differences are that cash and cash
equivalents under IFRS includes term deposits which were included in
management of liquid resources under UK GAAP, and corporation tax paid,
interest received and interest paid are classified within operating
activities for IFRS purposes.
As software developments are reported as intangible assets under IFRS,
expenditure on these is separately reported in the cash flow statement as
purchase of intangible assets.
This information is provided by RNS
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