16th Dec 2005 10:45
Mucklow(A.& J.)Group PLC16 December 2005 16 December 2005 A & J MUCKLOW GROUP plc International Financial Reporting Standards A & J Mucklow Group plc (the Group) will be adopting International FinancialReporting Standards (IFRS) for year end 30 June 2006. As a result, our interimresults in March 2006 for the six months ended 31 December 2005 will beannounced under the new accounting requirements. The purpose of this unaudited announcement is to give stakeholders an indicationof the likely effect on the Group's results. While there will be a change inpresentation and reported profits and net assets, there will be no change to theGroup's strategy and cash flows. For the Group and other property companies, the principal effects of adoptingIFRS are: • The valuation surplus on investment properties will be shown on the face of the income statement (formerly the profit and loss account), rather than as it was under UK GAAP, in the statement of total recognised gains and losses. • The contingent tax on the investment property portfolio will be accounted for as deferred tax, which will reduce net assets in the balance sheet but have no impact on the amount of tax paid by the Group. • Dividends will be included when paid or approved, which will normally not be in the same period as the results to which it relates. This is not a change in dividend policy by the Group. • Tax on realised revaluation gains previously charged to reserves will be included in the income statement. There are other, more minor, effects on the Group, such as changing the periodover which lease inducements are spread, but these are currently of limitedimpact. Attached are indicative effects of the standards on the profits and net assetsof the Group, which are subject to audit. We intend to announce full details of the effect of the standards and ourrevised accounting policies in advance of our interim announcement. Changes to the income statement (unaudited) Year ended Note 30 June 2005 £000Profit after tax reported under UK GAAP 678Valuation surplus on investment properties 1 11,330Preference dividend reclassified as interest 2 (47)Deferred tax on valuation surplus 3 (73)Tax on realised revaluation gains 4 (1,946)Operating lease incentives 5 95Deferred tax on operating lease incentives 5 (29)Profit after tax under IFRS 10,008 Notes(1) The valuation surplus on investment properties was previously shown in the statement of total recognised gains and losses.(2) The dividend on the preference shares is now treated as an interest cost to the Group, rather than as a non-equity dividend under UK GAAP.(3) The movement on the deferred tax for contingent chargeable gains is now reflected in the income statement. Previously only the year end balance was shown in a note to the accounts.(4) The tax on investment property disposals was previously split between the profit and loss account and the statement of total recognised gains and losses reflecting the split of profit between the two statements.(5) Operating lease incentives, including the direct cost of arranging new leases, are spread over the lease term under IFRS, rather than the period to the first review (rent frees) or written off as incurred (direct costs of arranging new leases). The deferred tax impact of this has also been recognised. Changes to the statement of recognised income and expense (unaudited) Year ended Note 30 June 2005 £000Profit after tax under IFRS as above 10,008Revaluation of owner occupied property 1 468Deferred tax on the revaluation of owner occupied property 2 (176)Revaluation of development property 1 1,304Deferred tax on the revaluation of development property 2 (371)Total recognised income and expense for the year under IFRS 11,233 Notes (1) The surplus on revaluation of owner occupied property and development property (excluding investment properties being redeveloped) is recognised in equity. The revaluation on developments is transferred to retained earnings where these properties become investment properties.(2) The deferred tax on owner occupied property and development property is also recognised in equity. Changes to net assets (unaudited) Notes Year ended Year ended 30 June 2005 30 June 2004 £000 £000Net assets under UK GAAP 207,374 203,242Non-equity (preference) shares 1 (675) (675)Equity shareholders' funds under UKGAAP 206,699 202,567Deferred tax on revaluation surpluses 2 (17,946) (17,326)Removal of proposed dividend 3 4,175 3,888Lease incentives 4 295 200Deferred tax on lease incentives 4 (89) (60) Net assets under IFRS 5 193,134 189,269 Notes (1) Preference shares are treated as debt under IFRS.(2) The contingent liability for chargeable gains is now reflected in net assets. Previously this was shown in a note to the accounts.(3) Dividends are recognised when approved. The final dividend for the year ended 30 June 2005 will be reflected in the 30 June 2006 results as it was approved by shareholders in November 2005.(4) Operating lease incentives, including the direct cost of arranging new leases, are spread over the lease term under IFRS, rather than the period to the first review (rent frees) or written off as incurred (direct costs of arranging new leases). The deferred tax impact of this has also been recognised.(5) The year on year movement in net assets comprises the total recognised income and expense for the year of £11.233m, less the dividends paid to shareholders in the year of £7.368m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mucklow (A & J)