15th Jun 2005 07:00
Spectris PLC15 June 2005 Date: Embargoed until 07:00 15 June 2005 Contact: Steve Hare, Finance Director, Spectris plc Tel: 01784 470470 Richard Mountain, Financial Dynamics Tel: 020 7269 7291 ADOPTION OF INTERNATIONAL REPORTING STANDARDS Spectris plc, the precision instrumentation and controls company, todayannounces the completion of preparations to adopt International Financial Reporting Standards (IFRS). Spectris' transition date for IFRS reporting is 1 January 2004, and the firstfull year reporting under IFRS will be 31 December 2005. Commenting on thegroup's adoption of the new accounting rules, Steve Hare, Finance Director,said: "The financial information presented today shows the adoption of IFRS will havea minimal impact on our accounts. The most significant changes are that Spectriswill no longer amortise goodwill, and from 1 January 2005 the adoption of IAS 39may introduce greater volatility into our income statement. However, theadoption of IFRS does not change our strategy, our risk management processes orour cash flows." The primary changes to Spectris' reported 2004 financial information followingthe adoption of IFRS are as a result of: • Changes in presentation and disclosure; • Ceasing to amortise goodwill. Capitalised goodwill will, in future, be subject to an annual impairment review; • Recognising an expense for share-based payments; • Recognising certain intangible assets, which will be amortised; • Recognising assets and liabilities in respect of employee benefits; • Recognising deferred tax assets and liabilities on a different basis; and • Certain modest differences in the timing of revenue recognition. The effect of the adoption of IFRS in respect of the group's 2004 financialstatements is set out in detail in a report that can be downloaded from thecompany's website at www.spectris.com. In summary: UK GAAP IFRS Change £m £m £m Revenue 614.2 614.1 (0.1) Operating profit 52.2 51.2 (1.0) Adjusted operating profit* 65.2 64.6 (0.6) Profit before tax 36.9 35.9 (1.0) Adjusted profit before tax* 51.1 50.5 (0.6) Earnings per share 20.4p 19.5p (0.9p) Adjusted earnings per share* 32.1p 31.6p (0.5p) £m £m £m Net assets at 31 December 2004 196.0 234.3 38.3 *Adjusted operating profits and earnings per share are after adding backintangible asset amortisation, asset impairment charges, gains or losses ondisposals of businesses and tangible fixed assets e.g. property, volatilityarising due to IAS 39 and the related tax effects of each. • Adjusted operating profits for the year to 31 December 2004 are reduced by £0.6m from £65.2m to £64.6m due primarily to share-based payment expenses of £0.4m; unadjusted operating profits are reduced by £1.0m from £52.2m to £51.2m, which, in addition to the share-based payment expenses, is primarily caused by changes to the accounting for goodwill and intangible assets; • Adjusted and unadjusted profits before tax for the year to 31 December 2004 are reduced for the same reasons by £0.6m (from £51.1m to £50.5m) and £1.0m (from £36.9 to £35.9m) respectively; • Adjusted and unadjusted earnings per share are consequently reduced by 0.5 pence per share and 0.9 pence per share respectively; • Net assets as at 31 December 2004 are increased by £38.3m from £196.0m to £234.3m, primarily due to the recognition of a deferred tax asset on US goodwill of £11.0m, and changes to the timing of recognition of dividend payments totalling £12.4m; • Net assets at 1 January 2005 are reduced by £7.1m from £234.3m to £227.2m following the adoption of IAS 39, comprising a liability of £9.5m relating to swaps, offset by assets of £1.8m for average rate options, £0.8m for forward contracts, and the related deferred tax asset of £0.2m; • The adoption of IAS 39 will result in some additional earnings volatility in 2005 and thereafter. Had the 2004 results been restated to reflect the requirements of IAS 39 unadjusted profits before tax of £35.9m would have been reduced by £5.0 million, of which £4.9m related to cross-currency interest rate swaps. There would have been no impact on adjusted profits before tax. To date, Spectris plc has prepared its accounts in compliance with UK GenerallyAccepted Accounting Principles (UK GAAP). EU regulations require Spectris plc toadopt IFRS in its financial statements from 2005. In conjunction with ourauditors, the group has reviewed those changes necessary to move from UK GAAP toIFRS. Restatements of our 2004 financial statements are unaudited, but ourauditors have agreed the principles and methodologies that have now been adoptedby the group. Disclaimer Standards currently in issue and adopted by the EU are subject to interpretationissued from time to time by the International Financial ReportingInterpretations Committee (IFRIC). Further standards may be issued by the IASBthat will be adopted for financial years beginning on or after 1 January 2005.Additionally, IFRS is currently being applied in the United Kingdom and in alarge number of countries simultaneously for the first time. Furthermore, due toa number of new and revised Standards included within the body of Standards thatcomprise IFRS, there is not yet significant established practice on which todraw in forming decisions regarding the interpretation and application.Accordingly, practice is continuing to evolve. At this preliminary stage,therefore, the full financial effect of reporting under IFRS as it will beapplied and reported on in the Company's first IFRS financial statements for theyear ended 31 December 2005 may be subject to change. Copies of this announcement are available from the company's registered officeat Station Road, Egham, Surrey TW20 9NP, and on the company's website atwww.spectris.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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