28th Oct 2005 07:30
Tribal Group PLC28 October 2005 IFRS RESTATEMENT Tribal Group plc today publishes an analysis of the impact of InternationalFinancial Reporting Standards (IFRS) on its results for the year ended 31 March2005, together with a detailed reconciliation from UK Generally AcceptedAccounting 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'sweb site www.tribalgroup.co.uk * Adjusted profit before tax and adjusted diluted earnings per share are statedbefore IFRS 3 intangible amortisation, goodwill impairment, share option chargesand exceptional Mercury bid costs Simon Lawton, Group Finance Director, can be contacted on 01285 886020 to answerquestions 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 itsfinancial statements under UK Generally Accepted Accounting Practice ('UKGAAP'). For periods beginning on or after 1 January 2005, all listed companiesin the European Union ('EU') are required to prepare their consolidatedfinancial statements in accordance with International Financial ReportingStandards ('IFRS') and International Accounting Standards ('IAS') as adopted bythe European Commission. The consolidated financial statements for the year ending 31 March 2006 will beprepared for the Group under IFRS principles. In order to comply with EUregulations the interim results for the half year to 30 September 2005 will bealso presented under IFRS. This document explains the differences that will arise when the Group'sfinancial statements are prepared under IFRS rather than UK GAAP. Specificallythis document sets out the reconciliations of the Group's balance sheets, asprepared under UK GAAP, to those prepared in accordance with IFRS as at 1 April2004 (the opening balance sheet as at the date of transition to IFRS), 30September 2004 and 31 March 2005. In addition this document includesreconciliations of the Group's consolidated profit and loss accounts preparedunder UK GAAP to the consolidated Income Statements prepared in accordance withIFRS for the six months ended 30 September 2004 and for the year ended 31 March2005. There is no change to the Group's underlying performance under IFRS and, inparticular, 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 prepareconsolidated financial statements under 'International Accounting Standards' asadopted by the European Commission. These will be those IAS, IFRS and relatedInterpretations (SIC-IFRIC interpretations), subsequent amendments to thosestandards and related interpretations, future standards and relatedinterpretations issued or adopted by the International Accounting StandardsBoard ('IASB') that have been endorsed by the European Commission (collectivelyreferred to as IFRSs). These are subject to on going review and endorsement bythe European Commission or possible amendment by interpretive guidance from theIASB and the International Financial Reporting Interpretations Committee('IFRIC') and are therefore still subject to change. Moreover, under IFRSs, onlya complete set of financial statements comprising a balance sheet, incomestatement, statement of changes in equity, cash flow statement, together withcomparative financial information and explanatory notes can provide a fairpresentation of the Group's financial position, results of operations and cashflow. Accordingly, the financial information cannot be described as compliantwith IFRS but has been prepared in accordance with the policies expected to bein place at 31 March 2006. The UK GAAP information in this document does not comprise statutory accountswithin the meaning of section 240 of the Companies Act 1985. The information forthe year ended 31 March 2004 and 31 March 2005 is an extract from the statutoryaccounts to those dates which have been delivered to the Registrar of Companies.Those accounts included audit reports which were unqualified and which did notcontain 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 thosecompanies adopting IFRS for the first time. The Group has elected to takeadvantage 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-basedpayments granted on or before 7 November 2002 and for equity settledtransactions granted after 7 November 2002, vesting before 1 January 2005. TheGroup has retrospectively applied IFRS 2 to non-vested equity instrumentsgranted on or after 7 November 2002. Business combinations The Group will adopt IFRS 3 'Business Combinations' to the extent that itapplies to acquisitions post 1 April 2004. Business combinations prior to thatdate will be treated under previous accounting standards in accordance with theoptional exemption permitted under IFRS 1. Under IFRS 3, the identification ofassets and liabilities within acquired businesses includes intangible assets notpreviously recognised under UK GAAP. These intangibles will be valued for eachacquisition after 1 April 2004 and will be amortised over their estimatedeconomic lives. All goodwill and intangibles will be tested for impairment asrequired by IAS 36 'Impairment of Assets' on an annual basis. Employee benefits The Group will take advantage of the exemption which allows cumulative actuarialgains and losses in defined benefit pension schemes up to the date of transitionto IFRS to be recognised immediately. Going forward, the Group will apply therules of the amendment to IAS 19 which allows actuarial gains and losses to berecognised immediately in the Statement of Recognised Income and Expense. Thisapproach is consistent with the treatment required by FRS 17, the effect ofwhich 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 andmeasurement', prospectively from 1 April 2005. Therefore until 31 March 2005,the Group continued to account for interest rate swaps in accordance with UKGAAP, and hence the comparative financial statements exclude the impact of thesestandards. Shares to be issued have also been reclassified as a financialliability rather than equity in accordance with IAS 32. Details of the impact ofadopting these standards at 1 April 2005 are set out later in this documentunder heading "IAS 32/39 Financial Instruments -impact on net assets at 1 April2005". 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 itapplies to the Group's share schemes. The cost recognised in respect of shareoptions 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. UnderIFRS 2 all share awards are measured at fair value at grant date and recognisedas an expense over the vesting period. Advice has been taken from external valuation specialists and all relevantoptions 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 goodwilland intangible assets. Goodwill will be recognised as an asset and reviewed forimpairment at least annually. Any impairment is recognised immediately and willnot subsequently reverse. Goodwill amortisation has ceased at the date oftransition to IFRS. Other intangible assets arising from acquisitions after 1 April 2004 will beseparately 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 theGroup is in accounting for defined pension schemes. Under UK GAAP, the Groupaccounted for these schemes using SSAP 24 'Accounting for Pension Costs' andalso 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' on1 April 2005; the standard therefore had no effect on the Group's financialstatements prior to that date. Adoption of IAS 39 resulted in a £0.2m reductionin opening net assets on 1 April 2005. This represents the net effect of markingto market the interest rate swaps held by the Group. Adoption of IAS 32 hasresulted in the reclassification of shares to be issued from equity toliabilities resulting in a reduction of net assets of £16.5m. The effect on theopening 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 fixedrate obligations, and to hedge the Group's obligations under its long termborrowings. The Group's discounted swap entered into on 1 April 2004 does not qualify as ahedge and as a result the change in the fair value during the half year periodof circa £0.5m will be reflected as a non-cash charge to the consolidated incomestatement for the period ended 30 September 2005. This charge represents theincrease in the fair value of buying out the swap at market prices prevailingduring the period ended 30 September 2005. This treatment can create volatilityin the charges against profits. The directors do not consider this to bereflective of the on-going operations of the business; it will therefore beseparately highlighted and excluded from adjusted earnings. The market value ofthe 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 withitems which are considered material in relation to the Group's financialstatements. Basis of preparation The financial information has been prepared in accordance with InternationalFinancial 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 ofthe Company and all its subsidiary undertakings. All intra group transactions, balances, income and expenses are eliminated onconsolidation. Revenue and turnover recognition Turnover comprises the gross amounts billed to clients in respect ofcommission-based income together with the total of other fees earned. Revenuecomprises commission and fees earned in respect of turnover and is measured atthe fair value of the consideration derived from the provision of goods andservices to third party customers in the normal course of business. Turnover andrevenue are stated exclusive of VAT, sales tax and trade discounts. Theparticular 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 ofcommission based income. Cost of sales includes the direct expenditure incurredin providing the goods and services described above, including the cost ofassociates and the salary costs of employed fee earners. Administrative expensesinclude the salary cost of non-fee earners. Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable. Acquisitions and disposals On acquisition, the assets and liabilities and contingent liabilities of asubsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired iscredited to income and expense in the period of acquisition. The interests of minority shareholdings is stated at the minority's proportionof the fair values of the assets and liabilities recognised. Subsequently, anylosses applicable to the minority interest in excess of the minority interestare allocated against the interest of the parent. The profit or loss on the disposal or closure of a previously acquired businessincludes the attributable amount of any purchased goodwill relating to thatbusiness not previously charged through the profit and loss account. The results and cash flow relating to a business are included in theconsolidated income statement and the consolidated cash flow statement from thedate of acquisition or up to the date of disposal. Intangible assets - goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities of a subsidiary. Goodwill is recognised as an asset and reviewed for impairment at leastannually. Any impairment is recognised immediately in the income statement andis not subsequently reversed. Goodwill arising on acquisitions before the date of transition to IFRSs has beenretained at the previous UK GAAP amounts subject to being tested for impairmentat that date. Where the amount of purchase consideration is contingent on one or more futureevents, the cost of acquisition includes a reasonable estimate of the fair valueof amounts expected to be payable in the future. The cost of acquisition isadjusted when revised deferred consideration estimates are made, withconsequential adjustments continuing to be made to goodwill until the ultimatedeferred consideration is known. On disposal of a subsidiary, the attributable amount of goodwill is included inthe determination of the profit and loss on disposal. Acquired intangibles Intangibles assets acquired in business combinations are accounted for inaccordance with IFRS 3 'Business combinations'. Such intangible assets arerecognised separately if they meet the criteria for recognition, and areamortised over their expected useful economic lives unless these are indefinitein which case they are reviewed regularly for impairment in accordance with IAS38 'Intangible assets'. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine theextent of the impairment (if any). Where the asset does not generate cash flowsthat are independent from other assets, the Group estimates the recoverableamount of the cash-generating unit to which the asset belongs. An intangibleasset with an indefinite useful life is tested for impairment annually andwhenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and the valuein use. The estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessments of thetime value of money and the risks specific to the asset for which the estimatesof future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised as an expense immediately, unless the relevant asset is carried ata revalued amount, in which case the impairment loss is treated as a revaluationdecrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss is recognised as income immediately, unless the relevant asset is carriedat a revalued amount, in which case the reversal of the impairment loss istreated as a revaluation increase. Corporate information systems In accordance with IAS 38, the Group's corporate information systems are treatedas an intangible asset. Costs included are those directly attributable to thedesign, construction and testing of new systems (including major enhancements)from the point of inception to the point of satisfactory completion where theprobable future economic benefits arising from the investment could be assessedwith reasonable certainty at the time the costs are incurred. Maintenance andminor 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 inwhich it is incurred. An internally-generated intangible asset arising from the Group's productdevelopment 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 basisover their useful lives. Where no internally-generated intangible asset can berecognised, development expenditure is recognised as an expense in the period inwhich it is incurred. Property, plant and equipment Property, plant and equipment are stated at cost, net of depreciation and anyrecognised impairment loss. Depreciation is charged so as to write off the costof each asset, other than properties in the course of construction, by equalinstalments 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 usefullives on the same basis as owned assets or, where shorter, over the term of therelevant lease. Assets in the course of construction relate to Mercury Health sites and are notdepreciated until brought into use by the business. Leases Assets acquired under finance leases are capitalised at their fair value or, iflower, at the present value of the minimum lease payments, each determined atthe inception of the lease. The outstanding future lease obligations are shownin the balance sheet as a finance lease obligation. The finance charges areallocated over the period of the lease in proportion to the capital amountoutstanding and are charged directly against income. Operating lease rentals are charged against income on a straight line basis overthe period of the lease. Borrowing costs Borrowing costs directly attributable to the construction of qualifying assetsand long-term contract costs are capitalised as part of the cost of thoseassets. The commencement of capitalisation begins when both finance costs andexpenditures for the asset are being incurred and activities that are necessaryto get the assets ready for use are in progress. Capitalisation ceases whensubstantially all the activities that are necessary to get the asset ready foruse are complete. All other borrowing costs are recognised in income or expensein the period in which they are incurred. Investment properties Investment property, which is property held to earn rentals and/or capitalappreciation, is stated at its fair value at the balance sheet date. Gains orlosses arising from changes to the fair value of investment property areincluded 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 tounquoted equity investments where fair value cannot be readily determined and atfair value otherwise. Inventories Inventories, other than long-term contracts, are stated at the lower of cost andnet realisable value. Cost comprises materials, direct labour and a share ofproduction overheads appropriate to the relevant stage of production. Netrealisable value is based on estimated selling price less all further costs tocompletion and all relevant marketing, selling and distribution costs. Long-term contracts Long-term contracts balances represent costs incurred on specific contracts, netof 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 ofwork carried out to date. Profits are recognised on long-term contracts where the final outcome can beassessed with reasonable certainty. In calculating this, the percentage ofcompletion method is used to calculate the profit based upon the proportion ofcosts incurred to the total estimated costs. Cost includes direct staff, outlaysand an appropriate proportion of overheads. Full provision is made for all knownlosses immediately such losses are forecast on each contract. Amounts recoverable on contracts are included within debtors and are valued atthe proportion of the anticipated net sales value of the work done to date,including uncertified amounts where the directors have satisfied themselves thatentitlement has been established less billed on account. Advance payments areincluded in creditors to the extent that they exceed the related work inprogress. Directly attributable pre-contract costs incurred after the point when there isa virtual certainty that the contract will be awarded are capitalised withininventories and amortised over the contract period. All other pre-contract costsare expensed as incurred. Retirement benefit costs The Group operates various defined contribution pension schemes that areestablished in accordance with employment terms set by the subsidiaryundertakings. The assets of these schemes are held separately from those of theGroup in independently administered funds. The amount charged against profitsrepresents the contributions payable to the scheme in respect of the accountingperiod. A small number of employees participate in various defined benefit schemes. Theexpected cost of providing benefits is determined using the Projected UnitCredit Method, with actuarial valuations being carried out at each balance sheetdate. Actuarial gains and losses are recognised in full in the period in whichthey occur. They are recognised in the statement of recognised income andexpense. Past service cost is recognised immediately to the extent that the benefits arealready vested, and otherwise is amortised on a straight-line basis over theaverage period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents thepresent value of the defined benefit obligation as adjusted for unrecognisedpast service cost, and as reduced by the fair value of scheme assets. Any assetresulting from this calculation is limited to past service cost, plus thepresent value of available refunds and reductions in future contributions to theplan. Share-based payments The Group has applied the requirements of IFRS 2 'Share-based payments'. Inaccordance with transitional provisions IFRS 2 has been applied to all grants ofequity 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 becauseunder the terms of IFRS 2 the Group is not permitted to apply the standard tothese instruments. The Group issues equity-settled share-based payments tocertain employees. Equity settled share based payments are measured at fairvalue at the date of grant. This is expensed on a straight-line basis over thevesting periods of the instruments based on the Group's estimate of shares thatwill 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 theyear end as the Company has obtained tax indemnities from employees in relationto employers' national insurance. Taxation The tax expense represents the sum of the tax currently payable and deferredtax. Current tax is provided at amounts expected to be paid or recovered using thetax rates and laws that have been enacted or substantially enacted by thebalance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying values of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or from the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. The carrying value of deferred tax assets is reviewed at each balance sheet dateand reduced to the extent that it is no longer probable that sufficient taxableprofits 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 theperiod when the liability is settled or the asset is realised. Deferred tax inthe income statement tax is charged or credited, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt 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 toobligations to settle acquisition related deferred consideration in Tribalshares. The number of shares to be issued will vary depending upon the shareprice 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 ondemand. Derivative financial instruments The Group's activities expose it primarily to the financial risks of changes ininterest rates. The Group uses interest rate swap contracts to hedge theseexposures. The use of financial derivatives is governed by the Group's policies approved bythe board of directors, which provides written principles on the use offinancial derivatives. Changes in the fair value of derivative financial instruments that aredesignated and effective as hedges of future cash flows are recognised directlyin equity and the ineffective portion is recognised immediately in the incomestatement. If the cash flow hedge of a firm commitment or forecasted transactionresults in the recognition of an asset or a liability, then, at the time theasset or liability is recognised, the associated gains or losses on thederivative that had previously been recognised in equity are included in theinitial measurement of the asset of liability. For hedges that do not result inthe recognition of an asset or a liability, amounts deferred in equity arerecognised in the income statement in the same period in which the hedged itemaffects net profit or loss. For an effective hedge of an exposure to changes in fair values, the hedged itemis adjusted for changes in fair value attributable to the risk being hedged withthe corresponding entry in income or expense. Gains or losses from re-measuringthe derivative are recognised in income or expense. Changes in the fair value of derivative financial instruments that do notqualify for hedge accounting are recognised in the income statement as theyarise. Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated, or exercised, or no longer qualifies for hedge accounting. At thattime, any cumulative gain or loss on the hedging instrument recognised in equityis retained in equity until the forecasted transaction occurs. If a hedgingtransaction is no longer expected to occur, the net cumulative gain or lossrecognised in equity is transferred to net income or expense for the period. Derivatives embedded in other financial instruments or other host contracts aretreated as separate derivatives when their risks and characteristics are notclosely related to those of host contracts and the host contracts are notcarried at fair value with unrealised gains or losses reported in the incomestatement. Accounting for PFI contracts In March 2005, IFRIC issued a draft interpretation on accounting for serviceconcession arrangements (PFI/PPP). IFRIC is currently considering the commentsreceived on this draft guidance, with the final guidance expected to be issuedover coming months. Until the final guidance is issued the potential effect on the Group isuncertain. Tribal Group plcReconciliation of equityat 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 3Non-currentassetsGoodwill 200,798 - - - - - 200,798Otherintangibleassets 557 - - - - - 557Property,plant andequipment 6,267 - - - - - 6,267Investmentproperty 89 - - - - - 89Available forsaleinvestments 190 - - - - - 190Deferred taxassets 378 257 - - - - 635--------------------------------------------------------------------------------------------------- 208,279 257 - - - - 208,536=================================================================================================== Current assetsInventories -work inprogress 2,058 - - - - - 2,058Trade andotherreceivables 44,867 - - - - - 44,867Cash and cashequivalent 41,740 - - - - - 41,740--------------------------------------------------------------------------------------------------- 88,665 - - - - - 88,665---------------------------------------------------------------------------------------------------Total assets 296,944 257 - - - - 297,201=================================================================================================== CurrentliabilitiesTrade andother (55,062) (593) - 1,400 - (969) (55,224)payablesTax liabilities (4,510) - - - - - (4,510)Obligationsunder financeleases (44) - - - - - (44)Bank overdraftsand loans (8,168) - - - - - (8,168) --------------------------------------------------------------------------------------------------- (67,784) (593) - 1,400 - (969) (67,946)--------------------------------------------------------------------------------------------------- Net currentassets 20,881 (593) - 1,400 - (969) 20,719 Non-currentliabilitiesBank loans (71,423) - - - - - (71,423)Pensionliabilities - (262) - - - - (262)Deferred taxliabilities - - (178) - - - (178)Obligationsunder financeleases (2) - - - - - (2)Othernon-currentliabilities (590) - - - - - (590)--------------------------------------------------------------------------------------------------- (72,015) (262) (178) - - - (72,455)---------------------------------------------------------------------------------------------------Totalliabilities (139,799) (855) (178) 1,400 - (969) (140,401)===================================================================================================Net assets 157,145 (598) (178) 1,400 - (969) 156,800===================================================================================================EquityShare 3,448 - - - - - 3,448capitalShare premiumaccount 79,548 - - - - - 79,548Equity 42,989 - - - - - 42,989reserveShares to beissued 27,172 - - - (2,084) - 25,088Retainedearnings 2,861 (598) (178) 1,400 2,084 (969) 4,600---------------------------------------------------------------------------------------------------Equityattributableto equityholders ofthe parent 156,018 (598) (178) 1,400 - (969) 155,673 Minorityinterest 1,127 - - - - - 1,127---------------------------------------------------------------------------------------------------Total equity 157,145 (598) (178) 1,400 - (969) 156,800=================================================================================================== Tribal Group plcReconciliation of equityat 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 6Non-currentassets Goodwill 197,188 - - 9,971 (1,912) - - - - - 205,247Otherintangibleassets 740 - - - 2,410 329 - - - - 3,479Property,plant andequipment 12,867 - - - - (329) - - - - 12,538Investmentproperty 180 - - - - - - - - - 180Available forsaleinvestments 151 - - - - - - - - - 151Deferred taxassets 644 638 - - - - - - - - 1,282------------------------------------------------------------------------------------------------------- 211,770 638 - 9,971 498 - - - - - 222,877=======================================================================================================Current assets Inventories 9,102 - - - - - - - - - 9,102Trade andotherreceivables 56,315 - - - - - - - - - 56,315Cash and cashequivalent 28,335 - - - - - - - - - 28,335------------------------------------------------------------------------------------------------------- 93,752 - - - - - - - - - 93,752-------------------------------------------------------------------------------------------------------Total assets 305,522 638 - 9,971 498 - - - - - 316,629=======================================================================================================CurrentliabilitiesTrade andother payables (66,154) (630) - - - - 1,530 - (597) - (65,851)Taxliabilities (5,758) - - - - - - - - - (5,758)Obligationsunder financeleases (20) - - - - - - - - - (20)Bankoverdrafts andloans (3,802) - - - - - - - - - (3,802)------------------------------------------------------------------------------------------------------- (75,734) (630) - - - - 1,530 - (597) - (75,431)-------------------------------------------------------------------------------------------------------Net currentassets 18,018 (630) - - - - 1,530 - (597) - 18,321 Non-currentliabilitiesBank loans (77,518) - - - - - - - - - (77,518)Pensionliabilities - (1,370) - - - - - - - - (1,370) Deferred taxliabilities - - (308) - (723) - - - - (27) (1,058) Obligationsunder financeleases (26) - - - - - - - - - (26)Othernon-currentliabilities (945) 534 - - - - - - - - (411)------------------------------------------------------------------------------------------------------- (78,489) (836) (308) - (723) - - - - (27) (80,383)-------------------------------------------------------------------------------------------------------Totalliabilities (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=======================================================================================================EquityShare capital 3,748 - - - - - - - - - 3,748Share premiumaccount 86,928 - - - - - - - - - 86,928Revaluationreserve 91 - - - - - - - - (91) -Equity reserve 46,160 - - - - - - - - - 46,160Shares to beissued 17,934 - - - - - - (1,417) - - 16,517 Retainedearnings (5,456) (828) (308) 9,971 (225) - 1,530 1,417 (597) 64 5,568-------------------------------------------------------------------------------------------------------Equityattributableto equityholders of the parent 149,405 (828) (308) 9,971 (225) - 1,530 - (597) (27) 158,921 Minorityinterest 1,894 - - - - - - - - - 1,894--------------------------------------------------------------------------------------------------------Total equity 151,299 (828) (308) 9,971 (225) - 1,530 - (597) (27) 160,815======================================================================================================== Tribal Group plcReconciliation of the consolidated income statementfor 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 agencycosts (49,613) - - - - - - - (49,613)Revenue 179,857 - - - - - - - 179,857 Cost of sales (102,772) - - - - - - - (102,772)---------------------------------------------------------------------------------------------------------------------Gross profit 77,085 - - - - - - - 77,085===================================================================================================================== Netadministrativeexpenses (54,707) (178) - - - - 91 - (54,794)Intangibleamortisation - - (322) - - - - - (322)Goodwillamortisation (11,436) - - - - - - 11,436 -Goodwillimpairment (5,200) - - - - - - (1,465) (6,665)Share optioncharges 244 - - (244) (134) - - - (134)ExceptionalMercury bidcosts (1,747) - - - - - - - (1,747)---------------------------------------------------------------------------------------------------------------------Totaladministrativeexpenses (72,846) (178) (322) (244) (134) - 91 9,971 (63,662)---------------------------------------------------------------------------------------------------------------------Operatingprofit 4,239 (178) (322) (244) (134) - 91 9,971 13,423 Finance income 914 - - - - - - - 914Financecharges (5,365) (15) - - - - - - (5,380)---------------------------------------------------------------------------------------------------------------------Net financecosts (4,451) (15) (4,466)(Loss)/profitbefore tax (212) (193) (322) (244) (134) - 91 9,971 8,957Tax (5,367) 26 97 - - (130) (27) - (5,401)---------------------------------------------------------------------------------------------------------------------(Loss)/profitfor the year (5,579) (167) (225) (244) (134) (130) 64 9,971 3,556=====================================================================================================================Attributableto: Equity holdersof the parent (5,882) (167) (225) (244) (134) (130) 64 9,971 3,253 Minorityinterest 303 - - - - - - - 303--------------------------------------------------------------------------------------------------------------------- (5,579) (167) (225) (244) (134) (130) 64 9,971 3,556=====================================================================================================================Earnings pershare Basic loss pershare (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 Adjusteddilutedearnings pershare (pence) 15.62p (0.21)p - - - (0.17)p 0.08p - 15.32p Tribal Group plcNotes to reconciliation of equityat 1 April 2004 (date of transition to IFRS) Notes 1. On first time adoption of IFRS, the Group has taken advantage of theexemption allowed under IFRS1 not to apply full retrospective application of IAS19 'Employee benefits'. Accordingly, the Group has elected to recognise allcumulative actuarial losses at the date of transition to IFRS. Consequently, thefull pension liability of £0.2m is recognised under IFRS but was not recognisedunder 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. Adeferred tax liability is also created in respect of long leasehold andinvestment properties. 2. Proposed dividends are not recognised under IFRS until the period when theyare declared and therefore the provision of £1.4m has been written back. 3. The cumulative liability for share based payments of £1.0m is recognisedunder IFRS 2 and replaces the UITF 17 liability of £2.1m, formally included inshares to be issued under UK GAAP. Notes to reconciliation of equityat 31 March 2005 Notes 1. The full pension liability of £1.4m is recognised under IFRS but was notrecognised under UK GAAP. In addition a holiday pay accrual of £0.8m isrecognised. The deferred tax asset on this pension liability is also recognised in full. Adeferred tax liability is also created in respect of long leasehold andinvestment properties and for temporary differences arising on amortisation ofpurchased goodwill. 2. Goodwill amortisation under UK GAAP of £10.0m is added back. £2.7m ofseparately identified intangible assets have been recognised in accordance withIFRS 3/IAS 38 (derecognised in goodwill) as has the deferred tax liability of£0.7m in relation to this. Amortisation of these separately identifiable assetsof £0.3m has been charged to the income statement for the period. 3. Under IAS 38, 'Intangible assets' the remaining value of the Group'scorporate information systems has been reclassified on transition as anintangible asset. Under UK GAAP it was treated as a tangible fixed asset. 4. Proposed dividends are not recognised under IFRS until the period they aredeclared and therefore the provision of £1.5m has been written back. 5. The cumulative liability for share based payments of £0.6m is recognisedunder IFRS 2 and replaces the UITF 17 liability of £1.4m, formerly included inshares to issued, under UK GAAP. 6. The revaluation of the investment property under IAS 40 is recognised throughthe income statement rather than directly to reserves under UK GAAP. Tribal Group plcNotes to income statement reconciliationat 31 March 2005 Notes 1. The change from accounting for the defined benefit pension schemes under UKGAAP to IFRS has resulted in an increased charge of £29,000 and a charge forholiday pay of £164,000 was made. 2. Provision is made for amortisation of £0.3m on separately identifiableintangible assets. 3. UITF 17 credit of £0.2m is derecognised and replaced by IFRS 2 share basedpayment charge. Provision for share based payments of £0.1m is recognised underIFRS 2. 4. The deferred tax charge arises from the temporary difference resulting fromthe differing tax treatment for purchased goodwill. 5. IAS 40 recognises the revaluation of investment properties through the incomestatement, rather than directly to reserves under UK GAAP. 6. Goodwill amortisation under UK GAAP of £11.4m is added back, with anadditional impairment of £1.5m being charged for the amortisation previouslyrecorded. 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 3,253IFRS 3 intangible amortisation (net of tax) 225Goodwill impairment 6,665Share option charges 134Exceptional Mercury bid costs 1,747Adjusted 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 Basicloss (£'000) (5,882) (167) (225) (244) (134) (130) 64 9,971 3,253 Basicloss 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 Adjustedearnings(£'000) 12,257 (167) - - - (130) 64 - 12,024 Adjusteddilutedearningsper 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 IAS32 and IAS 39 prospectively from 1 April 2005. Net assets will be adverselyaffected by the introduction of IAS 32/39. Included within liabilities arederivative financial instruments totalling £0.2m which represents the total costof buying out all the Group's interest rate swaps at market prices prevailing on1 April 2005. IAS 32 requires shares to be issued to be included within liabilities whereasunder UK GAAP they were included within equity. Shares to be issued representthe expected value of future share issues in respect of earn out payments and assuch are not categorised as equity under IFRS. £'000Restated net assets at 31 March 2005 160,815Adoption 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 £'000Attributable profit for the year reported under IFRS 3,253Actuarial gain on defined benefit plans 105 3,358 Tribal Group plcGroup 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 1April 2004under UK GAAP 3,448 79,548 27,172 9,545 33,444 2,861 1,127 157,145 Equitydividendsunapproved - - - - - 1,400 - 1,400 Employeebenefitsrecognised(net of tax) - - - - - (598) - (598) DerecogniseUITF 17liability - - (2,084) - - 2,084 - - RecognitionofIFRS 2 - - - - - (969) - (969)liability Deferred tax(IAS 12) - - - - - (178) - (178)---------------------------------------------------------------------------------------------Net changesrelating tofirst timeadoption - - (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 inshares to beissued - - (8,571) - - - - (8,571) Share optionscancelled andexercised - - - - - 506 - 506 Derecognitionof UITF 17charges - - - - - (578) - (578)Recognitionofemployeebenefits acquired - - - - - (168) - (168) Actuarialgains ondefinedbenefit plans - - - - - 105 - 105 New minorityinterests - - - - - - 720 720 Purchase ofminorities - - - - - - (176) (176) Minoritydividends paid - - - - - - (80) (80)---------------------------------------------------------------------------------------------- 3,748 86,928 16,517 9,545 36,615 4,465 1,591 159,409 Attributableprofit forthe year - - - - - 3,253 303 3,556 Equitydividend 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 ONTHE IFRS RECONCILIATIONS We have audited the reconciliations of the consolidated balance sheet at 1 April2004 and 31 March 2005, the consolidated income statement and the reconciliationof equity for the year ended 31 March 2005 between UK GAAP and InternationalFinancial Reporting Standards ('IFRS'), (together 'the IFRS Reconciliations'). This report is made solely to the Board of Directors, in accordance with ourengagement letter dated 15 September 2005 and solely for the purpose ofassisting with the transition to IFRS. Our audit work has been undertaken sothat we might state to the company's board of directors those matters we arerequired to state to them in an auditors' report and for no other purpose. Tothe fullest extent permitted by law, we will not accept or assume responsibilityto anyone other than the company for our audit work, for our report, or for theopinions we have formed. Respective responsibilities of directors and auditors The company's directors are responsible for ensuring that the Company and theGroup maintains proper accounting records and for the preparation of the IFRSReconciliations on the basis set out in the financial information, whichdescribes how IFRS will be applied under IFRS 1, including the assumptions thedirectors have made about the standards and interpretations expected to beeffective, and the policies expected to be adopted, when the company preparesits first complete set of IFRS financial statements as at 31 March 2006. Ourresponsibility is to audit the IFRS Reconciliations in accordance with relevantUnited Kingdom legal and regulatory requirements and auditing standards andreport 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 andconsider the implications for our report if we become aware of any apparentmisstatements or material inconsistencies with the IFRS Reconciliations. Basis of audit opinion We conducted our audit in accordance with United Kingdom auditing standardsissued by the Auditing Practices Board. An audit includes examination, on a testbasis, of evidence relevant to the amounts and disclosures in the IFRSReconciliations. It also includes an assessment of the significant estimates andjudgements made by the directors in the preparation of the IFRS Reconciliationsand of whether the accounting policies are appropriate to the circumstances ofthe group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the IFRS Reconciliationsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion, we also evaluated the overalladequacy of the presentation of information in the IFRS Reconciliations. Without qualifying our opinion, we draw attention to the fact that the IFRSstatement explains why there is a possibility that the accompanying IFRSReconciliations may require adjustment before constituting the final IFRSReconciliations. Moreover, we draw attention to the fact that, under IFRSs, onlya complete set of financial statements comprising a balance sheet, incomestatement, statement of changes in equity, cash flow statement, together withcomparative financial information and explanatory notes, can provide a fairpresentation of the company's financial position, results of operations and cashflows in accordance with IFRSs. OpinionIn our opinion the IFRS Reconciliations are prepared, in all material respects,on the basis set out in the financial information which describes how IFRS willbe applied under IFRS 1, including the assumptions the directors have made aboutthe standards and interpretations expected to be effective, and the policiesexpected to be adopted, when the company prepares its first complete set of IFRSfinancial statements as at 31 March 2006. Deloitte & Touche LLP Chartered Accountants& Registered AuditorsBristol, UK 27 October 2005 Tribal Group plcUnaudited reconciliation of equityat 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-currentassetsGoodwill 192,771 - - 4,896 (74) - - - - 197,593 Otherintangibleassets 623 - - - 95 351 - - - 1,069Property,plant andequipment 7,740 - - - - (351) - - - 7,389 Investmentproperty 89 - - - - - - - - 89Available forsaleinvestments 190 - - - - - - - - 190Deferred taxassets 378 286 - - - - - - - 664-------------------------------------------------------------------------------------------- 201,791 286 - 4,896 21 - - - - 206,994============================================================================================CurrentassetsInventories -work inprogress 4,616 - - - - - - - - 4,616Trade andotherreceivables 40,645 - - - - - - - - 40,645Cash and cashequivalent 27,493 - - - - - - - - 27,493-------------------------------------------------------------------------------------------- 72,754 - - - - - - - - 72,754--------------------------------------------------------------------------------------------Total assets 274,545 286 - 4,896 21 - - - - 279,748============================================================================================CurrentliabilitiesTrade andother payables (45,778) (675) - - - - 750 - (1,710) (47,413) Taxliabilities (3,614) - - - - - - - - (3,614)Obligationsunder financeleases (48) - - - - - - - - (48)Bankoverdrafts andloans (3,936) - - - - - - - - (3,936)---------------------------------------------------------------------------------------------- (53,376) (675) - - - - 750 - (1,710) (55,011)----------------------------------------------------------------------------------------------Net currentassets 19,378 (675) - - - - 750 - (1,710) 17,743 Non-currentliabilitiesBank loans (71,423) - - - - - - - - (71,423)Pensionliabilities - (277) - - - - - - - (277)Deferred tax liabilities - - (178) (29) - - - - (207) Obligationsunder financeleases (38) - - - - - - - - (38)Othernon-currentliabilities (400) - - - - - - - - (400)---------------------------------------------------------------------------------------------- (71,861) (277) (178) - (29) - - - - (72,345)----------------------------------------------------------------------------------------------Totalliabilities (125,237) (952) (178) - (29) - 750 - (1,710) (127,356)==============================================================================================Net assets 149,308 (666) (178) 4,896 (8) - 750 - (1,710) 152,392==============================================================================================EquityShare 3,468 - - - - - - - - 3,468capitalShare premiumaccount 79,636 - - - - - - - - 79,636Equity reserve 43,646 - - - - - - - - 43,646Shares to beissued 25,605 - - - - - - (2,584) - 23,021 Retainedearnings (4,396) (666) (178) 4,896 (8) - 750 2,584 (1,710) 1,272----------------------------------------------------------------------------------------------Equityattributableto equityholders of the parent 147,959 (666) (178) 4,896 (8) - 750 - (1,710) 151,043 Minorityinterest 1,349 - - - - - - - - 1,349----------------------------------------------------------------------------------------------Total equity 149,308 (666) (178) 4,896 (8) - 750 - (1,710) 152,392============================================================================================== Tribal Group plcUnaudited reconciliation of the consolidated income statementfor 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 5Turnover 107,718 - - - - - 107,718 Direct agencycosts (25,902) - - - - - (25,902)------------------------------------------------------------------------------------------------------------Revenue 81,816 - - - - - 81,816 Cost of sales (45,625) - - - - - (45,625)-----------------------------------------------------------------------------------------------------------Gross profit 36,191 - - - - - 36,191=========================================================================================================== -----------------------------------------------------------------------------------------------------------Netadministrativeexpenses (27,266) (89) - - - - (27,355)Intangibleamortisation - - (11) - - - (11)Goodwillamortisation (5,629) - - - - 5,629 -Goodwillimpairment (3,200) - - - - (733) (3,933)Share optioncharges (500) - - 500 (905) - (905)ExceptionalMercury bidcosts (1,991) - - - - - (1,991)-----------------------------------------------------------------------------------------------------------Totaladministrativeexpenses (38,586) (89) (11) 500 (905) 4,896 (34,195)-----------------------------------------------------------------------------------------------------------Operatingprofit (2,395) (89) (11) 500 (905) 4,896 1,996 Finance income 486 - - - - - 486Financecharges (2,536) (8) - - - - (2,544)-----------------------------------------------------------------------------------------------------------Net financecosts (2,050) (8) - - - - (2,058)Profit beforetax (4,445) (97) (11) 500 (905) 4,896 (62) Tax (2,062) 29 3 - - - (2,030) (Loss)/Profitfor the year (6,507) (68) (8) 500 (905) 4,896 (2,092)===========================================================================================================Attributable to:Equity holdersof 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 pershare (pence) (9.39)p (0.10)p (0.01)p 0.72p (1.31)p 7.07p (3.02)p Adjusteddilutedearnings pershare (pence) 6.49p (0.09)p - - - - 6.40p Tribal Group plcNotes to unaudited reconciliation of equityat 30 September 2004 Notes 1. As noted in the reconciliation of equity at 1 April 2004, the full pensionliability is recognised under IFRS but was not recognised under UK GAAP. Inaddition a holiday pay accrual of £0.7m is recognised. The deferred tax asset on this pension liability is also recognised in full. Adeferred tax liability is also created in respect of long leasehold andinvestment properties. 2. Goodwill amortisation under UK GAAP of £4.9m is added back. £0.1m ofseparately identified intangible assets have been recognised in accordance withIFRS 3/IAS 38 (derecognised in goodwill) as has the deferred tax asset inrelation 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'scorporate information systems has been reclassified on transition as anintangible asset. Under UK GAAP it was treated as a tangible fixed asset. 4. Proposed dividends are not recognised under IFRS until the period when theyare declared and therefore the provision of £0.8m has been written back. 5. The cumulative liability for share based payments of £1.7m is recognisedunder IFRS 2 and replaces the UITF 17 liability of £2.6m, formerly included inshares to issued, under UK GAAP. Notes to unaudited income statement reconciliationat 30 September 2004 Notes 1. The change from accounting for the defined benefit pension schemes under UKGAAP to IFRS has resulted in an increased charge of £15,000 and a charge forholiday pay of £82,000 is made. 2. Provision is made for amortisation of £11,000 on separately identifiableintangible assets. 3. UITF 17 charge of £0.5m is derecognised and replaced by IFRS 2 'Share-basedpayments' 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 anadditional impairment of £0.7m being charged for the amortisation previouslyrecorded. Tribal Group plcUnaudited 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) 8Goodwill impairment 3,933Share option charges 905Exceptional Mercury bid costs 1,991Adjusted 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 Basicloss (£'000) (6,507) (68) (8) 500 (905) 4,896 (2,092) Basicloss per share(pence) (9.39)p (0.10)p (0.01)p 0.72p (1.31)p 7.07p (3.02)p Adjustedearnings(£'000) 4,813 (68) - - - - 4,745 Adjusteddilutedearningsper share(pence) 6.49p (0.09)p - - - - 6.40p This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tribal Grp.