21st Mar 2006 07:04
Mears Group PLC21 March 2006 Unaudited presentation of Financial Statements prepared under IFRS Mears Group PLC has voluntarily elected to adopt International FinancialReporting Standards (IFRS) for the year ended 31 December 2005. The date oftransition to IFRS is therefore 1 January 2004 with the transitional year beingthe year to 31 December 2004. The preliminary results for the year ended 31 December 2005 were released on 21March 2006. The purpose of this announcement is to explain how Mears Group PLC's financialperformance for the year ended 31 December 2004, and its financial position asat that date, presented under IFRS, differs to that previously reported under UKGenerally Accepted Accounting Principles (UK GAAP). The financial information contained in this announcement is unaudited. This doesnot constitute statutory accounts as defined by section 240 of Companies Act1985. A copy of the statutory accounts for the year ended 31 December 2004,which were prepared under UK GAAP, has been delivered to the Registrar ofCompanies. The adoption of IFRS does not affect the underlying performance of the businessand turnover remains unchanged. The adoption also has no impact on cashgenerated from operations. The reconciliations and explanatory notes describethe impact of the adoption of IFRS on the results of the Group for the yearended 31 December 2004, six months ended 30 June 2004 and six months to 30 June2005 Profit and loss reported under UK GAAP for the year ending 31 December 2004 isreconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000---------------- ------- -------- ------- -------- --------Sales revenue 173,685 - - - 173,685 Cost of sales (128,766) - - - (128,766)---------------- ------- -------- ------- -------- --------Gross profit 44,919 - - - 44,919 Administrativeexpenses (38,081) 664 (315) - (37,732)---------------- ------- -------- ------- -------- --------Operatingresult 6,838 664 (315) - 7,187 Share ofoperatingresult inassociate 4 - - - 4 Finance costs (68) - - - (68)---------------- ------- -------- ------- -------- --------Result for theyear before tax 6,774 664 (315) - 7,123 Tax expense (1,855) - - 95 (1,760)---------------- ------- -------- ------- -------- --------Net result forthe year 4,919 664 (315) 95 5,363---------------- ------- -------- ------- -------- -------- Profit and loss reported under UK GAAP for the 6 months to 30 June 2004 isreconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000----------------- ------- -------- ------- -------- --------Sales revenue 81,331 - - - 81,331Cost of sales (61,082) - - - (61,082)----------------- ------- -------- ------- -------- --------Gross profit 20,249 - - - 20,249Administrativeexpenses (17,345) 344 (130) - (17,131)----------------- ------- -------- ------- -------- --------Operatingresult 2,904 344 (130) - 3,118Share ofoperatingresult inassociate 3 - - - 3Finance costs (32) - - - (32)----------------- ------- -------- ------- -------- --------Result for theyear beforetax 2,875 344 (130) - 3,089Tax expense (911) - - 45 (866)----------------- ------- -------- ------- -------- --------Net result forthe year 1,964 344 (130) 45 2,223----------------- ------- -------- ------- -------- -------- Profit and loss reported under UK GAAP for the 6 months to 30 June 2005reconciled to IFRS as follows: UK GAAP Goodwill Share-based Deferred tax IFRS amortisation payments £'000 £'000------------------- ------- -------- ------- -------- --------Sales revenue 96,295 - - - 96,295Cost of sales (68,710) - - - (68,710)------------------- ------- -------- ------- -------- --------Gross profit 27,585 - - - 27,585Administrativeexpenses (23,312) 283 (235) - (23,264)------------------- ------- -------- ------- -------- --------Operatingresult 4,273 283 (235) - 4,321Share of operating - - - - -result in associateFinance costs 6 - - - 6------------------- ------- -------- ------- -------- --------Result for theyear beforetax 4,279 283 (235) - 4,327Tax expense (1,278) - - 55 (1,223)------------------- ------- -------- ------- -------- --------Net result forthe year 3,001 283 (235) 55 3,104------------------- ------- -------- ------- -------- -------- Earnings per share reported under IFRS for the year ended 31 December 2004 andsix months to 30 June 2004 and 30 June 2005 are as follows: -------Basic------ ------Diluted------ 6 months 6 months Year 6 months 6 months Year 2005 2004 2004 2005 2004 2004 p p p p p p--------------- ------- ------- ------ ------- ------ ------Earnings per share 5.35 3.87 9.32 4.95 3.63 8.71 Effect of eliminatingshare based payments 0.31 0.15 0.38 0.29 0.14 0.36 Effect of fulltax adjustment (0.15) (0.10) (0.66) (0.14) (0.09) (0.62)--------------- ------- ------- ------ ------- ------ ------Normalised earnings per share beforeshare based payments 5.51 3.92 9.04 5.10 3.68 8.45--------------- ------- ------- ------ ------- ------ ------ The remeasurement of the consolidated balance sheet items at the IFRS openingbalance sheet date and at 31 December 2004, together with the reconciliation ofthe Group's equity reported under UK GAAP to its equity under IFRS as at 1January 2004 and 31 December 2004 may be summarised as follows: The Group Note UK GAAP Effect of IFRS transition £'000 £'000 £'000--------------- ------- ------- ------- -------At 1 January 2004Pension obligation 1.2 - (88) (88)Proposed dividend creditor 1.3 (573) 573 -Deferred tax asset 1.4 - 900 900--------------- ------- ------- ------- -------Total adjustment to equity 1,385Total equity - UK GAAP 12,292--------------- ------- ------- ------- -------Total equity - IFRS 13,677--------------- ------- ------- ------- -------At 31 December 2004Goodwill 1.1 10,406 663 11,069Equity accounted investments 1.1 48 1 49Pension obligation 1.2 - (142) (142)Proposed dividend creditor 1.3 (815) 815 -Deferred tax asset 1.4 - 2,100 2,100--------------- ------- ------- ------- -------Total adjustment to equity 3,437Total equity - UK GAAP 16,436--------------- ------- ------- ------- -------Total equity - IFRS 19,873--------------- ------- ------- ------- ------- 1.1 Goodwill Under IFRS, goodwill is not amortised. Instead, goodwill is tested forimpairment annually, or more frequently if events or changes in circumstancesindicate that it might be impaired. As required by IFRS 1, 'First-time adoption of IFRS', goodwill recognised underUK GAAP has been tested for impairment at the transition date of 1 January 2004.No impairment loss was required to be recognised. In accordance with IFRS 1,this amount has been considered the carrying amount of goodwill in the openingIFRS balance sheet. For the year ending 31 December 2004, goodwill is not amortised under IFRS. As aresult, the amortisation of goodwill as required under UK GAAP is reversed inthe reconciliation from UK GAAP to IFRS with a corresponding reduction inexpenses. 1.2 Pension obligation Under IFRS, pension obligations are recognised as a liability in the balancesheet based on the defined benefit obligation at the balance sheet date. Inaccordance with the transitional provisions of IFRS 1 the deficit has beenrecognised in the balance sheet at the transition date of 1 January 2004. UnderUK GAAP the pension costs charged against profits were designed to spread theanticipated pension costs over the service lives of employees in the scheme. 1.3 Proposed dividend creditor Under IAS 10 'Events after the balance sheet date', dividends approved after thebalance sheet date should not be recognised as a liability at the balance sheetdate since the liability did not represent a present obligation at that date.Under UK GAAP, proposed dividends were recognised as a liability in the periodto which they related. 1.4 Deferred tax asset Under IAS 12 'Income Taxes', deferred tax is provided on temporary differencesbetween the book carrying value and tax base of assets and liabilities (abalance sheet approach). Under UK GAAP, deferred tax was provided on timingdifferences between the accounting and taxable profit (an income statementapproach). 1.5 Share-based payments Under IFRS 2 'Share-based payments', the cost of employee share schemes,including SAYE schemes, is based on the fair value of the awards. Under UK GAAP,the cost of awards made under the Group's employee share schemes was based onthe intrinsic value of the awards, with the exception of SAYE schemes for whichno cost was recognised. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mears