25th Jan 2006 07:01
Diploma PLC25 January 2006 FOR IMMEDIATE RELEASE 25 January 2006 DIPLOMA PLC THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") Restatement of 2005 Financial Information On 14 November 2005, Diploma PLC ("Diploma") announced its results for the yearended 30 September 2005 using UK Generally Accepted Accounting Principles (UKGAAP). This Announcement ("Announcement") restates those results underInternational Financial Reporting Standards ("IFRS"). The Group will prepare financial statements for the year ending 30 September2006 and for the half year ending 31 March 2006 in accordance with IFRS. Theresults for the comparative year (ended 30 September 2005) will therefore berestated. This Announcement shows the impact of this restatement and explainsthe primary differences. The move to IFRS will not impact the Group's underlying business performance, itwill not change the way the Group is managed and it will have no impact on cashflows. The financial information in this Announcement is unaudited. It is also subjectto possible change as the definition and interpretation of IFRS continues toevolve and be amended by the relevant authorities. SUMMARY FINANCIAL INFORMATION The impact on the Group's consolidated financial results for the year ended 30September 2005 is as follows: 2005 IFRS 2005 UK GAAP Variance (unaudited) (audited) £m £m £m Turnover 111.3 111.3 - Profit before financing and tax 16.4 14.6 +1.8 Finance income 0.7 0.7 - Profit before tax 17.1 15.3 +1.8 Free cash flow 11.9 11.9 -Cash and cash equivalents 25.7 25.7 -Trading capital employed 51.4 48.5 +2.9Total shareholders' equity 75.4 72.5 +2.9 Basic earnings per share 52.0p 46.6p +5.4p Adjusted PBT £16.9m £16.6m +£0.3mAdjusted EPS 52.9p 52.4p +0.5p As highlighted in the 2005 Annual Report, the most significant effects of IFRSon the Group's financial statements include accounting for defined benefitpension schemes, dividends, goodwill and deferred tax. The principal measures of underlying performance in the Income Statement has, inthe past, been the profit before tax, goodwill amortisation and exceptionalitems ("Adjusted PBT") and earnings per share before goodwill amortisation andexceptional items ("Adjusted EPS"). In the year ended 30 September 2005 AdjustedPBT was £16.6m on a UK GAAP basis, whereas under IFRS Adjusted PBT is £16.9m.The difference is due to a change in accounting for defined benefit pensionschemes and share-based payments. Calculated on the same basis, Adjusted EPSincrease from 52.4p under UK GAAP to 52.9p under IFRS, an increase of 1.0%. On the Balance Sheet, total shareholders' equity at 30 September 2005 increasesby £2.9m from £72.5m under UK GAAP to £75.4m under IFRS. The main differencesare the movement of the accrual for the final dividend for the year ended 30September 2005 into the following year (+£2.9m), the gross provision for thedefined benefit pension scheme deficits (-£3.8m), the removal of goodwillamortisation (+£1.3m) and recognition of deferred tax assets (+£2.5m). The Company has substantial distributable reserves under both UK GAAP and IFRS. Cash flow is unchanged from that previously reported under UK GAAP. Enquiries: Nigel Lingwood, Group Finance Director Diploma PLC 020 7448 4875 Gustav Rober, Financial Controller Diploma PLC 020 7448 4878 This statement is published on the corporate website at www.diplomaplc.com INTRODUCTION The European Union has approved the application of International FinancialReporting Standards ("IFRS") for all listed companies for accounting periodscommencing on or after 1 January 2005. For Diploma, the financial statementsfor the year ending 30 September 2006 will be the first to be prepared inaccordance with IFRS. In these financial statements, the results for thecomparative year (ended 30 September 2005) will be restated. The transition date to IFRS for Diploma is 1 October 2004. The move to IFRS will not change how Diploma is managed and will have no impacton cash flow. As with most companies, it may however, lead to increasedvolatility in the Income Statement and Balance Sheet, with the presentation ofthe financial statements also affected. Against this background, Diploma will continue to focus on the measures ofAdjusted PBT and Adjusted EPS as it believes this will greatly assist theunderstanding of the underlying performance of the business. Management willfocus on these measures while complying with the reporting requirements of IFRS.Free cash flow is not affected by the transition to IFRS and remains a keyperformance indicator, both internally and for shareholders. This Announcement summarises: • the major changes to the Income Statement from the transition from UK GAAP to IFRS; • the definition of Adjusted PBT and Adjusted EPS; • the material transitional adjustments to the Balance Sheet at 1 October 2004 and 30 September 2005 (Attachment 1); and • the unaudited summarised consolidated results of Diploma for the year ended 30 September 2005 on an IFRS basis, together with reconciliations from UK GAAP to IFRS (Attachments 1 and 2). 1. BASIS OF PREPARATION The financial information presented in this Announcement has been prepared onthe basis of the application of all IFRS that have been published to date thatare applicable to the Group, including International Accounting Standards (IAS)and interpretations issued by the International Accounting Standards Board(IASB) and all its committees. These are subject to ongoing amendment by theIASB and subsequent endorsement by the European Commission and are thereforesubject to possible change. This could result in the need to change the basisof accounting or presentation of certain financial information from thatpresented in this Announcement. It is possible, therefore, that further changeswill be required to this information before it is published as comparativeinformation for the year ending 30 September 2006. The financial informationpresented in this Announcement is unaudited. 2. FIRST-TIME ADOPTION OF IFRS (IFRS 1) IFRS 1, First-time Adoption of IFRS (revised 2004), permits companies adoptingIFRS for the first time to adopt alternative accounting treatments for certainareas of the financial statements during the transition period. In preparingthe financial information in this Announcement, Diploma has taken the followingexemptions: Business combinations Business combinations prior to the transition date, 1 October 2004, have notbeen restated to an IFRS basis. As a result, in the transition Balance Sheet asat 1 October 2004, goodwill arising from past business combinations remains asstated under UK GAAP at £23.5m. Employee benefits IFRS requires that a balance sheet asset or liability must be shown in respectof defined benefit pension schemes. Actuarial gains and losses arise when theactual returns on scheme assets and liabilities differ from those anticipated atthe time of valuation. The Group will adopt the exemption in IFRS 1 allowing allactuarial gains and losses arising before 1 October 2004 to be shown in theopening Balance Sheet at 1 October 2004. In the future, actuarial gains andlosses will be included in the Statement of Recognised Income and Expense. Cumulative translation differences In the Group financial statements the results of overseas subsidiaries aretranslated into Sterling at the average exchange rate. The Balance Sheet istranslated at the closing rate. This leads to exchange gains and losses beinggenerated on consolidation. IFRS requires translation differences on theretranslation of the assets and liabilities of overseas subsidiaries to be takendirectly to a separate translation reserve. On the disposal of an overseasentity, exchange differences previously taken to reserves will be transferred tothe Income Statement as part of the profit/loss on disposal of that entity. The elective exemption in IFRS 1 means that any translation differences prior tothe date of transition (1 October 2004) do not need to be analysedretrospectively and so the deemed cumulative translation differences at thisdate can be set to £nil. Thus, any cumulative translation differences arisingprior to the date of transition are excluded from any future profit/loss ondisposal of any entities. The Group will adopt this exemption. Financial instruments (IAS 32 and 39) As permitted, the implementation of IAS 32, Financial Instruments: Disclosureand Presentation, and IAS 39, Financial Instruments: Recognition andMeasurement, will be first applied to the financial year ending 30 September2006. As a result, financial instruments will continue to be accounted andpresented in accordance with UK GAAP for the year ended 30 September 2005. 3. SHARE-BASED PAYMENT (IFRS 2) At the transition date, the Group had no equity settled share-based awardsrelating to awards made before 7 November 2002. The Group did have awardsoutstanding at 1 October 2004 where part of the awards comprised a cash settledshare-based transaction. However, all of the performance conditions for theseawards had been completed by the transition date and the awards had vested, asdefined by IFRS. Hence no adjustments in respect of these awards are necessaryon transition. The impact of IFRS on equity settled share based awards relating to awards madeafter 7 November 2002 is discussed further below. 4. PRESENTATION OF FINANCIAL STATEMENTS (IAS 1) The primary statements within the financial information contained in this Reporthave been presented in accordance with IAS 1, Presentation of FinancialStatements. However, this format and presentation may require modification aspractice develops and in the event of further guidance being issued. 5. SEGMENT REPORTING (IAS 14) IAS 14, Segment Reporting does not change the Group's reportable segments fromthose reported under UK GAAP. The Group's existing business segments under UKGAAP will be the primary reporting segments under IAS 14. The Group's existinggeographical segments under UK GAAP will be the secondary reporting segmentsunder IAS 14. IAS 14 requires additional disclosures to be made for the primaryreporting segments compared to UK GAAP. 6. ADJUSTED PBT AND ADJUSTED EPS Diploma has identified Adjusted PBT as being profit before: - amortisation of acquisition intangible assets; - exceptional items; and - taxation. Adjusted EPS takes Adjusted PBT less taxation (attributable to Adjusted PBT) andminority interests, divided by the weighted average number of shares in issue(excluding own shares held in the Employee Benefit Trust). EXPLANATION OF IFRS ADJUSTMENTS The following paragraphs explain the key adjustments made to the financialresults for the year ended 30 September 2005, in order to reflect IFRS. 1. Share-based Payment (IFRS 2) The Group currently maintains share-based incentive schemes comprising aLong-Term Incentive Plan (LTIP) and a closed Matching Share Bonus Scheme (MSB). Under UK GAAP, companies were required to recognise an expense over theperformance period based on the intrinsic value of the share-based award. Thisvalue was the difference between the exercise price and the fair value of theshare at the date of the award (typically the market price), adjusted to reflectexpected and actual levels of vesting and the actual cost of the shares acquiredto satisfy the award. Under IFRS 2, Share-based Payment, an expense is also recognised in the IncomeStatement for all share-based payments over the vesting period. Whereperformance conditions for the Group's LTIP and MSB are partly based on growthin earnings per share, which under IFRS is a "non-market based" measure, theexpense is adjusted each year to reflect expected and actual levels of vesting. However, under the Group's LTIP, the performance conditions are also partlybased on total shareholder return ("TSR") relative to the FTSE mid-250 Index(excluding Investment Trusts). Under IFRS this is a "market based" measure andthe expense is determined at commencement of the award and not adjusted, otherthan for forfeitures. The IFRS expense in respect of this "market based" measure of the LTIP is basedon the fair value of the award at the date of grant; IFRS requires companies touse a simulation model, such as a Monte Carlo model, to simulate future shareprice movements for the Company and its comparator group. In the opinion of the Directors, the cost of preparing such a model to simulatethe share price, outweighs the benefit of the results of using this model.Accordingly for the purposes of applying IFRS 2, the Directors have assumed thatthe Company's total share performance relative to its comparator group over thethree year performance period will be such that 80% of the award relating tothis performance condition will vest. There are two potential principal differences in the accounting methods forshare-based payments under UK GAAP and IFRS. These relate to: • the cost of the shares acquired by the Group to meet the awards, on the assumptions set out above, which has been used under UK GAAP to determine the fair value of the awards and is being charged to profit over the performance period. Under IFRS, the cost of acquiring shares over and above the fair value at the date of grant is charged directly to retained earnings and not the income statement. • the MSB which (subject to achieving a "non-market based" performance condition) gives participants matching shares after two years, if they invest their annual cash bonus in Diploma shares. Although the total charge over time is the same under UK GAAP and IFRS, the phasing is different. Under UK GAAP, all the expense of a grant was taken in the year in which the performance was measured. Under IFRS, the expense is spread over a three year period starting in the year when the bonus on which it is based is earned. The operating expense arising from the adoption of IFRS 2 for the year ended 30September 2005 is £0.4m compared to a UK GAAP expense of £0.5m. The ongoingannual operating expense under IFRS is expected to be in the region of £0.6m,although the actual charge each year will be influenced by the likelihood ofperformance conditions being met in respect of the Group's LTIP awards. 2. Employee Benefits (IAS 19) Under UK GAAP, the Group accounts for pensions in accordance with SSAP 24. ThisStandard adopted an income statement driven approach which spread the cost ofproviding benefits over the estimated average service lives of employees. Thisresults in a stable, regular charge to income. The SSAP 24 discount rate isbased on the long-term estimate of the scheme's investment return. Typically,under SSAP 24, pension costs are reviewed triennially. Under UK GAAP, the Group also provided the required disclosures in accordancewith FRS 17 which set out the pension fund deficits and the assets andliabilities based on the valuation methodologies of that Standard. FRS 17 isfundamentally different to SSAP 24 and adopts a balance sheet driven approachwith market based measures. The discount rate under FRS 17 is based on themarket yield of high quality corporate bonds at the valuation date. Valuationsare updated annually. IAS 19 Employee Benefits adopts a similar valuation approach to FRS 17.Furthermore, an amendment to IAS 19 also provides an option that allowsactuarial gains and losses to be accounted for through the Statement ofRecognised Income and Expense, similar to FRS 17, from date of transition toIFRS (1 October 2004). Diploma has chosen to adopt this option. Set out below is a comparison of the impact of accounting for the Group'sdefined benefit pension schemes under SSAP 24, FRS 17 and IAS 19, in the IncomeStatement for the year ended 30 September 2005 and the Balance Sheet as at 30September 2005: Balance sheet Income Statement 2005 30 September 2005 SSAP 24 FRS 17 IAS 19 SSAP 24 FRS 17 IAS 19 £m £m £m £m £m £mSchemes: PLC (0.1) - - (0.1) (0.9) (0.9) Anachem* (0.3) (0.2) (0.2) (0.5) (3.5) (3.5)Pre-tax charge / netdeficit (0.4) (0.2) (0.2) (0.6) (4.4) (4.4) Deferred tax asset 0.2 1.3 1.3 Net liability (0.4) (3.1) (3.1) * before exceptional curtailment gain of £0.2m (paragraph 3 below) IAS 19 compared to SSAP 24 Under SSAP 24, there was a charge in the Income Statement amounting to £0.4m.Under IAS 19, this charge (before exceptional curtailment gain of £0.2m) isreduced to £0.2m for the year ended 30 September 2005 increasing operatingprofit by £0.2m. IAS 19 does not require the interest cost and expected returnon assets to be presented separately as a finance cost/(income). Consequently,the impact on net income has been included in arriving at operating profit, inline with SSAP 24. The impact of IAS 19 on the UK GAAP (SSAP 24) Balance Sheet at 30 September 2005is to reduce net assets by £2.7m, including the impact of deferred tax. Theimpact excluding deferred tax is £3.8m, which arises as a result of includingthe pension scheme deficit on the Balance Sheet which was not required underSSAP 24. The net pension deficit (after deferred tax) of the Group's defined benefitpension schemes under IFRS at 30 September 2005 was £3.1m. IAS 19 compared to FRS 17 IAS 19 has some minor differences from FRS 17 which do not result in asignificant difference in the Income Statement impact of these two Standards.In addition, IAS 19 is not specific in a number of areas and is therefore opento interpretation. In particular: • IAS 19 is not specific with respect to the inclusion of scheme expenses when calculating scheme liabilities. Diploma has included an allowance for the cost of future scheme expenses in calculating scheme liabilities. Such an allowance was not required under FRS 17. • IAS 19 is silent on the treatment of non-service related benefits, for example death in service lump sum payments. The Group has adopted the treatment of apportioning the cost between the past service liability and the service cost. This is slightly different to the method under FRS 17. The impact of these two areas of interpretation at the transition date and at 30September 2005 was to slightly increase the pension scheme liabilities, comparedto that disclosed under FRS 17. These numbers are not significant and do notimpact the reported numbers. 3. Termination of Defined Benefit Pension Scheme (IAS 19) During the year the Group negotiated the termination of the defined benefitscheme of one of its subsidiary companies, namely the Anachem Pension Scheme. The negotiations resulted in the cessation of future accrual of benefits and assuch represents a curtailment under IAS 19 since the Group is demonstrablycommitted to making a material reduction in the benefits for future service. Under SSAP 24 in UK GAAP, no gain or loss is recognised in the Income Statementfrom a decision to close a pension scheme to future accrual. Under IFRS, the curtailment gain arising from the termination of this Scheme isthe aggregate of the change in the present value of the defined obligation, thechange in the fair value of the Scheme's assets and any related actuarial gainsand losses. Hence in the year ended 30 September 2005, under IFRS the Group hasrecognised an exceptional curtailment gain of £0.2m, being the aggregatereduction in the present value of the defined benefit obligation less thereduction in the unrecognised actuarial loss. 4. Business Combinations and Goodwill A business combination occurs when one entity gains control of another. Theacquired assets and liabilities should be stated at fair value in the books ofthe acquirer (if appropriate) or in the Group accounts. The excess of thepurchase price over the cost is classified as goodwill on the face of theBalance Sheet in the Group accounts. Under UK GAAP, goodwill is amortised over its estimated useful life, whichDiploma has determined to be between 5 and 20 years in respect of the businessesacquired where goodwill has been capitalised. Under IFRS, goodwill is considered to have an indefinite life and thereforegoodwill should not be amortised but should be reviewed, at least annually, forimpairment and carried in the Balance Sheet at cost less any accumulatedimpairment losses. Goodwill already in existence at the transition date to IFRS will not beadjusted. The impact on the Income Statement for the year ending 30 September2005 is that goodwill amortisation of £1.3m that was previously charged under UKGAAP, is now removed under IFRS. The annual impairment test under IFRS duringthe year ended 30 September 2005 did not result in any reduction in the carryingvalue of goodwill. 5. Intangible Assets Under UK GAAP, all capitalised computer software is included within tangiblefixed assets as plant and equipment. Under IFRS, only computer software that isintegral to a related item of hardware should be included as plant andequipment. All other computer software should be recorded as an intangibleasset. This means that application software costs that have been capitalised astangible fixed assets must now be reclassified as intangible assets. Accordingly, a reclassification of the net book amount of capitalised computersoftware of £0.6m has been made in the transition Balance Sheet (at 1 October2004) and also £0.6m in the Balance Sheet as at 30 September 2005 betweenproperty, plant and equipment and intangible assets. There is no impact on theIncome Statement as a result of this reclassification since, under both UK GAAPand IFRS, computer software is depreciated over its estimated useful economiclife. 6. Income Taxes (IAS 12) Under UK GAAP, deferred taxation is recognised on the basis of timingdifferences, being the difference between accounting profit and taxable profit.IFRS requires deferred taxation to be based on temporary differences, being thedifference between the carrying value of an asset or liability and its tax base.As a result of the accounting treatment of defined benefit pension schemesunder IFRS, the Group has recognised an additional £1.2m of deferred tax assetin the transition Balance Sheet. In addition, a further £1.9m of deferred taxassets has been recognised in the transition Balance Sheet which primarilyrelates to goodwill, in respect of which the Group receives a tax benefit on theamortisation thereof. Where required, deferred tax has been provided on the IFRS adjustments. Under IFRS, deferred tax assets and deferred tax liabilities are, in certaincircumstances, disclosed separately on the balance sheet as non-current assetsand non-current liabilities, respectively. The impact of IFRS on the total tax charge for the year ended 30 September 2005is to increase the tax charge by £0.6m to £5.0m, representing an effective taxrate of 29.2% on profit before tax on an IFRS basis. The impact of IFRS on deferred tax in the Balance Sheet at transition and at 30September 2005 is as follows: 2005 2004 £m £m Net deferred tax asset at 30 September - UK GAAP 0.6 - IFRS adjustments: Deferred tax on pension deficit 1.1 1.2Deferred tax on goodwill 1.2 1.5Other timing differences 0.2 0.4 Net deferred tax asset at 30 September - IFRS 3.1 3.1 7. Provisions Reclassification (IAS 1) IFRS requires the elements of provisions which are expected to be paid withinone year of the Balance Sheet date to be presented on the Balance Sheet withincurrent liabilities as short term provisions. This has resulted in £1.0m ofprovisions relating principally to deferred consideration, being reclassified asshort term provisions in the Balance Sheet at 30 September 2005. 8. Events After the Balance Sheet Date (IAS 10) Under UK GAAP, ordinary dividends are accounted for in the period to which theyrelate even if the approval of that dividend takes place after the balance sheetdate. Under IFRS, proposed ordinary dividends do not meet the definition of aliability until such time as they have been approved. In the case of a finalordinary dividend this approval is by shareholders at the Annual GeneralMeeting. The approval of an interim dividend takes place at a meeting of theBoard of Directors. This means that each dividend will be charged in the periodin which it is approved rather than in the period to which it relates. Under IFRS, ordinary dividends are no longer disclosed on the face of the IncomeStatement but shown as a movement in equity. The final dividend for the year ended 30 September 2004 of £2.4m has beenreversed in the transition Balance Sheet and charged to equity in the half yearended 31 March 2005. The interim dividend for the six months ended 31 March2005 of £1.6m will be reversed and charged to equity in the half year ended 30September 2005. The final dividend for the year ended 30 September 2005 of£2.9m has been reversed and charged to equity following approval at the AnnualGeneral Meeting held on 11 January 2006. 9. Financial Instruments (IAS 32 and 39) As permitted, the implementation of IAS 32, Financial Instruments: Disclosureand Presentation, and IAS 39, Financial Instruments: Recognition andMeasurement, will be first applied to the financial year ending 30 September2006. As a result, financial instruments will continue to be accounted andpresented in accordance with UK GAAP for the year ended 30 September 2005.Accordingly, there will be an adjustment as at 1 October 2005 to reflect thetransition from UK GAAP to IFRS. The most significant financial instruments for Diploma are its forward purchasesof foreign currencies to hedge the value of transactions carried out in the UKrelating to purchases from overseas. The impact on the financial statements ofDiploma is unlikely to be material. It is expected that all of the Group's derivatives will qualify for hedgeaccounting under IFRS and therefore no significant gains or losses on thesecontracts from market movements will be charged or credited to the IncomeStatement. 10. Cash and Cash Equivalents (IAS 7) Under IAS 7 (Cash Flow Statements), for a short term deposit to qualify as acash equivalent, it must be readily convertible to a known amount of cash.Therefore, a short term deposit normally only qualifies as cash when it has amaturity of three months or less from the date of acquisition. The Group has reclassified short term deposits with a maturity of less thanthree months from short term deposits to 'cash and cash equivalents'. Theoverall impact is to reclassify £19.6m from short term deposits to cash and cashequivalents as at 30 September 2005. An IFRS Cash Flow Statement is similar to UK GAAP but presents various cashflows in different categories and in a different order from UK GAAP. The entire IFRS adjustments net out within cash generated from operations exceptfor the intangible assets reclassification where the cash used to purchasecomputer software has been reclassified from purchase of plant and equipment topurchase of intangible assets. The transition from UK GAAP to IFRS does not change the reported cash flows ofthe Group. 11. Other Changes There are a number of other minor changes. These have no material effect oneither reported profits or net assets. 12. Distributable Reserves Diploma PLC has considerable distributable reserves under both UK GAAP and IFRS. ATTACHMENT 1 RECONCILIATION OF THE FINANCIAL INFORMATIONFROM UK GAAP TO IFRS Adjusted PBT of £16.9m is £0.3m higher than the UK GAAP equivalent of £16.6m.The table below sets out a summary reconciliation of UK GAAP to IFRS for theyear ended 30 September 2005: Year ended 30 September 2005 £m Profit before goodwill amortisation, exceptional items and taxunder UK GAAP 16.6 Share based payments 0.1Pension costs 0.2 0.3Adjusted PBT under IFRS 16.9 The equivalent of Group profit after tax under IFRS is higher in 2005. Thetable below sets out a summary reconciliation of Group profit after tax under UKGAAP to Group profit after tax under IFRS: Year ended 30 September 2005 £m Group profit after tax under UK GAAP 10.9 Share based payments and pension costs (as above) 0.3Exceptional pension curtailment gain 0.2Reversal of goodwill amortisation 1.3Deferred taxation (0.6) 1.2Group profit after tax under IFRS 12.1 The table set out below provides a summary reconciliation between UK GAAP andIFRS GAAP for the Balance Sheets as at 1 October 2004 (the transition date) and30 September 2005. At 30 At 1 October September 2005 2004 £m £m Total shareholders' equity under UK GAAP 72.5 64.0 Pension liabilities, gross (3.8) (3.6)Reversal of UK GAAP goodwill amortisation charged aftertransition 1.3 -Deferred taxation 2.5 3.1Dividends 2.9 2.4Total shareholders' equity under IFRS 75.4 65.9 Total shareholders' equity increased at 30 September 2005 by 4.0% under IFRS,compared with that reported under UK GAAP. ATTACHMENT 2a Income Statementfor the year ended 30 September 2005 (unaudited) IFRS ADJUSTMENTS Share-based pmtsCONTINUING OPERATIONS UK GAAP Pension Good- Taxation will IFRS £m £m £m £m £m £m Revenue 111.3 111.3 Cost of Sales (71.8) (71.8) Gross Profit 39.5 39.5 Distribution expenses (3.5) (3.5)Administration expenses (20.1) 0.1 0.2 - (19.8)Amortisation of goodwill (1.3) - - 1.3 -Exceptional items - - 0.2 - 0.2 Profit before financing and tax 14.6 0.1 0.4 1.3 - 16.4 Finance income 0.7 0.7 Profit before tax 15.3 0.1 0.4 1.3 - 17.1 Tax expense (4.4) - (0.1) - (0.5) (5.0) Profit after tax for the year 10.9 0.1 0.3 1.3 (0.5) 12.1 Attributable to: Equity shareholders of the parentcompany 10.5 0.1 0.3 1.3 (0.5) 11.7Minority interests 0.4 - - - - 0.4 Earnings per 5p share:Basic and diluted earnings 46.6p 0.5p 1.3p 5.8p (2.2)p 52.0p Adjusted PBT £16.6m £0.1m £0.2m - - £16.9m Adjusted EPS 52.4p 0.5p 0.9p - (0.9)p 52.9p ATTACHMENT 2b Consolidated Balance Sheetas at 30 September 2005 (unaudited) UK IFRS ADJUSTMENTS IFRS GAAP Other Pension Goodwill Dividend Taxation reclassifi -cation £m £m £m £m £m £m £mAssetsNon-current assetsGoodwill 23.3 - 1.3 - - - 24.6Intangible assets - - - - - 0.6 0.6Property, plant and equipment 10.4 - - - - (0.6) 9.8Deferred tax assets - 1.1 - - 1.4 0.6 3.1 33.7 1.1 1.3 - 1.4 0.6 38.1 Current assetsInventories 21.3 21.3Trade and other receivables 20.3 - - - - (0.6) 19.7Cash and cash equivalents 25.7 25.7 67.3 - - - - (0.6) 66.7 LiabilitiesCurrent liabilitiesTrade and other payables (19.4) (19.4)Current tax liabilities (2.9) (2.9)Dividends (2.9) - - 2.9 - - -Other liabilities - - - - - (1.0) (1.0) (25.2) - - 2.9 - (1.0) (23.3) Net current assets 42.1 - - 2.9 - (1.6) 43.4 Total assets less current 75.8 1.1 1.3 2.9 1.4 (1.0) 81.5liabilities Non-current liabilitiesRetirement benefit obligations - (4.4) - - - - (4.4)Provisions (1.6) 0.6 - - - 1.0 - (1.6) (3.8) - - - 1.0 (4.4) Net assets 74.2 (2.7) 1.3 2.9 1.4 - 77.1 Shareholders' equityShare capital 1.1 1.1Capital redemption reserve 0.2 0.2Translation reserve - - - - - 2.2 2.2Retained earnings 71.2 (2.7) 1.3 2.9 1.4 (2.2) 71.9Total shareholders' equity 72.5 (2.7) 1.3 2.9 1.4 - 75.4 Equity minority interest 1.7 1.7 74.2 (2.7) 1.3 2.9 1.4 - 77.1 ATTACHMENT 2c Consolidated Statement of Recognised Income and Expensefor the year ended 30 September 2005 (unaudited) UK IFRS ADJUSTMENTS IFRS GAAP Share-based pmts Pension Goodwill Dividend Taxation £m £m £m £m £m £m £m Exchange rate adjustments on foreigncurrency net investments 2.2 2.2Actuarial losses on defined benefitpension schemes - - (0.6) - - - (0.6) Net income recognised directly inequity 2.2 - (0.6) - - - 1.6 Profit for the financial year 10.5 0.1 0.3 1.3 - (0.5) 11.7 Total recognised income and expense forthe year 12.7 0.1 (0.3) 1.3 - (0.5) 13.3 Reconciliation of Movements in Total Shareholders' Equityfor the year ended 30 September 2005 (unaudited) UK IFRS ADJUSTMENTS IFRS GAAP Share-based pmts Pension Goodwill Dividend Taxation £m £m £m £m £m £m £m Profit for the financial year 10.5 0.1 0.3 1.3 - (0.5) 11.7 Dividends (4.5) - - - 0.5 - (4.0) Profit after tax for the year 6.0 0.1 0.3 1.3 0.5 (0.5) 7.7 Exchange rate adjustments on foreigncurrency net investments 2.2 - - - - - 2.2Actuarial losses on defined pensionschemes - - (0.6) - - - (0.6)Purchase of own shares (0.5) - - - - - (0.5)Cost of employee share schemes 0.8 (0.1) - - - - 0.7 Net increase in shareholders' equity 8.5 - (0.3) 1.3 0.5 (0.5) 9.5 Total shareholders' equity at beginningof year 64.0 - (2.4) - 2.4 1.9 65.9Total shareholders' equity at end ofyear 72.5 - (2.7) 1.3 2.9 1.4 75.4 The Reconciliation of Movements in Total Shareholders' Equity is not a requiredprimary statement under IFRS; it has been shown here to provide an explanationof the movement in total shareholders' equity from those shown in the transitionbalance sheet. ATTACHMENT 2d Consolidated Group Cash Flow Statementfor the year ended 30 September 2005 (unaudited) UK IFRS ADJUSTMENTS IFRS GAAP Share based pmts Pension Goodwill Dividend Taxation Other £m £m £m £m £m £m £m £mCash flow from operating activities Cash generated from operations 16.4 16.4Interest received 0.7 0.7Tax paid (3.7) (3.7) Net cash from operating activities 13.4 13.4 Cash flow from investing activities Acquisition of subsidiaries (0.3) (0.3)Proceeds from the sale of property,plant and equipment 0.4 0.4Purchase of property, plant andequipment (1.4) (0.6) (0.8) Purchase of intangibles - 0.6 (0.6) Net cash used in investing activities (1.3) - (1.3) Cash flow from financing activities Dividends paid to shareholders (4.1) (4.1)Dividends paid to minority interest - -Purchase of own shares (0.5) (0.5) Net cash used in financing activities (4.6) (4.6) Net increase in cash and cashequivalents 7.5 7.5 Cash and cash equivalents at 1 October2004 17.9 17.9 Effect of exchange rates on cash andcash equivalents 0.3 0.3 Cash and cash equivalents at 30September 2005 25.7 - - - - - - 25.7 The Group's consolidated cash flow statement above has been reformatted inaccordance with IFRS. Compared to UK GAAP, cash generated from operatingactivities and cash is unchanged. Cash and cash equivalents include all shortterm deposits and are £25.7m. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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