24th Apr 2006 07:01
Fenner PLC24 April 2006 24 April 2006 FENNER PLC Restatement of financial information under International Financial Reporting Standards Fenner PLC today announces the restatement of financial information for the halfyear ended 28 February 2005 and the year ended 31 August 2005 underInternational Financial Reporting Standards (IFRS). The Group previouslyprepared its consolidated financial statements under UK Generally AcceptedAccounting Principles. The full restatement document can be found on the Group's website atwww.fenner.com. The document explains the impact of the change to IFRS on theGroup's previously reported interim and full year results for 2005 and theopening position at the Group's date of transition to IFRS of 1 September 2004. The first results under IFRS will be published in the Interim Report for thehalf year ended 28 February 2006. The first full year results under IFRS will bepublished in the Annual Report for the year ending 31 August 2006. Basis of preparation==================== The financial information presented in this statement has been prepared inaccordance with IFRS as adopted for use in the European Union (EU) that areexpected to be applicable at 31 August 2006, the Group's first annual reportingdate at which it is required to adopt IFRS. The IFRS that will be effective oravailable for adoption at 31 August 2006 are subject to review by theInternational Accounting Standards Board (IASB) and endorsement by the EU. Thefailure of the EU to endorse all standards in time or the issue of newinterpretative guidance by the IASB could result in changes to the financialinformation in this statement and amendments may be required up to the point ofpreparation of the financial statements for the year ending 31 August 2006. Overview of impact of IFRS on 2005 results========================================== +-----------------+---------------------------+-------------------------+| | | || | Year ended 31 August 2005 | Half year ended || | | 28 February 2005 |+-----------------+---------+--------+--------+--------+--------+-------+| | UK GAAP|IFRS adj| IFRS| UK GAAP|IFRS adj| IFRS| | | £'000| £'000| £'000| £'000| £'000| £'000| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Revenue | 313,012| (9,368)| 303,644| 141,339| (4,242)|137,097| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Operating profit*| 21,255| (410)| 20,845| 6,571| (87)| 6,484| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Operating profit | 15,849| 448 | 16,297| 5,324| 604 | 5,928| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Profit before | | | | | | | |taxation | 12,025| 440 | 12,465| 3,602| 598 | 4,200| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Profit for the | | | | | | | |period | 7,511| 922 | 8,433| 2,270| 612 | 2,882| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Earnings per | | | | | | | |share * | 9.34p| 0.41p| 9.75p| 2.77p| 0.21p| 2.98p| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Earnings per | | | | | | ||share | 5.28p| 1.38p| 6.66p| 1.74p| 0.84p| 2.58p| +-----------------+---------+--------+--------+--------+--------+-------+| | | | | | | | |Net assets | 123,159|(16,897)| 106,262| 65,967|(24,079)| 41,888| +-----------------+---------+--------+--------+--------+--------+-------+ * before amortisation of acquisition intangible assets and exceptional items There is no impact on the underlying performance or cash generation of the Group Explanation of IFRS adjustments=============================== 1. Employee benefits-------------------- IAS 19 'Employee Benefits' is broadly similar in accounting treatment to FRS 17'Retirement Benefits', the impact of which has been disclosed in the Group'sfinancial statements since 2001. It requires surpluses or deficits onpost-retirement defined benefit schemes to be recognised in the balance sheetand permits actuarial gains and losses to be recognised directly in equitythrough the statement of recognised income and expense. The only differencebetween IAS 19 and FRS 17 that has a material impact on the Group is therecognition of future expenses of running the schemes in the defined benefitobligation. Under UK GAAP the Group accounted for post-retirement definedbenefit schemes under SSAP 24 'Accounting for pension costs' with disclosures inthe financial statements in accordance with the transitional provisions of FRS17. The Group operates a number of post-retirement defined benefit schemes,principally a defined benefit pension scheme in the UK. The adjustment for IFRShas been made in respect of all UK and overseas post-retirement defined benefitschemes with the exception of those that are immaterial to the Group. Impact of IFRS adjustment There was an increase in profit for the year ended 31 August 2005 of £533,000and an increase in profit for the half year ended 28 February 2005 of £237,000. There was a decrease in net assets at 31 August 2005 of £23,587,000 and adecrease in net assets at 28 February 2005 of £23,891,000. 2. Business combinations======================== 2.1 Goodwill amortisation------------------------- IFRS 3 does not permit the amortisation of goodwill. Goodwill is carried at itsamortised value at the date of transition to IFRS and is reviewed for impairmentannually, or more frequently when events or changes in circumstances indicatethat the carrying amount may be impaired. Any impairment is recognisedimmediately in the income statement. Under UK GAAP goodwill is amortised overits expected useful life. No adjustment has been made to amortisation of goodwill prior to the date oftransition to IFRS as permitted by the transitional provisions of IFRS 1. No impairment is required to the carrying amount of goodwill. Impact of IFRS adjustment There was an increase in profit for the year ended 31 August 2005 of £1,918,000and an increase in profit for the half year ended 28 February 2005 of £698,000. There was an increase in net assets at 31 August 2005 of £1,921,000 and anincrease in net assets at 28 February 2005 of £695,000. 2.2 Recognition of intangible assets------------------------------------ IFRS 3 requires an acquiring company to recognise separately the identifiableassets and liabilities of an entity on the acquisition of that entity. Forintangible assets this is required if their fair value can be measured reliably.Intangible assets are initially valued at fair value and are amortised overtheir estimated useful lives. Under UK GAAP there are less prescriptiverequirements for the identification of intangible assets and this generallymeans that intangible assets acquired are not separately identified and as aresult are classified within goodwill. No adjustment has been made in respect of business combinations prior to thedate of transition to IFRS as permitted by the transitional provisions of IFRS1. Impact of IFRS adjustment There was a decrease in profit for the year ended 31 August 2005 of £691,000.There was no impact on the income statement for the half year ended 28 February2005. There was a decrease in net assets at 31 August 2005 of £631,000. There was noimpact on net assets at 28 February 2005. 3. Foreign currency translation=============================== 3.1 Retranslation of goodwill----------------------------- IAS 21 requires goodwill arising on the acquisition of a foreign operation andany fair value adjustments relating to the acquisition to be treated as assetsand liabilities of that operation and expressed in the functional currency ofthat operation. These amounts must then be retranslated at the closing rate ateach balance sheet date, with any exchange differences on retranslationrecognised directly in equity. Under UK GAAP goodwill arising on consolidationis translated to sterling at the date of acquisition and carried in sterling,with no retranslation at the balance sheet date. No adjustment has been made to goodwill arising on acquisitions prior to thedate of transition to IFRS, as permitted by the transitional provisions of IFRS 1. Impact of IFRS adjustment There was no impact on the income statement. There was an increase in net assets at 31 August 2005 of £393,000. There was noimpact on net assets at 28 February 2005. 3.2 Separate classification of cumulative exchange differences in equity------------------------------------------------------------------------ IAS 21 requires the cumulative exchange differences recognised in equity to beclassified as a separate component of equity. Under UK GAAP this is includedwithin the appropriate component of equity. Cumulative foreign exchange differences in equity at the date of transition toIFRS have been reset to zero as permitted by the transitional provisions of IFRS 1. Impact of IFRS adjustment There was no impact on the income statement. There was no impact on net assets since this only reclassifies balances withinequity. 4. Post balance sheet events - Dividends======================================== IAS 10 'Events After the Balance Sheet Date' requires that dividends approvedafter the balance sheet date should not be recognised as a liability at thebalance sheet date since the liability does not represent a present obligationas defined by IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'.Dividends are only recognised when approved by shareholders at the AnnualGeneral Meeting or, for interim dividends, when paid. Under UK GAAP theliability is recognised in the period to which the dividends relate irrespectiveof when they are approved or paid. Impact of IFRS adjustment There was no impact on the income statement since dividends are not included inthe income statement under IFRS. There was an increase in net assets at 31 August 2005 of £8,168,000 and anincrease in net assets at 28 February 2005 of £2,145,000. 5. Joint ventures - Minority interests====================================== IAS 27 'Consolidated and Separate Financial Statements' requires that an entitycan only be consolidated as a subsidiary if the Group has the power to governthe financial and operating policies of the entity. Under UK GAAP an entity canbe consolidated as a subsidiary if the Group can demonstrate dominant influenceover the financial and operating policies of the entity. The distinction istherefore that IFRS requires the legal enforceability of control whereas UK GAAPrequires the demonstration that actions exert dominant influence. The Group holds a 50% shareholding in an entity which was previously accountedfor as a subsidiary under UK GAAP on the basis that the actions of the Groupwere demonstrated to exert dominant influence. Under IFRS the Group is unable tolegally enforce control and so the entity is consolidated as a joint venturerather than as a subsidiary. IAS 31 'Interests in Joint Ventures' requires interests in joint ventures to berecognised using the proportionate consolidation method or as an alternative,the equity method. The use of the proportionate consolidation method means theGroup's income statement will include its share of the income and expenses ofthe joint venture and the Group's balance sheet will include its share of theassets and liabilities of the joint venture. Under UK GAAP, as accounted for asa subsidiary, the Group's income statement includes all income and expenses ofthe joint venture before deduction of the minority interest as a single figureand the Group's balance sheet includes all assets and liabilities of the jointventure with the minority interest deducted in equity. Impact of IFRS adjustment There was a decrease in profit for the year ended 31 August 2005 of £795,000 anda decrease in profit for the half year ended 28 February 2005 of £302,000. Therewas however no impact on profit attributable to equity holders of the parent. There was a decrease in net assets at 31 August 2005 of £3,746,000 and adecrease in net assets at 28 February 2005 of £3,509,000. There was however noimpact on shareholders' equity. 6. Deferred taxation==================== IAS 12 'Income Taxes' requires deferred tax to be provided on temporarydifferences between the carrying amounts and tax values of assets andliabilities (a balance sheet approach). Under UK GAAP deferred tax is providedon timing differences between profit in the financial statements and taxableprofit (an income statement approach). In addition IAS 12 requires therecognition of deferred tax assets and liabilities in respect of rolled overcapital gains and revalued assets. Under UK GAAP these are generally notrequired to be recognised. Under UK GAAP, goodwill on acquisitions prior to 1 September 1998 was recognisedimmediately in equity and would be charged to the income statement upon anysubsequent sale or closure of the business. Consequently a deferred taxprovision is recognised for tax deductible goodwill on the timing differencethrough the income statement. Under IFRS such goodwill is not recycled throughthe income statement and remains in equity, but a deferred tax asset may berecognised on the temporary difference representing the tax base of the asset. The deferred tax effects of the other IFRS adjustments are included within therelevant adjustment. Impact of IFRS adjustment There was a decrease in profit for the year ended 31 August 2005 of £43,000 anda decrease in profit for the half year ended 28 February 2005 of £21,000. There was an increase in net assets at 31 August 2005 of £585,000 and anincrease in net assets at 28 February 2005 of £481,000. 7. Share-based payments======================= IFRS 2 'Share-based Payment' requires the cost of share-based payments to becharged to the income statement over the vesting period of the award based onthe fair value at the date of grant of the award. For equity-settled awardsthese are credited to equity. Under UK GAAP the charge is based on the intrinsicvalue of the award. No material adjustments were required for IFRS in respect of share-basedpayments. - ends - For further information please contact: Fenner PLC 01482 626501Mark Abrahams, Chief ExecutiveRichard Perry, Finance Director Weber Shandwick Square Mile 020 7067 0700Nick Oborne/Stephanie Badjonat This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Fenner PLC