13th Oct 2006 07:00
Rensburg Sheppards plc13 October 2006 13 October 2006 RENSBURG SHEPPARDS PLC ('Rensburg Sheppards' or 'the group') TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS The group today announces the effect of the transition to InternationalFinancial Reporting Standards. The information contained in this announcementwill shortly be available as a separate document in the Investor Relationssection of the group's website at www.rensburgsheppards.co.uk. For furtherinformation, please contact: Jonathan Wragg, Group Finance DirectorRensburg Sheppards plcTel: 0114 275 5100 Iain Hooley, Group Financial ControllerRensburg Sheppards plcTel: 0114 275 5100 TRANSITIONAL STATEMENT From 1 April 2006, Rensburg Sheppards plc is required by EC Regulation No. 1606/2002 to report its consolidated financial statements in accordance withInternational Financial Reporting Standards as endorsed by the European Union ('EU') and adopted by the EU ('adopted IFRSs'). The purpose of thisannouncement is to explain how the changes in accounting treatment requiredunder IFRS impact upon the group's results as previously reported under UKGenerally Accepted Accounting Principles ('UK GAAP'). The date of transition toIFRS for the group is 1 December 2004, being the start of the earliest period ofcomparative information. The preliminary IFRS financial information containedin this announcement is audited. The preliminary IFRS financial information provided in this document has beenprepared in accordance with current standards and interpretations as issued bythe International Accounting Standards Board ('IASB') and its predecessors andadopted by the European Commission ('EC'). However, the standards that are inissue are subject to ongoing review and endorsement by the IASB and the EC,whilst the application of the standards continues to be subject to review by theInternational Financial Reporting Interpretations Commission ('IFRIC').Accordingly, modifications may be required to be made to the information aspresented in this announcement as further guidance is issued and as practicedevelops. The table below gives a summary of the impact of the transition to IFRS on thegroup's results for the 16 month period to 31 March 2006: UK % GAAP IFRS Change 16 months ended 31 March 2006: Profit on ordinary activities before tax (£'000) 9,738 13,007 33.6% Adjusted profit on ordinary activities before tax (£'000) 29,347* 29,077** (0.9%) Earnings per share (pence) - Basic 7.6p 20.9p 175.0% - Adjusted basic 55.6p* 55.1p** (0.9%) Total equity (£'000) 153,675 157,784 2.7% * Before amortisation of both goodwill (£8.6 million) and the Employee BenefitTrust ('EBT') prepayment (£4.2 million), exceptional reorganisation costs (£9.9million) and exceptional profit on disposal of fixed asset investments (£3.1million). These adjustments amount to a net charge before tax of £19.6 million. ** Before amortisation of client relationships intangible asset (£5.1 million),share-based charges relating to the EBT (£4.2 million), reorganisation costs(£9.9 million) and profit on disposal of available-for-sale investments (£3.1million). These adjustments amount to a net charge before tax of £16.1 million. The most significant changes arising from the transition to IFRS are as follows: • goodwill is no longer amortised (IFRS 3). • the acquisition of Carr Sheppards Crosthwaite Limited has been restated in accordance with IFRS 3. This has resulted in client relationships being recognised as an intangible asset, separate to that of goodwill. The client relationships intangible asset recognised at the date of acquisition is £61.1 million and is being amortised over its estimated useful economic life of up to 12 years. • final dividends are recognised as a liability in the period in which they are declared (IAS 10). • the recognition of a charge in respect of both the group's SAYE employee share option scheme and potential future entitlements to shares granted by the Employee Benefit Trust ('EBT') (IFRS 2). • the classification of equity investments as 'available-for-sale' (IAS 39). • revenue is disclosed both before and after fees and commissions payable to intermediaries. • the provision of deferred taxation in respect of the above adjustments, where applicable (IAS 12). On 2 June 2005 the accounting reference date of Rensburg Sheppards plc waschanged from 30 November to 31 March. As a result, the group's interim resultsfor the current financial year will be in respect of the six months ended 30September 2006. The comparative interim results will be restated to present asix month period ended 30 September 2005. Previously, the interim results ofthe prior period, which were reported under UK GAAP, were in respect of the 10months ended 30 September 2005. As a result of the change of accountingreference date, the results for the 10 months ended 30 September 2005 will notbe reported under IFRS in the forthcoming interim report and hence noreconciliation of these results from UK GAAP to IFRS has been included withinthis transitional statement. FIRST TIME ADOPTION IFRS 1 'First time adoption of International Financial Reporting Standards'outlines how a company should apply the requirements of IFRSs upon transitionand in its first IFRS financial statements. The standard requires that acompany adopts accounting policies that comply with adopted IFRSs effective atthe first reporting date, and for those policies to be applied retrospectivelyto all periods presented in those first IFRS financial statements. IFRS 1 doeshowever provide a number of optional exemptions to this requirement that can beapplied at the date of transition to IFRS. Of these exemptions, the group haschosen to take advantage of the following: Business Combinations The group has chosen not to apply IFRS 3 'Business Combinations' retrospectivelyto business combinations that took place prior to the date of transition toIFRS, being 1 December 2004. Share based payments The group has chosen not to apply IFRS 2 'Share Based Payments' to equityinstruments that were granted before 7 November 2002 or to those that weregranted after 7 November 2002 that vested before 1 January 2005. IMPACT ANALYSIS The significant adjustments arising from the transition to IFRS are explainedbelow. The effect of these adjustments on the group's financial statements areshown in the financial information section. Business combinations - IFRS 3 In accordance with the transitional provisions of IFRS 1, the group has chosennot to apply IFRS 3 retrospectively. Business combinations arising before thedate of transition to IFRS, being 1 December 2004, have therefore not beenrestated. As a result, the value of goodwill arising on such combinations hasbeen frozen at its carrying value at 1 December 2004, being £13.0 million. Theamortisation charged in the period to 31 March 2006 relating to all acquisitionsof £8.6 million has been reversed. The acquisition of Carr Sheppards Crosthwaite Limited ('CSC'), which occurredafter the date of transition, has been restated in accordance with IFRS 3. Thishas resulted in the recognition of an intangible asset in respect of clientrelationships of £61.1 million and a related deferred tax liability of £18.3million. These items have been recognised as part of the net assets of CSC atthe date of acquisition. The client relationships intangible asset has a finiteeconomic life, estimated at up to 12 years, and is being amortised over thisperiod. Goodwill existing at the date of transition of 1 December 2004 was tested forimpairment at that date and at the end of the last financial period, being 31March 2006. Goodwill will be tested annually thereafter for impairment andcarried at cost less accumulated impairment losses. Under UK GAAP, goodwill wasamortised on a straight-line basis over its useful economic life, not exceeding20 years. The impact of these changes on the income statement for the 16 months ended 31March 2006 is to reverse the goodwill amortisation charged under UK GAAP of £8.6million and to charge £5.1 million of amortisation in respect of the clientrelationships intangible asset, being the amortisation charge for the periodfrom the date of acquisition of CSC of 6 May 2005 to 31 March 2006. Inaddition, there is a credit to the income tax expense for the period of £1.5million, representing the movement of the deferred tax liability that arose inrespect of the client relationships intangible asset. The impact on the balancesheet at 31 March 2006 is to increase intangible assets by £22.1 million and toincrease deferred tax liabilities by £17.1m, resulting in an overall increase inclosing equity reserves of £5.0 million. The net impact on intangible assets of£22.1 million comprises the additional deferred tax liabilities recognised atthe date of acquisition of £18.3 million referred to above, plus other deferredtax liabilities recognised at the date of acquisition of £0.3 million, the writeback of goodwill amortisation of £8.6 million and the amortisation of the clientrelationship intangible asset of £5.1 million. Intangible assets - IAS 38 In accordance with the requirements of IAS 38, capitalised computer software hasbeen classified as a separate category of intangible fixed assets. Previously,computer software was recognised within tangible fixed assets. The effect of this change is to increase the net book value of intangible assetsby £1.1 million at 1 December 2004 and by £1.2 million at 31 March 2006; the netbook value of tangible fixed assets has reduced by the corresponding amounts atthe respective dates. The period over which these assets are being depreciatedremains unchanged and hence there is no overall impact on equity reserves. Property, plant and equipment - IAS 16 The group's policy under IAS 16 will be to recognise all categories of tangiblefixed assets at depreciated historic cost, less provision for any impairment,with the exception of freehold land and buildings, which will be carried at fairvalue. This policy of revaluation of freehold land and buildings has beenapplied retrospectively at the date of transition and the depreciation chargefrom the date of transition has been restated based on the revalued amount.Under UK GAAP, freehold land and buildings were carried at historic cost, lessprovision for any impairment. The effect of this change is to increase the carrying value of freehold land andbuildings by £1.4 million at 1 December 2004 and 31 March 2006. The revaluationgives rise to a deferred tax liability, recognised in accordance with IAS 12, of£0.4 million at 1 December 2004 and 31 March 2006 and hence a revaluationreserve of £1.0 million has been recognised. The depreciation charge for the 16months ended 31 March 2006 has increased by £0.02 million; as permitted by theCompanies Act 1985, a corresponding amount of the revaluation reserve has beenrecognised as a realised profit and transferred from the revaluation reserve toretained earnings. Equity reserves have increased by £1.0 million at 1 December2004 and 31 March 2006. Presentation of financial statements - IAS 1 In accordance with IAS 1 'Presentation of Financial Statements', revenue isdisclosed both before and after the deduction of fees and commissions payable tothird parties. Under UK GAAP, turnover was stated net of fees and commissionspayable. There is no net effect on profit before tax or equity reserves as aresult of this change. Financial instruments: recognition and measurement - IAS 39 In accordance with IAS 39, financial assets held by the group, consistingentirely of equity investments, have been classified as available-for-saleinvestments. IAS 39 requires that available-for-sale investments be carried atfair value. The impact of these changes is to increase the carrying value ofthe investments by £3.4 million at 1 December 2004 and by £1.4 million at 31March 2006. The difference in value between 1 December 2004 and 31 March 2006includes the effect of the disposal of 662,857 shares of London Stock Exchangeplc during 16 months ended 31 March 2006. The measurement of these investmentsat fair value gives rise to a deferred tax liability, recognised in accordancewith IAS 12, of £1.0 million at 1 December 2004 and £0.4 million at 31 March2006. An available-for-sale reserve has therefore been recognised of £2.4million at 1 December 2004 and £1.0 million at 31 March 2006. As noted above, 662,857 shares of London Stock Exchange plc were disposed ofduring the 16 months ended 31 March 2006. The gain arising on this disposalpreviously reported under UK GAAP was £3.1 million. The gain as reported underIFRS remains at £3.1 million; however, this gain now includes the recycling offair value gains previously recognised directly in equity, amounting to £2.7million at 1 December 2004. The net effect of the above changes is to increase equity reserves by £2.4million at 1 December 2004 and by £1.0 million at 31 March 2006. Events after the balance sheet date - IAS 10 IAS 10 'Events after the Balance Sheet Date' requires that assets andliabilities at the balance sheet date be adjusted for events occurring after thebalance sheet date where they provide evidence of conditions that existed at thebalance sheet date. In accordance with this requirement, final dividendspayable are recognised during the period in which they are declared, i.e. thedividends are appropriately authorised and are no longer at the discretion ofthe company. Previously, under UK GAAP, dividends declared after the end of theperiod but prior to the financial statements being authorised for issue wererecognised as a liability at the balance sheet date. The impact of this change is to increase equity reserves by £2.6 million at 1December 2004 and by £5.8 million at 31 March 2006. Share based payments - IFRS 2 (i) SAYE scheme and Employee Share Ownership Plan IFRS 2 'Share Based Payments' is applicable to equity instruments granted after7 November 2002 that had not vested by 1 January 2005. IFRS 2 therefore appliesto the group's Savings Related Share Option Scheme (SAYE) but does not apply tothe group's Employee Share Ownership Plan. In accordance with IFRS 2, a chargehas been recognised in the income statement representing the fair value of theoptions outstanding under the SAYE scheme. The fair value of the options ismeasured at the date the awards were granted using the Black-Scholes valuationmodel and is spread over the three year vesting period, taking into account theexpected and actual number of options vesting. Under UK GAAP, no such chargewas recognised in the income statement in respect of the SAYE scheme. Deferred tax assets have been recognised on the above adjustments relating tothe SAYE scheme, in accordance with IAS 12. In addition, although the EmployeeShare Ownership Plan does not fall within the scope of IFRS 2, a deferred taxasset has been recognised in accordance with IAS 12 based on the corporation taxrelief that is expected to be available at the time options are exercised. The effect on retained earnings and total equity of these changes is an increaseof £0.4 million at 1 December 2004 and an increase of £1.1 million at 31 March2006. Profit before tax for the 16 months ended 31 March 2006 is reduced by£0.2 million. (ii) Employee Benefit Trust The company acquired the entire share capital of Carr Sheppards CrosthwaiteLimited ('CSC') on 6 May 2005 from Investec 1 Limited ('Investec'). A total of25,500,000 ordinary shares of the company were issued to Investec under theterms of the acquisition. Investec immediately transferred 2,800,000 of theseshares to an Employee Benefit Trust ('EBT') for the future benefit of employeesof CSC. The fair value of the shares at the date of acquisition was 499 penceper share and hence the fair value of the shares relating to the EBT at the dateof acquisition was £13.972 million. The EBT does not fall within the control ofthe Rensburg Sheppards group and hence, under UK GAAP, the EBT was not accountedfor under UITF 38. The issue of these shares was considered to representconsideration for employment services from CSC's employees and therefore thefair value of these shares at the date of issue was recognised as a prepaymentof the group's employment costs. This prepayment was then amortised through theconsolidated profit and loss account on a straight-line basis over the threeyear period to which the awards relate. A total of £4.2 million of amortisationhad been recognised under UK GAAP at 31 March 2006, resulting in a carryingvalue of the EBT prepayment at that date of £9.746 million. Upon transition to IFRS, the awards to employees by the EBT have been treated bythe group as an equity settled share-based payment, in accordance with IFRS 2.This has resulted in the fair value of the awards being charged to the incomestatement over the three year vesting period. Under IFRS, the services providedby the relevant employees are regarded as being paid for, in part, by the awardsmade by the EBT; as the fair value of these awards has been recognised by thegroup, the original issue of shares to the EBT is considered, for the purposesof the group's consolidated accounts under IFRS, to be an issue for noconsideration, thus giving rise to no accounting entries, other than withinequity. Accordingly, the transitional adjustment to move from UK GAAP to IFRS isto eliminate the prepayment directly against equity, resulting in a reduction inequity reserves at 31 March 2006 of £9.7 million. The fair value of the EBT awards has been calculated using the Black-Scholesvaluation model. By virtue of the specific terms of the EBT awards, the fairvalue of the awards is equal to the fair value of the related shares at the datethe awards were made. The reversal of the EBT prepayment of £4.2 million hasbeen replaced with the fair value IFRS 2 charge of £4.2 million and there istherefore no net impact on profit before tax for the period, nor on the value ofequity reserves at 1 December 2004 and 31 March 2006. The above accounting treatment may be affected by the current IFRIC DraftInterpretation D17 "Group and Treasury Share Transactions". Accordingly,modifications may be required to this accounting treatment once the IFRICinterpretation has been finalised. Income taxes - IAS 12 Deferred tax assets and liabilities have been recognised in accordance with IAS12 'Income Taxes' on each of the above adjustments, as explained in the relevantsections. Cash flow statements - IAS 7 In accordance with IAS 7 'Cash Flow Statements', cash and cash equivalentsincludes short-term deposits that are readily convertible into known amounts ofcash. Under UK GAAP, such short-term deposits did not meet the definition ofcash to be reported in the cash flow statement. The impact of this change isthat £5.0 million of cash on deposit has been recognised within the cash flowstatement under IFRS. There is no impact on the balance sheet, as thesedeposits were included within cash at bank and in hand under UK GAAP. FINANCIAL INFORMATION The financial information provided in this document as listed in the index tothe IFRS reconciliations below, does not constitute statutory accounts withinthe meaning of section 240 of the Companies Act 1985. The consolidatedstatutory accounts for Rensburg Sheppards plc for the 16 month period ended 31March 2006, upon which the auditor made a report under section 235 of theCompanies Act 1985, have been delivered to the Registrar of Companies. Theauditor's report in respect of the statutory accounts for the 16 month periodended 31 March 2006 was unqualified and did not contain a statement undersection 237 (2) or (3) of the Companies Act 1985. Index to the IFRS reconciliations 1) Consolidated balance sheet at 1 December 2004 - presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAP balances. 2) Consolidated balance sheet at 1 December 2004 - measurement effects of IFRS on UK GAAP balances - summary. 3) Consolidated balance sheet at 1 December 2004 - measurement effects of IFRS on UK GAAP balances - detail. 4) Reconciliation of equity at 1 December 2004. 5) Consolidated income statement for the 16 months ended 31 March 2006 - presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAP income and expenses. 6) Consolidated income statement for the 16 months ended 31 March 2006 - measurement effects of IFRS on UK GAAP income and expenses - summary. 7) Consolidated income statement for the 16 months ended 31 March 2006 - measurement effects of IFRS on UK GAAP income and expenses - detail. 8) Consolidated balance sheet at 31 March 2006 - presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAP balances. 9) Consolidated balance sheet at 31 March 2006 - measurement effects of IFRS on UK GAAP balances - summary. 10) Consolidated balance sheet at 31 March 2006 - measurement effects of IFRS on UK GAAP balances - detail. 11) Consolidated statement of total recognised income and expense for the 16 months ended 31 March 2006. 12) Reconciliation of equity at 31 March 2006. 13) Consolidated cash flow statement for the 16 months ended 31 March 2006 - presentation and measurement effects of IFRS on reported cashflows. Consolidated balance sheetat 1 December 2004 (date of transition to IFRS)Presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAPbalances As reported IFRS IFRS UK GAAP Under adjustments: adjustments: balances in UK GAAP Assets Liabilities IFRS format £'000 £'000 £'000 £'000 Fixed assets Non-current assets Intangible assets 13,000 - - 13,000 Intangible assets Tangible assets 4,132 - - 4,132 Property, plant and equipment Investments 500 - - 500 Available-for-sale investments - 295 - 295 Deferred tax assets 17,632 295 - 17,927 Current assets Current assets Debtors - due within one 26,226 (295) - 25,931 Trade and other receivablesyear Cash at bank and in hand 40,618 - - 40,618 Cash and cash equivalents 66,844 (295) - 66,549 Total assets 84,476 - - 84,476 Total assets Creditors Current liabilities Amounts falling due within (40,389) - 2,438 (37,951) Trade and other payablesone year - - (750) (750) Financial liabilities - - (1,688) (1,688) Current tax liabilities (40,389) - - (40,389) Creditors Non-current liabilities Amounts falling due after (232) - - (232) Financial liabilitiesmore than one year - - (24) (24) Deferred tax liabilities Provisions for liabilities (206) - 24 (182) Provisionsand charges (438) - - (438) Total liabilities (40,827) - - (40,827) Total liabilities Net assets 43,649 - - 43,649 Net assets Capital and reserves Equity attributable to equity holders of the parent Called up share capital 2,209 - - 2,209 Share capital Share premium account 9,252 - - 9,252 Share premium Capital redemption reserve 100 - - 100 Capital redemption reserve Other reserves 6,086 - - 6,086 Other reserves Profit and loss account 26,002 - - 26,002 Retained earnings Equity shareholders' funds 43,649 - - 43,649 Total equity Consolidated balance sheetat 1 December 2004 (date of transition to IFRS)Measurement effects of IFRS on UK GAAP balances - summary UK GAAP Effect of balances in transition IFRS format to IFRS IFRS £'000 £'000 £'000 Assets Non-current assets Intangible assets 13,000 1,126 14,126 Property, plant and equipment 4,132 287 4,419 Available-for-sale investments 500 3,359 3,859 Deferred tax assets 295 397 692 17,927 5,169 23,096 Current assets Trade and other receivables 25,931 - 25,931 Cash and cash equivalents 40,618 - 40,618 66,549 - 66,549 Total assets 84,476 5,169 89,645 Current liabilities Trade and other payables (37,951) 2,629 (35,322) Financial liabilities (750) - (750) Current tax liabilities (1,688) - (1,688) (40,389) 2,629 (37,760) Non-current liabilities Financial liabilities (232) - (232) Deferred tax liabilities (24) (1,432) (1,456) Provisions (182) - (182) (438) (1,432) (1,870) Total liabilities (40,827) 1,197 (39,630) Net assets 43,649 6,366 50,015 Equity attributable to equityholders of the parent Share capital 2,209 - 2,209 Share premium 9,252 - 9,252 Capital redemption reserve 100 - 100 Available-for-sale reserve - 2,351 2,351 Revaluation reserve - 989 989 Other reserves 6,086 - 6,086 Retained earnings 26,002 3,026 29,028 Total equity 43,649 6,366 50,015 Consolidated balance sheetat 1 December 2004 (date of transition to IFRS)Measurement effects of IFRS on UK GAAP balances - detail UK GAAP Property Events Share- after balances Intangible plant and Financial balance based in IFRS assets equipment instruments sheet date payments format IAS 38 IAS 16 IAS 39 IAS 10 IFRS 2 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Assets Non-current assets Intangible assets 13,000 1,126 - - - - 14,126 Property, plant and equipment 4,132 (1,126) 1,413 - - - 4,419 Available-for-sale investments 500 - - 3,359 - - 3,859 Deferred tax assets 295 - - - - 397 692 17,927 - 1,413 3,359 - 397 23,096 Current assets Trade and other receivables 25,931 - - - - - 25,931 Cash and cash equivalents 40,618 - - - - - 40,618 66,549 - - - - - 66,549 Total assets 84,476 - 1,413 3,359 - 397 89,645 Current liabilities Trade and other payables (37,951) - - - 2,629 - (35,322) Financial liabilities (750) - - - - - (750) Current tax liabilities (1,688) - - - - - (1,688) (40,389) - - - 2,629 - (37,760) Non-current liabilities Financial liabilities (232) - - - - - (232) Deferred tax liabilities (24) - (424) (1,008) - - (1,456) Provisions (182) - - - - - (182) (438) - (424) (1,008) - - (1,870) Total liabilities (40,827) - (424) (1,008) 2,629 - (39,630) Net assets 43,649 - 989 2,351 2,629 397 50,015 Equity attributable to equityholders of the parent Share capital 2,209 - - - - - 2,209 Share premium 9,252 - - - - - 9,252 Capital redemption reserve 100 - - - - - 100 Available-for-sale reserve - - - 2,351 - - 2,351 Revaluation reserve - - 989 - - - 989 Other reserves 6,086 - - - - - 6,086 Retained earnings 26,002 - - - 2,629 397 29,028 Total equity 43,649 - 989 2,351 2,629 397 50,015 Reconciliation of equityat 1 December 2004 (date of transition to IFRS) At 1 December 2004 £'000 Total equity as previously reported under UK GAAP 43,649 Revaluation of available-for-sale investments 3,359 Deferred tax on revaluation of available-for-sale investments (1,008) Deferred tax on share based payments 397 Dividends 2,629 Revaluation of property, plant and equipment 1,413 Deferred tax on revaluation of property, plant and equipment (424) Total value of IFRS adjustments 6,366 Total equity as restated under IFRS 50,015 Consolidated income statementfor the 16 months ended 31 March 2006 Presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAPincome and expenses As reported UK GAAP Under IFRS balances in UK GAAP adjustments IFRS format £'000 £'000 £'000 109,385 8,792 118,177 Revenue - (8,792) (8,792) Fees and commissions payable Turnover 109,385 - 109,385 Net revenue Operating expenses (79,198) 79,198 -Reorganisation costs - exceptional (9,907) - (9,907) Reorganisation costsAmortisation of EBT prepayment (4,226) - (4,226) Amortisation of EBT prepaymentGoodwill amortisation (8,605) - (8,605) Goodwill amortisationOther operating expenses - (79,198) (79,198) Other operating expenses Total administrative expenses (101,936) - (101,936) Operating expenses Operating profit 7,449 - 7,449 Operating profit Profit on disposal of fixed asset 3,129 - 3,129 Profit on disposal ofinvestments available-for-sale investments Profit on ordinary activities before 10,578 - 10,578interest and investment income Interest receivable and similar 3,365 - 3,365 Finance incomeincome Interest payable and similar charges (4,205) - (4,205) Finance charges Profit on ordinary activities before 9,738 - 9,738 Profit before taxtaxation Tax on profit on ordinary activities (6,975) - (6,975) Income tax expense Profit for the financial period 2,763 - 2,763 Profit for the period attributable to the equity holders of the parent Consolidated income statementfor the 16 months ended 31 March 2006Measurement effects of IFRS on UK GAAP income and expenses - summary UK GAAP Effect of balances in transition IFRS format to IFRS IFRS £'000 £'000 £'000 Revenue 118,177 - 118,177Fees and commissions payable (8,792) - (8,792) Net revenue 109,385 - 109,385 Reorganisation costs (9,907) - (9,907)Amortisation of EBT prepayment (4,226) 4,226 -Share based charges - EBT - (4,226) (4,226)Share-based charges - other - (246) (246)Goodwill amortisation (8,605) 8,605 -Amortisation of intangible assets - client - (5,066) (5,066)relationshipsOther operating expenses (79,198) (24) (79,222) Operating expenses (101,936) 3,269 (98,667) Operating profit 7,449 3,269 10,718 Profit on disposal of available-for-sale investments 3,129 - 3,129 Finance income 3,365 - 3,365 Finance charges (4,205) - (4,205) Profit before tax 9,738 3,269 13,007 Income tax expense (6,975) 1,601 (5,374) Profit for the period attributable to the equity 2,763 4,870 7,633holders of the parent Earnings per share Basic 7.6p 13.3p 20.9p Diluted 7.5p 13.1p 20.6p Adjusted earnings per share Basic 55.6p* (0.5p) 55.1p** Diluted 54.8p* (0.5p) 54.3p** * Before amortisation of both goodwill (£8.6 million) and the Employee BenefitTrust ('EBT') prepayment (£4.2 million), exceptional reorganisation costs (£9.9million) and exceptional profit on disposal of fixed asset investments (£3.1million). These adjustments amount to a net charge before tax of £19.6 million. ** Before amortisation of client relationships intangible asset (£5.1 million),share-based charges relating to the EBT (£4.2 million), reorganisation costs(£9.9 million) and profit on disposal of available-for-sale investments (£3.1million). These adjustments amount to a net charge before tax of £16.1 million. Consolidated income statementfor the 16 months ended 31 March 2006Measurement effect of IFRS on UK GAAP income and expenses - detail UK GAAP Property balances Business plant and Share-based in IFRS combinations equipment payments format IFRS 3 IAS 16 IFRS 2 IFRS £'000 £'000 £'000 £'000 £'000 Revenue 118,177 - - - 118,177Fees and commissions payable (8,792) - - - (8,792) Net revenue 109,385 - - - 109,385 Reorganisation costs (9,907) - - - (9,907)Amortisation of EBT prepayment (4,226) - - 4,226 -Share-based charges - EBT - - - (4,226) (4,226)Share-based charges - other - - - (246) (246)Goodwill amortisation (8,605) 8,605 - - -Amortisation of intangible assets - client relationships - (5,066) - - (5,066)Other operating expenses (79,198) - (24) - (79,222) Operating expenses (101,936) 3,539 (24) (246) (98,667) Operating profit 7,449 3,539 (24) (246) 10,718 Profit on disposal of available-for-sale investments 3,129 - - - 3,129 Finance income 3,365 - - - 3,365 Finance charges (4,205) - - - (4,205) Profit before tax 9,738 3,539 (24) (246) 13,007 Income tax expense (6,975) 1,520 7 74 (5,374) Profit for the period attributable to the equity holders 2,763 5,059 (17) (172) 7,633of the parent Consolidated balance sheetat 31 March 2006Presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAPbalances As reported IFRS IFRS UK GAAP Under adjustments: adjustments: balances in UK GAAP Assets Liabilities IFRS format £'000 £'000 £'000 '£'000 Fixed assets Non-current assets Intangible assets 170,326 - - 170,326 Intangible assets Tangible assets 4,540 - - 4,540 Property, plant and equipment Investments 800 - - 800 Available-for-sale investments - 1,915 - 1,915 Deferred tax assets 175,666 1,915 - 177,581 Current assets Current assets Debtors - due within one 173,829 (6,572) - 167,257 Trade and other receivablesyear Debtors - due after one year 5,089 4,657 - 9,746 EBT prepayment Cash at bank and in hand 49,958 - - 49,958 Cash and cash equivalents 228,876 (1,915) - 226,961 Total assets 404,542 - - 404,542 Total assets Creditors Current liabilities Amounts falling due within (183,693) - 3,634 (180,059) Trade and other payablesone year - - (840) (840) Financial liabilities - - (2,794) (2,794) Current tax liabilities (183,693) - - (183,693) Creditors Non-current liabilities Amounts falling due after (60,000) - - (60,000) Subordinated loanmore than one year Provisions for liabilities (7,174) - 7,174 -and charges - - (15) (15) Deferred tax liabilities - - (7,159) (7,159) Provisions (67,174) - - (67,174) Total liabilities (250,867) - - (250,867) Total liabilities Net assets 153,675 - - 153,675 Net assets Capital and reserves Equity attributable to equity holders of the parent Called up share capital 4,760 - - 4,760 Share capital Share premium account 9,276 - - 9,276 Share premium Capital redemption reserve 100 - - 100 Capital redemption reserve Other reserves 130,601 - - 130,601 Other reserves Profit and loss account 8,938 - - 8,938 Retained earnings Equity shareholders' funds 153,675 - - 153,675 Total equity Consolidated balance sheetat 31 March 2006 Measurement effects of IFRS on UK GAAP balances - summary UK GAAP Effect of balances in transition IFRS format to IFRS IFRS £'000 £'000 £'000 Assets Non-current assets Intangible assets 170,326 23,285 193,611 Property, plant and equipment 4,540 235 4,775 Available-for-sale investments 800 1,388 2,188 Deferred tax assets 1,915 1,069 2,984 177,581 25,977 203,558 Current assets Trade and other receivables 167,257 - 167,257 EBT prepayment 9,746 (9,746) - Cash and cash equivalents 49,958 - 49,958 226,961 (9,746) 217,215 Total assets 404,542 16,231 420,773 Current liabilities Trade and other payables (180,059) 5,783 (174,276) Financial liabilities (840) - (840) Current tax liabilities (2,794) - (2,794) (183,693) 5,783 (177,910) Non-current liabilities Subordinated loan (60,000) - (60,000) Deferred tax liabilities (15) (17,905) (17,920) Provisions (7,159) - (7,159) (67,174) (17,905) (85,079) Total liabilities (250,867) (12,122) (262,989) Net assets 153,675 4,109 157,784 Equity attributable to equityholders of the parent Share capital 4,760 - 4,760 Share premium 9,276 - 9,276 Capital redemption reserve 100 - 100 Available-for-sale reserve - 972 972 Revaluation reserve - 972 972 Other reserves 130,601 - 130,601 Retained earnings 8,938 2,165 11,103 Total equity 153,675 4,109 157,784 Consolidated balance sheetat 31 March 2006Measurement effects of IFRS on UK GAAP balances - detail UK GAAP Property Events after balances Business Intangible plant and Financial balance Share-based in IFRS combinations assets equipment instruments sheet date payments format IFRS 3 IAS 38 IAS 16 IAS 39 IAS 10 IFRS 2 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Assets Non-current assets Intangible assets 170,326 22,131 1,154 - - - - 193,611 Property, plant and 4,540 - (1,154) 1,389 - - - 4,775equipment Available-for-sale 800 - - - 1,388 - - 2,188investments Deferred tax assets 1,915 - - - - - 1,069 2,984 177,581 22,131 - 1,389 1,388 - 1,069 203,558 Current assets Trade and other 167,257 - - - - - - 167,257receivables EBT prepayment 9,746 - - - - - (9,746) - Cash and cash equivalents 49,958 - - - - - - 49,958 226,961 - - - - - (9,746) 217,215 Total assets 404,542 22,131 - 1,389 1,388 - (8,677) 420,773 Current liabilities Trade and other payables (180,059) - - - - 5,783 - (174,276) Financial liabilities (840) - - - - - - (840) Current tax liabilities (2,794) - - - - - - (2,794) (183,693) - - - - 5,783 - (177,910) Non-current liabilities Subordinated loan (60,000) - - - - - - (60,000) Deferred tax liabilities (15) (17,072) - (417) (416) - - (17,920) Provisions (7,159) - - - - - - (7,159) (67,174) (17,072) - (417) (416) - - (85,079) Total liabilities (250,867) (17,072) - (417) (416) 5,783 - (262,989) Net assets 153,675 5,059 - 972 972 5,783 (8,677) 157,784 Equity attributable toequity holders of theparent Share capital 4,760 - - - - - - 4,760 Share premium 9,276 - - - - - - 9,276 Capital redemption reserve 100 - - - - - - 100 Available-for-sale reserve - - - - 972 - - 972 Revaluation reserve - - - 972 - - - 972 Other reserves 130,601 - - - - - - 130,601 Retained earnings 8,938 5,059 - - - 5,783 (8,677) 11,103 Total equity 153,675 5,059 - 972 972 5,783 (8,677) 157,784 Consolidated statement of recognised income and expensefor the sixteen months ended 31 March 2006 At 31 March 2006 £'000Revaluation of available-for-sale investments -gain arising from changes in fair value 738 -gain on disposal transferred to the income statement (2,709) Deferred tax on revaluation of available-for-sale investments -on gain arising from changes in fair value (221) -on gain on disposal transferred to the income statement 813 Net expense recognised directly in equity (1,379) Profit for the period 7,633 Total recognised income and expense for the period 6,254 Reconciliation of equityat 31 March 2006 At 31 March 2006 £'000 Total equity as previously reported under UK GAAP 153,675 Revaluation of available-for-sale investments 1,388 Deferred tax on revaluation of available-for-sale investments (416) Deferred tax on share based payments 1,069 Dividends 5,783 Revaluation of property, plant and equipment 1,389 Deferred tax on revaluation of property, plant and equipment (417) Business combinations 5,059 EBT prepayment taken to equity (9,746) Total value of IFRS adjustments 4,109 Total equity as restated under IFRS 157,784 Consolidated cash flow statementfor the sixteen months ended 31 March 2006Presentation and measurement effects of IFRS on reported cashflows As reported under IFRS adjustments UK GAAP Presentation Measurement IFRS £'000 £'000 £'000 £'000 Reconciliation of operating Cash flows from operatingprofit to operating cash activitiesflowsOperating profit 7,449 (7,449) - - - 9,738 3,269 13,007 Profit before taxation Adjustments for:Goodwill amortisation 8,605 (8,605) - - - 9,156 (3,539) 5,617 - Amortisation of intangible assets - 4,205 - 4,205 - Finance cost - (3,365) - (3,365) - Investment incomeDepreciation 1,274 (551) 24 747 - DepreciationAmortisation of EBT 4,226 - (4,226) -prepayment - - 4,472 4,472 Share-based charges - (3,129) - (3,129) Profit on disposal of available-for-sale investmentsLoss on disposal of 58 - - 58 Loss on disposal oftangible fixed assets tangible fixed assetsNon-cash reorganisation 669 - - 669 Non-cash reorganisationcosts costsIncrease in debtors (52,992) - - (52,992) Increase in trade and other receivablesIncrease in creditors and 55,095 - - 55,095 Increase in trade payablesprovisions and provisions Net cash inflow from 24,384operating activities 24,384 Cash generated from operations Returns on investment andservicing of financeInterest received 3,823 - - 3,823 Interest receivedInterest paid (2,496) 2,179 - (317) Interest paidTaxation paid (5,595) - - (5,595) Income taxes paid 22,295 Net cash from operating activities Capital expenditure and Cash flows from investingfinancial investment activitiesPurchase of tangible fixed (1,834) 810 - (1,024) Purchase of property, plantassets and equipment - (810) - (810) Purchase of intangible softwareProceeds from sale of fixed 3,129 - - 3,129 Proceeds from disposal ofasset investments available-for-sale investmentsAcquisitions and disposalsCosts associated with (5,781) 5,781 - -purchase of subsidiaryundertakingsCash acquired with 17,611 (17,611) - -subsidiary undertakings - 11,830 5,000 16,830 Acquisition of subsidiaries, net of cash acquiredPayment of deferred (52) - - (52) Deferred consideration paidconsideration 18,073 Net cash used in investing activities Cash flows from financing activitiesEquity dividends paid (26,939) - - (26,939) Dividends paid to shareholders Cash inflow before 6,250financingFinancingIssue of ordinary share 25 - - 25 Proceeds from issue ofcapital ordinary share capitalCosts associated with issue (180) - - (180) Costs associated with issueof shares of sharesRedemption of loan notes (1,755) - - (1,755) Redemption of loan notes - (2,179) - (2,179) Interest paid on subordinated loan (31,028) Net cash used in financing Increase in cash in the 4,340 - 5,000 9,340 Net increase in cash andperiod cash equivalents SIGNIFICANT ACCOUNTING POLICIES Accounting convention The preliminary IFRS financial information has been prepared in accordance withInternational Financial Reporting Standards as adopted by the EU ('adoptedIFRSs') and IFRS 1 'First Time Adoption of IFRSs' to establish the financialposition, results of operations and cash flows of the group necessary to providethe comparative financial information expected to be included in the group'sfirst complete set of IFRS financial statements for the year ending 31 March2007. The preliminary IFRS financial information does not include comparativefinancial information for the prior period. The preliminary IFRS financialinformation has been prepared under the historical cost convention, except that:(1) non-current assets held for sale are stated at fair value less cost to selland (2) freehold property is carried at a revalued amount, being its fair valueat the date of revaluation, less any accumulated depreciation and subsequentaccumulated impairment losses. The principal accounting policies that thedirectors intend to apply in the preparation of the group's first full IFRSfinancial statements for the year ending 31 March 2007 are set out below. The preliminary IFRS financial information provided in this document has beenprepared in accordance with current standards and interpretations as issued bythe International Accounting Standards Board ('IASB') and its predecessors andadopted by the European Commission ('EC'). However, the standards that are inissue are subject to ongoing review and endorsement by the IASB and the EU,whilst the application of the standards continues to be subject to review by theInternational Financial Reporting Interpretations Commission ('IFRIC').Accordingly, modifications may be required to be made to the information aspresented in this announcement as further guidance is issued and as practicedevelops. No changes to accounting estimates have been made in preparing the preliminaryIFRS financial information; such estimates have been applied in preparing theIFRS balances as were originally applied under UK GAAP. Revenue Revenue comprises fees, commissions and interest receivable in the course ofordinary investment business and is stated net of Value Added Tax. Revenue isdisclosed both before and after the deduction of fees and commissions payable tothird parties. Basis of consolidation The group accounts comprise the accounts of the company and its subsidiaries.The results of subsidiaries acquired or disposed of are included in theconsolidated financial statements from or to the date on which control changes.All intra-group transactions and balances between group companies are eliminatedon consolidation. Property, plant and equipment Freehold property is stated at revalued amount less accumulated depreciation andaccumulated impairment losses. Freehold property is subject to a formalindependent valuation when, in the opinion of the directors, there is evidenceto indicate that the fair value of the property is materially different to thecarrying value. Plant and equipment is stated at cost less accumulateddepreciation and accumulated impairment losses. Depreciation has been calculated to write off the cost or revalued amount ofproperty, plant and equipment over the assets expected useful economic life on astraight-line basis to its residual value at the following annual rates: Freehold land Nil Freehold buildings 2% Fixtures, fittings and office equipment Between 7% and 25% Computer equipment Between 20% and 33% Where assets are revalued, depreciation is charged prospectively based on therevalued amount. Intangible assets (i) Goodwill Goodwill arising on the acquisition of subsidiary undertakings and businessesrepresents the excess of the fair value of the consideration given over the fairvalue of the identifiable assets and liabilities acquired. Goodwill isrecognised as an asset and is reviewed annually for impairment. Goodwill arising on acquisitions before the date of transition to IFRS has beenretained at the value as previously stated under UK GAAP, subject to a reviewfor impairment at that date. Goodwill arising on acquisitions in the year ended30 November 1998 and earlier periods that was written off to reserves inaccordance with the accounting standards then in force, has not been restated. (ii) Computer software and software development costs Costs to acquire computer software licences are capitalised based on theacquisition cost and any direct costs of bringing the software into use. Thesecosts are amortised on a straight-line basis over the expected useful economiclife of the software, being 3 years. Where software is acquired under alicence, the cost is written off over the life of the licence. (iii) Client relationships Costs to acquire client relationships and contracts are capitalised where theclient relationships and contracts represent an identifiable asset, inaccordance with IAS 38, and their value can be measured reliably. Where theclient relationships and contracts are expected to have a finite economic life,the cost is amortised on a straight-line basis over the estimated economic life. Where the economic life is considered to be indefinite, the carrying value isreviewed annually for impairment and any impairment losses are recognisedimmediately in the income statement. Impairment The carrying values of goodwill and intangible assets where the economic life isconsidered to be indefinite are reviewed at least annually or where changes incircumstances or events indicate that the carrying value of an asset may not berecoverable. Impairment reviews for all other assets are performed wherecircumstances exist that indicate the carrying value of an asset may not berecoverable. An impairment loss is recognised whenever the carrying value of an asset or acash generating unit exceeds its recoverable amount. Recoverable amount is thehigher of fair value less any cost to sell and value in use. Impairment lossesrecognised in respect of cash generating units are allocated first to reduce thecarrying amount of any goodwill allocated to cash generating units and then toreduce the carrying amount of the other assets in the unit on a pro-rata basis. Impairment losses relating to assets carried at depreciated historic cost arerecognised in the income statement immediately. Impairment losses that relateto assets carried at valuation are first allocated against any revaluationsurplus directly in reserves, with the balance of the impairment loss beingrecognised in the income statement. Impairment losses in respect of goodwill are not reversed. Impairment lossesrelating to assets other than goodwill may only be reversed where there has beena change in the estimates used to determine their recoverable amount. Suchimpairment losses would only be reversed to the extent that the asset'srecoverable amount exceeds its carrying value, net of depreciation andamortisation, that would have applied had no impairment loss originally havebeen recognised. Provisions Provisions are recognised when the group has a present obligation, either legalor constructive, that can be reliably measured and is the result of a pastevent, where it is probable that a transfer of economic benefits will result. Leases Annual rentals in respect of assets held under operating lease agreements arecharged to the income statement on a straight-line basis over the term of thelease. Taxation Tax on profit on ordinary activities comprises both current and deferredtaxation. Tax is charged or credited to the income statement, except where itrelates to items charged or credited directly to equity, in which case the taxis also recognised within equity. Current tax represents the expected tax payable on profits chargeable tocorporation tax, using the rates of taxation applicable at the balance sheetdate, net of any adjustments to tax payable in respect of prior years. Deferred tax reflects the tax that is anticipated to be payable or recoverableon differences between the carrying amounts of assets and liabilities in thefinancial statements and the corresponding tax bases used in the calculation oftaxable profits, and is accounted for using the balance sheet liability method.Deferred tax liabilities are generally recognised for all taxable temporarydifferences and deferred tax assets are recognised only to the extent that thedirectors consider that it is more likely than not that there will be suitabletaxable profits in the future against which the deductible temporary differencecan be utilised. Deferred tax assets and liabilities are not recognised if thetemporary difference arises on the initial recognition of goodwill. Thecarrying amount of deferred tax assets and liabilities are reviewed at eachbalance sheet date. Deferred tax assets and liabilities are not discounted.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. Pension costs Contributions to occupational pension schemes are charged to the incomestatement in the period to which they relate. Financial instruments Equity investments held by the group are classified as available-for-sale andare carried at fair value. Gains or losses arising from changes in fair valueare recognised directly in the available-for-sale reserve. When the investmentis no longer recognised, the cumulative gain or loss on the equity investment,including any gain or loss previously recognised directly in theavailable-for-sale reserve, is recognised in the income statement. Loans and borrowings Loans and borrowings are initially recognised at the fair value of theconsideration received. Subsequent to initial recognition, loans and borrowingsare measured at amortised cost using the effective interest rate method.Borrowing costs are recognised as an expense in the period in which they areincurred. Interest income and expense Interest income and expense for all financial assets and liabilities that aremeasured at amortised cost is recognised in the income statement using theeffective interest rate method. Share-based payments The group has applied the requirements of IFRS 2 'Share-Based Payments' to allgrants of equity instruments made after 7 November 2002 that had not vested by 1January 2005. The group has issued equity-settled share based payments to certain employees.Equity-settled share based payment transactions are measured at fair value. Thefair value is determined at the date of grant using the Black-Scholes optionpricing model, the fair value being expensed on a straight-line basis over thevesting period, taking into account the group's estimate of the number ofoptions that will ultimately vest. The fair value of shares issued to Investec 1 Limited ('Investec') upon theacquisition of Carr Sheppards Crosthwaite Limited ('CSC') and transferred byInvestec to an Employee Benefit Trust ('EBT') for the future benefit ofemployees of CSC has been recognised directly in equity. Equity instruments Equity instruments issued by the company are recorded at the proceeds received,net of direct issue costs. Dividends Final dividends are recognised as a deduction from equity once approved andinterim dividends are charged once paid. Cash and cash equivalents Cash and cash equivalents comprise cash in hand and deposits with banks andfinancial institutions with a maturity of up to three months. For the purposeof the cash flow statement, bank overdrafts repayable on demand are includedwithin cash and cash equivalents. Special Purpose Audit Report of KPMG Audit Plc to Rensburg Sheppards plc ("theCompany") on its Preliminary International Financial Reporting Standards("IFRS") Financial Information In accordance with the terms of our engagement letter dated 27 September 2006,we have audited the accompanying consolidated preliminary IFRS balance sheet ofRensburg Sheppards plc ("the Company") at 1 December 2004 and at 31 March 2006,and the related consolidated statements of income, changes in equity and cashflows for the 16 month period then ended and the related accounting policy andother notes ("the preliminary IFRS financial information"). Respective responsibilities of directors and KPMG Audit Plc The directors of the Company have accepted responsibility for the preparation ofthe preliminary IFRS financial information which has been prepared as part ofthe Company's conversion to IFRS. Our responsibilities, as independent auditors,are established in the United Kingdom by the Auditing Practices Board, ourprofession's ethical guidance and the terms of our engagement. Under the terms of engagement we are required to report to you our opinion as towhether the preliminary IFRS financial information has been properly prepared,in all material respects, in accordance with the Significant Accounting Policiessection. We also report to you if, in our opinion, we have not received all theinformation and explanations we require for our audit. We read the other information accompanying the preliminary IFRS financialinformation and consider whether it is consistent with the preliminary IFRSfinancial information. We consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies with thepreliminary IFRS financial information. Our report has been prepared for the Company solely in connection with theCompany's conversion to IFRS. Our report was designed to meet the agreedrequirements of the Company determined by the Company's needs at the time. Ourreport should not therefore be regarded as suitable to be used or relied on byany party wishing to acquire rights against us other than the Company for anypurpose or in any context. Any party other than the Company who chooses to relyon our report (or any part of it) will do so at its own risk. To the fullestextent permitted by law, KPMG Audit Plc will accept no responsibility orliability in respect of our report to any other party. Basis of audit opinion We conducted our audit having regard to Auditing Standards issued by the UKAuditing Practices Board. An audit includes examination, on a test basis, ofevidence relevant to the amounts and disclosures in the preliminary IFRSfinancial information. It also includes an assessment of the significantestimates and judgements made by the directors in the preparation of thepreliminary IFRS financial information, and of whether the accounting policiesare appropriate to the Group's circumstances, consistently applied andadequately 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 preliminary IFRSfinancial information is free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion we also evaluatedthe overall adequacy of the presentation of information in the preliminary IFRSfinancial information. Emphasis of matters Without qualifying our opinion, we draw your attention to the following matters: • The Accounting Convention section explains why the accompanying preliminary IFRS financial information may require adjustment before its inclusion as comparative information in the IFRS financial statements for the year ending 31 March 2007 when the Company prepares its first IFRS financial statements. • As described in the Accounting Convention section, as part of its conversion to IFRSs, the Company has prepared the preliminary IFRS financial information for the 16 month period ended 31 March 2006 to establish the financial position, results of operations and cash flows of the Company necessary to provide the comparative financial information expected to be included in the Company's first complete set of IFRS financial statements for the year ending 31 March 2007. The preliminary IFRS financial information does not include comparative financial information for the prior period. • As explained in the Accounting Convention section, in accordance with IFRS 1 First-time Adoption of International Financial Reporting Standards, no adjustments have been made for any changes in estimates made at the time of approval of the UK Generally Accepted Accounting Practices financial statements on which the preliminary IFRS financial information is based. Opinion In our opinion, the accompanying preliminary IFRS financial information for the16 month period ended 31 March 2006 has been prepared, in all material respects,in accordance with the basis set out in the Significant Accounting Policiessection, which describes how IFRS have been applied under IFRS 1, including theassumptions made by the directors of the Company about the standards andinterpretations expected to be effective, and the policies expected to beadopted, when they prepare the first complete set of consolidated IFRS financialstatements of the Company for the year ending 31 March 2007. KPMG Audit PlcChartered AccountantsLeeds 12 October 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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