13th Oct 2005 07:01
Smith (DS) PLC13 October 2005 13 October 2005 DS SMITH PLC RESTATEMENT OF 2004/05 FINANCIAL INFORMATION UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) DS Smith Plc today releases information about the restatement under IFRS of itsfinancial statements for the year ended 30 April 2005 and the six months ended31 October 2004. These restated 2004/05 financial statements will form thecomparative figures in the 2005/06 financial statements. DS Smith's underlying business and cash flows are unaffected by IFRS. As theGroup adopted FRS 17 for pension accounting in 2004/05 (DS Smith Plc's adoptionof FRS 17 is consistent in all material aspects with its adoption of IAS 19(Amended), which governs pensions accounting under IFRS), what otherwise wouldhave been the major effect of adopting IFRS has already been reported in the UKGAAP accounts; the further changes described in this release are thereforelimited. The primary changes to the Group's reported 2004/05 financialinformation following the adoption of IFRS are: • the ending of goodwill amortisation• the recognition of an expense for share-based payments• the statement of the Group's share of the associates' results after interest and tax• the recognition of dividends only after they have been declared• the recording of deferred tax liabilities for temporary timing differences that were not recognised under UK GAAP. The format of the financial statements and the disclosures presentation will bedifferent under IFRS but the underlying information presented about the Group'sfinancial performance and position will not change materially. The mostsignificant presentational difference is the disclosure of the Group's paper andcorrugated businesses under two key geographical segments. The Group'sborrowings arrangements are unaffected. Dividend policy and the ability to paydividends are also unaffected. Under UK GAAP, the Group reported its result on an unadjusted basis, whichincluded the amortisation of goodwill (2004/05: amortisation of £8.8m). Whenthe result was presented on an adjusted basis, this amortisation was excluded.Under IFRS, this goodwill will not be amortised and the Group's unadjustedresult will improve accordingly. Under UK GAAP, intellectual property intangible assets were amortised (2004/05:amortisation of £0.6m). When the result was presented on an adjusted basis,this amortisation was excluded. Under IFRS, this amortisation will continue.However, because the amortisation of intellectual property is not significant,this amortisation will not be adjusted for in any re-presentation of the resultsthat adjusts for other items, such as the presentation of the IFRS result beforeexceptional items in the table below.The effect of IFRS on key financial performance measures is as follows:- Full Year Full Year to Change Half Year to Half Year to Change to 30 April 30 April 31 October 31 October 2005 2005 2004 2004 UK GAAP IFRS UK GAAP IFRS Revenue £1,624.9m £1,624.9m - £800.1m £800.1m -Profit before tax £57.1m £64.3m +£7.2m £32.6m £37.4m +£4.8mAdjusted* profit before tax £76.1m £73.9m -£2.2m £37.3m £37.4m +£0.1mBasic earnings per share 10.1p 12.2p +2.1p 6.0p 7.3p +1.3pAdjusted* earnings per share 14.7p 14.4p -0.3p 7.2p 7.3p +0.1pFree cash inflow before dividends andacquisitions £55.4m £55.8m +£0.4m+ £26.0m £26.5m +£0.5m+Net assets £490.1m £519.8m +£29.7m £515.5m £529.9m +£14.4mFull year dividend per share 8.4p 8.4p - 2.6p 2.6p - *Adjusted profit before tax and adjusted earnings per share are presented above(i) for UK GAAP numbers, before exceptional items and amortisation ofintangibles and (ii) for IFRS, before exceptional items. Exceptional items aredefined in section 7.(c) of the IFRS Restatement Report. +Change due to inclusion of share of joint venture's cash flow, not a change inthe Group's own cash flows. Segmental Analysis The presentation of revenue and operating profit under the IFRS segments isshown in the table below. Previously under UK GAAP, the UK Paper and CorrugatedPackaging and Continental European Corrugated Packaging segments were presentedas a single Paper and Corrugated Packaging segment. Further segmentalinformation is given in section 4.7 of the IFRS Restatement Report. UK Paper Continental and European Corrugated Corrugated Plastic Office Products Other Packaging Packaging Packaging Wholesaling Operations Total £m £m £m £m £m £mSix months to 31 October 2004Revenue 312.7 131.5 99.9 240.0 16.0 800.1 Operating profit 19.8 9.9 6.2 6.9 (0.2) 42.6(no exceptional items during theperiod) Year ended 30 April 2005Revenue 631.2 265.7 195.9 499.7 32.4 1,624.9 Group operating profit before exceptional items 31.6 20.2 9.3 21.5 - 82.6 Exceptional operating items (4.9) - (5.8) - (10.7)Operating profit 26.7 20.2 3.5 21.5 - 71.9 Financial Instruments The effect of the adoption of IAS 32, 'Financial Instruments: Disclosure andPresentation', and IAS 39, 'Financial Instruments: Recognition and Measurement',as shown in section 8 of the IFRS Restatement Report, is to reduce the Group'snet assets at 1 May 2005 by £1.5m (after tax). The Group has designatedsubstantially all of its derivative financial instruments as hedges and believesthat the following are unlikely to have a significant effect on the futureincome statement: (a) hedge ineffectiveness; and (b) movements in the fair valueof any financial instruments that cannot be designated as hedges under IAS 39. Basis of Preparation This restatement has been prepared taking into account all InternationalFinancial Reporting Standards ('IFRSs'), including International AccountingStandards ('IASs') and interpretations issued by the International AccountingStandards Board ('IASB') and its committees. These IFRSs are subject to ongoingamendment by the IASB and subsequent endorsement by the European Commission andare therefore subject to possible change. Further changes may therefore berequired to the information presented in the IFRS Restatement Report before itis published as comparative information in the 2006 Annual Report and Accounts. Enquiries DS Smith Plc 020 7932 5000Gavin Morris, Group Finance DirectorPeter Aubusson, Group Communications Manager Financial Dynamics 020 7269 7291Richard Mountain/Robert Gurner This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Smith (DS)