25th Jan 2006 14:00
Regent Inns PLC25 January 2006 PRESS RELEASE 25 January 2006 Regent Inns plcImpact of the adoption of International Financial Reporting Standards Regent Inns plc today announces that it has completed preparations to adoptInternational Financial Reporting Standards ("IFRS"). For accounting periodscommencing from 3 July 2005, Regent Inns plc will prepare consolidated accountsin accordance with EU endorsed IFRS. This announcement is intended to assistinvestors and the wider financial community in understanding the impact of IFRSon Regent Inns' statutory accounts in advance of the publication of the InterimAccounts in February 2006, which will be the first set of accounts published inaccordance with IFRS. The full announcement comprises reconciliations of the primary financialstatements* for both the 52 weeks ended 2 July 2005 and for the 26 weeks ended 1January 2005 converted from UK GAAP to an unaudited IFRS basis for the sameperiods. Explanations of each change are provided in supporting notes. Theaccounting policies under which the financial information presented within theannouncement has been prepared can be found on the Company's website,www.regentinns.co.uk.* primary financial statements comprise the consolidated profit and lossaccount, consolidated balance sheet and consolidated cash flow statement. There are principally four accounting adjustments relating to goodwillamortisation, share based payments, lease incentives and deferred tax (onrolled-over gains). The key headlines from the restated 2005 financial statements compared to theprevious UK GAAP are as follows: •Operating profit from continuing operations reduced by 0.8% to £12,203k •Basic earnings per share before exceptionals and goodwill amortisation up 0.2pence to 7.7pence •Equity shareholder's funds reduced by £4,100k, £3,510k of which relates to deferred tax The highlights from the restated financial statements for the 26 weeks ended1 January 2005 are as follows: •Operating profit from continuing operations reduced by 0.6% to £4,327k •Earnings per share before exceptionals and goodwill amortisation reduced by 0.2pence to 3.3pence Regent Inns will be hosting a conference call for analysts at 11.00am on 26January 2006 to summarise the effects of the Company's adoption of IFRS andrestatement of financial information, and answer any questions relating to thisannouncement and the related information posted on its website. Please contactVanessa Maydon or Rebecca Penney at Merlin for details. Enquiries:Regent Inns plcJohn Leslie, Chief Financial Officer 0208 375 3102 MerlinVanessa MaydonRebecca Penney 0207 653 6620 1. Introduction Historically, Regent Inns plc has prepared its accounts under UK GenerallyAccepted Accounting Practice "UK GAAP". However, for accounting periodscommencing after 1 January 2005, the Group is required to prepare consolidatedaccounts in accordance with International Financial Reporting Standards("IFRS"), as adopted by the European Union. The first results to be issued underEU endorsed IFRS will be the interim financial statements for the 26 weeks ended31 December 2005. This statement presents and explains the consolidated financial statements ofthe Group converted from UK GAAP to an IFRS basis for the 26 weeks ended 1January 2005 and for the 52 weeks ended 2 July 2005, and also gives a restatedbalance sheet as at the IFRS transition date i.e. the commencement of theearliest comparative period to be reported, 3 July 2004. It also sets out thematerial accounting policy changes from those set out in the UK GAAP financialstatements for the 52 weeks ended 2 July 2005. A complete update of the Group'saccounting policies are available under the investor's section of the Company'swebsite www.regentinns.co.uk. 2. Relationship to statutory accounts The financial information presented in this document is unaudited and does notcomprise statutory accounts within the meaning of section 240 of the CompaniesActs 1985. The statutory accounts for the 52 weeks ended 2 July 2005, on whichthe auditors have issued an unqualified report, have been delivered to theRegistrar of Companies. 3. Basis of preparation and presentation The restated financial statements have been prepared on the assumption that allIFRS, including the interpretations of both the Standing InterpretationsCommittee and the International Financial Reporting Interpretations Committee,issued by the International Accounting Standards Board (IASB) are effective forthe reporting periods and will be endorsed by the European Commission. As at thedate of this announcement, not all IFRS have been endorsed by the EuropeanCommission. Further developments in the interpretation of the standards or thefailure of the European Commission to endorse all of these standards before thepublication of the Group's interim and full year results could result in changesto the basis of accounting or presentation of certain financial informationreported in this document. Therefore, it is possible that changes may berequired to this information before it is published as comparatives in theGroup's interim and full year results. 4. First time adoption choices / exemptions IFRS 1, "First-time adoption of International Financial Reporting Standards"sets out the procedures that the Group must follow when adopting IFRS for thefirst time as the basis for preparing its financial statements. The Group isrequired to establish its accounting policies for reporting its first resultsunder IFRS and, in principle, to apply these retrospectively to determine theIFRS opening balance sheet as at its transition date i.e. the start of itsearliest comparative period, 3 July 2004. However, IFRS 1 provides certainoptional exemptions to this general principle. The Group has adopted thefollowing key exemptions: (a) Business combinationsUnder GAAP, two amounts of goodwill were being carried and amortised over 20years: values as at the date of transition of £6,776,000 relating to theacquisition of Jongleurs Comedy Clubs in 2000 and £154,000 relating to theacquisition of PALS in 2001. For Jongleurs Comedy Clubs, the earlieracquisition, the Group has elected, as permitted by IFRS 1, not to restate thebusiness combination and to freeze the reported balance of goodwill as at thedate of transition. For PALS, the group has restated the acquisition under IFRS3, resulting in an allocation of goodwill to brand asset. The PALS brand wasacquired with the intention of undertaking a roll-out that did not subsequentlytake place and therefore, in accordance with IFRS 3 Business Combinations, itwas appropriate for the carrying value to be eliminated as at the date oftransition. Accordingly, in the opening balance sheet, £154,000 of PALS brandasset has been written-off to reserves and the Jongleurs' goodwill will now besubject to annual impairment testing. (b) Share based paymentsThe Group has elected to apply IFRS 2 Share-based payment only to relevant sharebased payment transactions granted after 7 November 2002, which had not vestedbefore 1 January 2005. Therefore, in the short term, as further share optionsare granted, it is likely that the level of the charge under IFRS 2 willincrease. (c) Financial instrumentsThe Group has elected not to restate comparatives for IAS 32 FinancialInstruments: Disclosure and Presentation and IAS 39 Financial Instruments:Recognition and Measurement. As a result, the information in this restatementand the comparative information in the 2006 financial statements will bepresented on the existing UK GAAP basis. IAS 32 and IAS 39 will be adopted from3 July 2005. 5. Presentation of Financial Information The primary statements within the financial information contained within thisannouncement have been presented in accordance with IAS 1, Presentation ofFinancial Statements, with additional information shown to assist theunderstanding of reconciliations from UK GAAP to IFRS. The format andpresentation of the financial statements may require modification as practicedevelops and in the event that further guidance is issued. IAS 1 specifies key lines that should be disclosed within the income statementand requires additional line items and headings to be presented on the face ofthe income statement when such presentation is relevant to the understanding ofan entity's performance having due regard to materiality and the nature andfunction of the components of income and expenditure. (a) Exceptional ItemsIAS 1 does not include a definition of exceptional items although it doesprovide examples of circumstances where items of income and expense aresignificantly material such that their nature and amount should be separatelydisclosed. The Group believes that items previously referred to as 'exceptionalitems' under UK GAAP should continue to be separately identified to assist usersof the statement with their understanding of the performance of the Group.Hence, such items will continue to be reported separately under IFRS. (b) Discontinued operationsIn 2002, the Group decided to divest nearly all of its unbranded venues andsubsequent to that date have separately reported the results of those remainingvenues under 'operations to be discontinued' in the form of a separate column inits Consolidated Profit & Loss Account thereby giving a split of turnover andoperating profit. IFRS 5 Non current assets held for sale and discontinuedoperations requires disclosure as a discontinued operation of components of anentity that are either classified as held-for-sale at the period end or weredisposed of during the period. In accordance with IFRS 5, the net income aftertax of discontinued operations is shown as one line on the income statement. (c) Profit /(Loss) on sale of fixed assetsUnder UK GAAP - FRS 3, profits or losses on the sale of fixed assets wererequired to be disclosed on the face of the income statement as a non-operatingexceptional item. In contrast there is no such requirement under IFRS - IAS 1.Profits or losses arising from the sale of discontinued businesses are includedin the net income after tax for Discontinued operations. 6. Segmental reporting IAS 14 Segmental Reporting requires an entity's reportable segments to reflectits internal reporting structure and organisation. The Group operates late-nightentertainment bars and although these principally comprise a mixture of threekey brands: Walkabout, Jongleurs and Bar Risa, there are other brands withsmaller numbers of units and also some unbranded units. In many locations, thebrands co-exist alongside one another and are jointly managed, bothoperationally and administratively with results reported for the businesscombination at that venue. Accordingly, management consider that the businesscomprises one segment of late-night entertainment bars. 7. Reconciliations Reconciliations to assist in understanding the nature and value of thedifferences between UK GAAP and IFRS are given in the appendices attached. Theseappendices present the balance sheets at the date of transition (4 July 2004),the interim reporting date (1 January 2005) and the year-end (2 July 2005),together with the Profit & Loss Accounts for the 26 weeks ended 1 January 2005and for the 52 weeks ended 2 July 2005. These adjustments, and the resultingrestated IFRS financial information, are unaudited. All differences between UK GAAP and IFRS having a material impact on theconsolidated Profit & Loss Account or net assets of the Group have beenrecognised and their impact explained under section 9. 8.1 Consolidated Balance Sheet as at 3 July 2004------------------------------------------------ UK GAAP UK GAAP UK GAAP IFRS IFRS reclassify detail to as originally accord with in IFRS accounting presented IFRS format adjustments £000 £000 £000 £000 £000------------------- --------- --------- --------- --------- --------Non-currentassetsGoodwill - 6,930 6,930 (154) 6,776Intangible assets 6,930 (6,930) - - -Property, plant &equipment 156,796 - 156,796 (3,661) 153,135Other non-currentassets - - - 3,487 3,487------------------- --------- --------- --------- --------- -------- 163,726 - 163,726 (328) 163,398 Current assetsStock 2,025 - 2,025 - 2.025Trade and otherreceivables 7,390 - 7,390 174 7,564Cash and cash - - - - -equivalents --------- --------- --------- --------- --------------------------- 9,415 - 9,415 174 9,589Assets held forsale 460 - 460 - 460------------------- --------- --------- --------- --------- -------- 9,875 - 9,875 174 10,049 CurrentLiabilitiesTrade and otherpayables (88,507) 71,133 (17,374) 1,227 (16,147)Current tax - - - - -Provisions - - - - -Bank loans andoverdrafts - (71,133) (71,133) - (71,133)------------------- --------- --------- --------- --------- -------- (88,507) - (88,507) 1,227 (87,280)------------------- --------- --------- --------- --------- --------Net currentliabilities (78,632) - (78,632) 1,401 (77,231)------------------- --------- --------- --------- --------- -------- Total assets lesscurrentliabilities 85,094 - 85,094 1,073 86,167 Non-currentliabilities Bank loans - - - - -Unsecuredconvertible loannotes (6,000) - (6,000) - (6,000)Deferred income - - - (2,273) (2,273)Provisions (19,053) 15,530 (3,523) - (3,523)Deferred tax - (15,530) (15,530) (3,670) (19,200)------------------- --------- --------- --------- --------- -------- (25,053) - (25,053) (5,943) (30,996)------------------- --------- --------- --------- --------- --------Net assets 60,041 - 60,041 (4,870) 55,171------------------- --------- --------- --------- --------- -------- Capital andreservesCalled up sharecapital 5,615 - 5,615 - 5,615Share premiumaccount 49,951 - 49,951 - 49,951Capital reserve -own shares (322) - (322) - (322)Equity reserve - - - 108 108Profit and Lossaccount 4,797 - 4,797 (4,978) (181)------------------- --------- --------- --------- --------- -------- Equityshareholders'funds 60,041 - 60,041 (4,870) 55,171------------------- --------- --------- --------- --------- -------- 8.2 Consolidated Income Statement for the 52 weeks ended 2 July 2005-------------------------------------------------------------------- UK GAAP UK GAAP UK GAAP UK GAAP IFRS IFRS as less Profit/(loss) Total (IFRS originally Discontinued on sale of format) accounting presented operations fixed assets £'000 adjustments £000 £000 £000 £000 £000 -------- -------- -------- -------- --------------------------- -------Continuingoperations Revenue 134,247 (2,975) - 131,272 - 131,272Operatingcosts(includingexceptionals &goodwillamortisation) (123,043) 4,015 57 (118,971) (98) (119,069)------------------- ------- -------- -------- -------- -------- -------- Operatingprofit beforeexceptionals &goodwillamortisation 15,926 1,040 57 17,023 (529) 16,494Exceptionalitems (4,291) - - (4,291) - (4,291)Goodwillamortisation (431) - - (431) 431 -Profit/(loss) on - - - - - -sale of fixed ------- -------- -------- -------- -------- --------assets Operatingprofit 11,204 1,040 57 12,301 (98) 12,203Profit/(loss)on sale offixed assets (103) 160 (57) - - -Net financecharges (5,703) - - (5,703) - (5,703)------------------- ------- -------- -------- -------- -------- -------- Profit beforetaxation 5,398 1,200 - 6,598 (98) 6,500Taxation (520) (312) - (832) 668 (164)------------------- ------- -------- -------- -------- -------- -------- Profit fromcontinuingoperations 4,878 888 - 5,766 570 6,336 Loss fromdiscontinuedoperations - (888) - (888) - (888)------------------- ------- -------- -------- -------- -------- -------- Profit for theperiodattributableto equityshareholders 4,878 - - 4,878 570 5,448------------------- ------- -------- -------- -------- -------- -------- Earnings per share expressed inpence -------- -------- -------- -------- --------------------------------Earnings per shareBasic 4.4p 0.5p 4.9p Diluted 4.3p 0.5p 4.8p Earnings per share before exceptionals and goodwill amortisationBasic 7.5p* 0.2p 7.7pDiluted 7.5p* 0.1p 7.6p Earnings per share from continuing operations before exceptionals and goodwillamortisationBasic 8.3p 0.2p 8.5pDiluted 8.3p 0.1p 8.4p------------------- ------- -------- -------- -------- -------- -------- * Earnings per share (EPS) before exceptionals and goodwill amortisation underUK GAAP is calculated in accordance with the figures as presented above i.e. inIFRS format. The effect of this is to exclude profit/(loss) on sale of fixedassets from exceptional items, whereas in the published 2005 accounts (based onUK GAAP format), this item was included as exceptional - hence EPS beforeexceptionals and goodwill amortisation was calculated as 7.6pence.8.3 Consolidated Balance Sheet as at 2 July 2005 UK GAAP UK GAAP UK GAAP IFRS IFRS reclassify detail to as originally accord with in IFRS accounting presented IFRS format adjustments £000 £000 £000 £000 £000------------------- --------- --------- --------- --------- --------Non-currentassets Goodwill 6,499 6,499 277 6,776Intangible assets 6,499 (6,499) - - -Property, plant &equipment 153,721 - 153,721 (2,790) 150,931Other non-currentassets - - - 2,647 2,647------------------- --------- --------- --------- --------- -------- 160,220 - 160,220 134 160,354 Current assets Stock 1,548 - 1,548 - 1,548Trade and otherreceivables 5,772 - 5,772 143 5,915Cash and cashequivalents 4,654 - 4,654 - 4,654------------------- --------- --------- --------- --------- -------- 11,974 - 11,974 143 12,117Assets held forsale 210 - 210 - 210------------------- --------- --------- --------- --------- -------- 12,184 - 12,184 143 12,327 CurrentLiabilities Trade and otherpayables (81,255) 63,639 (17,616) 813 (16,803)Current tax - (443) (443) - (443)Provisions - - - - -Obligations under - - - - -finance leasesBank loans andoverdrafts - (63,196) (63,196) - (63,196)------------------- --------- --------- --------- --------- -------- (81,255) - (81,255) 813 (80,442)------------------- --------- --------- --------- --------- --------Net currentliabilities (69,071) - (69,071) 956 (68,115)------------------- --------- --------- --------- --------- -------- Total assets lesscurrentliabilities 91,149 - 91,149 1,090 92,239 Non-currentliabilities Bank loans - - - - -Unsecuredconvertible loannotes (6,000) - (6,000) - (6,000)Obligations under - - - - -finance leasesDeferred income - - - (2,184) (2,184)Provisions (20,091) 16,799 (3,292) - (3,292)Deferred tax - (16,799) (16,799) (3,006) (19,805)------------------- --------- --------- --------- --------- -------- (26,091) - (26,091) (5,190) (31,281)------------------- --------- --------- --------- --------- --------Net assets 65,058 - 65,058 (4,100) 60,958------------------- --------- --------- --------- --------- -------- Capital andreservesCalled up sharecapital 5,625 - 5,625 - 5,625Share premiumaccount 50,080 - 50,080 - 50,080Capital reserve -own shares (322) - (322) - (322)Equity reserve - - - 308 308Profit and Lossaccount 9,675 - 9,675 (4,408) 5,267------------------- --------- --------- --------- --------- -------- Equityshareholders'funds 65,058 - 65,058 (4,100) 60,958------------------- --------- --------- --------- --------- -------- 8.4 Consolidated Income Statement for the 26 weeks ended 1 January 2005----------------------------------------------------------------------- UK GAAP UK GAAP UK GAAP IFRS IFRS less Discon- Total as originally tinued ( IFRS accounting presented operations format) adjustments £000 £000 £000 £000 £000--------------------- --------- -------- -------- --------- -------ContinuingoperationsRevenue 68,097 (868) 67,229 - 67,229Operating costs(includingexceptionals & (64,242) 1,366 (62,876) (26) (62,902)goodwill --------- -------- -------- --------- -------amortisation)--------------------- Operating profitbeforeexceptionals & 8,360 498 8,858 (240) 8,618goodwillamortisationExceptional items (4,291) - (4,291) - (4,291)Goodwill amortisation (214) - (214) 214 -Profit/(loss) on sale - - - - -of fixed assets --------- -------- -------- --------- ---------------------------- Operating profit 3,855 498 4,353 (26) 4,327Net finance charges (2,912) - (2,912) - (2,912)--------------------- --------- -------- -------- --------- ------- Profit before 943 498 1,441 (26) 1,415taxationTaxation (391) (149) (540) 77 (463)--------------------- --------- -------- -------- --------- ------- Profit fromcontinuing 552 349 901 51 952operations Loss fromdiscontinued - (349) (349) - (349)operations --------- -------- -------- --------- ---------------------------- Profit for the periodattributable toequity 552 - 552 51 603shareholders --------- -------- -------- --------- ---------------------------- Earnings per share expressed inpence -------- -------- --------- ----------------------------------- Earnings per shareBasic 0.5p 0.0p 0.5p Diluted 0.5p 0.0p 0.5p Earnings per share before exceptionals and goodwill amortisationBasic 3.5p (0.2)p 3.3pDiluted 3.5p (0.2)p 3.3p Earnings per share from continuing operations before exceptionals and goodwillamortisationBasic 3.8p (0.2)p 3.6pDiluted 3.8p (0.2)p 3.6p--------------------- --------- -------- -------- --------- ------- 8.5 Consolidated Balance Sheet as at 1 January 2005--------------------------------------------------- UK GAAP UK GAAP UK GAAP IFRS IFRS reclassify detail to as originally accord with in IFRS accounting presented IFRS format adjustments £000 £000 £000 £000 £000------------------- --------- --------- --------- --------- --------Non-currentassets Goodwill - 6,716 6,716 60 6,776Intangible assets 6,716 (6,716) - - -Property, plant &equipment 155,444 - 155,444 (3,574) 151,870Other non-currentassets - - - 3,400 3,400------------------- --------- --------- --------- --------- -------- 162,160 - 162,160 (114) 162,046 Current assets Stock 2,199 - 2,199 - 2,199Trade and otherreceivables 6,873 - 6,873 174 7,047Cash and cashequivalents 8,055 - 8,055 - 8,055------------------- --------- --------- --------- --------- -------- 17,127 - 17,127 174 17,301Assets held forsale 327 - 327 - 327------------------- --------- --------- --------- --------- -------- 17,454 - 17,454 174 17,628 CurrentLiabilities Trade and otherpayables (32,214) 10,610 (21,604) 1,020 (20,584)Current tax - (1,510) (1,510) - (1,510)Provisions - - - - -Bank loans andoverdrafts - (9,100) (9,100) - (9,100)------------------- --------- --------- --------- --------- -------- (32,214) - (32,214) 1,020 (31,194)------------------- --------- --------- --------- --------- --------Net currentliabilities (14,760) - (14,760) 1,194 (13,566)------------------- --------- --------- --------- --------- -------- Total assets lesscurrentliabilities 147,400 - 147,400 1,080 148,480 Non-currentliabilities Bank loans (61,646) - (61,646) - (61,646)Unsecuredconvertible loannotes (6,000) - (6,000) - (6,000)Deferred income - - - (2,229) (2,229)Provisions (3,400) - (3,400) - (3,400)Deferred tax (15,761) - (15,761) (3,593) (19,354)------------------- --------- --------- --------- --------- -------- (86,807) - (86,807) (5,822) (92,629)------------------- --------- --------- --------- --------- --------Net assets 60,593 - 60,593 (4,742) 55,851------------------- --------- --------- --------- --------- -------- Capital andreserves Called up sharecapital 5,615 - 5,615 - 5,615Share premiumaccount 49,951 - 49,951 - 49,951Capital reserve -own shares (322) - (322) - (322)Equity reserve - - - 185 185Profit and Lossaccount 5,349 - 5,349 (4,927) 422------------------- --------- --------- --------- --------- -------- Equityshareholders'funds 60,593 - 60,593 (4,742) 55,851------------------- --------- --------- --------- --------- -------- 9. Key impacts (a) Amortisation of GoodwillIn the 52 weeks ended 2 July 2005, the Group reported Goodwill amortisationunder UK GAAP of £431,000 (26 weeks ended 1 January 2005: £214,000). As statedabove under 3(a) Business Combinations, Goodwill is no longer amortised over 20years but is to be subject to annual impairment testing. Accordingly, there isno charge for amortisation under IFRS. At the IFRS transition date, Goodwill was previously reported at a carryingvalue of £6,930,000. Following the restatement of the business combination ofPALS, Goodwill originally costing £181,000 and with a carrying value under UKGAAP of £154,000 as at the transition date has been written off to reservesreducing the frozen value of Goodwill (in respect of Jongleurs only) to£6,776,000. (b) Share based paymentsUnder UK GAAP, the Group has not previously recognised any costs associated withthe grant of share options. IFRS 2 Share-based payment requires that an expense for equity instrumentsgranted be recognised in the financial statements based on their fair value atthe date of grant. This expense, which relates to employee option andperformance share schemes, is recognised over the vesting periods of theschemes. As stated above under 3(b) share-based payments, IFRS 2 allows the measurementof this expense to be calculated only on options granted after 7 November 2002and which had not vested by the later of 1 January 2005 and the date oftransition. The Group has used the Black-Scholes model for computing the fairvalue of options except for those awards including a market-based performancecriteria in which case a stochastic simulation has been used. The Group's IFRS 2 charge for the 52 weeks ended 2 July 2005 has been calculatedat £204,000 (26 weeks to 1 January 2005: £77,000). Given the significant numberof share options granted to new executive directors on their appointment inNovember 2004 and the subsequent grant of further options to employees anddirectors of the Group, the IFRS 2 charge is expected to increase in subsequentaccounting periods. (c) Property leasesUnder UK GAAP, all property leases have been accounted for as operating leasesin accordance with the recognition criteria required by SSAP 21. IAS 17, Leases requires the land element of leases of land and buildings to beconsidered separately for the purposes of determining whether the lease is anoperating or finance lease. The Group has a number of buildings on leases of 35 years; none of these leasescontain terms which, based on the criteria set out in IAS 17, might indicatethat the lease was a finance lease. Many of these properties are either listedbuildings or in conservation areas and the lease requires the property to bemaintained to its original standard. Professional valuers have advised thatthere is no reason to believe that any of the buildings subject to 35 yearleases would not be capable of being let for general use for further significantlease periods. Accordingly therefore, all leases have continued to be treated asoperating leases. (d) Lease premiumsUnder UK GAAP, payments made to acquire a lease of land and buildings werecapitalised as a tangible fixed asset and depreciated over the term of thelease. IAS 17 Leases requires lease premiums to be classified as non-currentprepayments. The portion due to be credited to profit within the next 12 monthsis classified as a current asset in accordance with IAS 1, and amortised overthe term of the lease (such amortisation to be classified as rent). Accordingly, lease premiums with book values of £3,661,000, £3,574,000 and£2,790,000 at the transition date, 1 January 2005 and 2 July 2005 respectively,have been transferred out of fixed assets and in to other non-currentprepayments or trade and other receivables. Also, the charge for depreciation inthe 52 weeks ended 2 July 2005 has been reduced by £174,000 and the charge forRent increased by the same amount (26 weeks ended 1 January 2005: £87,000).Operating profit is unaffected. (e) Lease incentivesUnder UK GAAP, (UITF 28 Operating Lease Incentives), incentives received onentering in to a lease were held on the balance sheet as deferred income andcredited to profit over the period to the first rent review. Under IFRS (SIC-15, Operating lease incentives), incentives received arerequired to be credited to profit over the term of the lease. Consequently, amounts previously credited to profit after adjustment fordeferred tax have been restated on the balance sheet as follows: £732,000 as atthe transition date, £846,000 as at 1 January 2005 and £960,000 as at 2 July2005. Also, the charge for Rent has been increased by £325,000 in the 52 weeksended 2 July 2005 (26 weeks ended 1 January 2005: £163,000) with relatedreductions in the tax charge equivalent to 30% of these amounts. (f) Tangible fixed assets See lease premiums above. (g) Financial instrumentsUnder UK GAAP, derivative financial instruments have been held off balance sheetand the fair values disclosed by way of note. IAS 32 Financial Instruments: Disclosure and Presentation, and IAS 39 FinancialInstruments: Recognition and Measurement, address the accounting for andreporting of financial instruments. Derivative financial instruments must now beaccounted for at fair market value whilst other financial instruments areaccounted for at amortised cost or at fair value depending on theirclassification. The Group currently holds £62m of interest rate swaps, of which £50m willterminate on 10 July 2006. The £50m comprises five transactions orginallytransacted in December 2001 (three) and July 2002 (two) at rates varying between5.255% and 5.5%. The remaining £12m was transacted at a rate of 7.31% inDecember 1999 and terminates on 24 September 2007. As noted above, in the transition to IFRS the implementation of IAS 32 and IAS39 has been deferred to 3 July 2005. At that date, the fair value of the swaps -a liability of £1,292,000, is required to be recognised in the balance sheettogether with a decrease in the provision for deferred taxation of £388,000 witha resultant decrease in reserves of £904,000. Thereafter, to the swap expirydates, movements in fair value of the swaps and the related tax consequenceswill be recognised in the profit and loss account. (h) Deferred taxationIAS 12 adopts a balance sheet approach to deferred tax and refers to temporarydifferences, whereas UK GAAP adopts an income statement approach and refers totiming differences. UK GAAP allows non-provision for deferred tax when capitalgains are rolled-over, whereas IFRS does not. UK GAAP requires provision only tothe extent that any tax on rolled over gains will be payable in the future.Accordingly, an additional provision of £3,990,000 is required at the transitiondate (1 January 2005: £3,990,000 , and 2 July 2005: £3,510,000) Adjustments to the provision for deferred tax arising from timing differencesresulting from the adoption of IFRS accounting treatments are shown as part ofeach accounting adjustment on the adjustment schedules. This includes accountingfor deferred tax on lease incentives and for the share option charge. Where thedeferred tax credit to be recorded in the profit and loss account has exceeded30% of the cumulative share option charge under IFRS 2, the remaining deferredtax credit has been taken directly to equity. (i) Discontinued operationsThe presentational differences relating to Discontinued operations between theGroup's most recent statutory accounts and the requirements of IFRS areexplained above under section 5(b) above. Accordingly, the impact ofreclassifying discontinued businesses from a separate column to a single line ofnet income after tax for the 52 weeks ended 2 July 2005 is to reduce turnover,and to increase operating profit and profit before tax in comparison to the UKGAAP treatment by £2,975,000, £1,040,000 and £1,200,000 respectively (26 weeksended 1 January 2005: £868,000, £498,000 and £498,000 respectively). (j) Profit / (Loss) on sales of fixed assetsThe presentational differences relating to Profit/(loss) on sales of fixedassets and the requirements of IFRS are explained under section 5(c) above.Accordingly, losses on the sale of fixed assets of £160,000 in the 52 weeksended 2 July 2005 under UK GAAP are now included in the net income after tax ofDiscontinued operations (26 weeks ended 1 January 2005: £nil). Regent Inns plc Appendix AIFRS Restatements - UK GAAP to IFRS Consolidated Balance Sheet as at 3 July 2004-------------------------------------------- IFRS 3 IFRS 2 IAS 17 SIC-15 IAS 12 Deferred tax on Share- rolled- Business based Lease Lease over Total Combinations payments premiums incentives gains adjustments £000 £000 £000 £000 £000 £000 ------------------- ---------- -------- -------- -------- -------- ---------Non-current assets Goodwill (154) - - - - (154)Intangible assets - - - - - -Property,plant &equipment - - (3,661) - - (3,661)Othernon-currentassets - - 3,487 - - 3,487------------------- ---------- -------- -------- -------- -------- --------- (154) - (174) - - (328)Current assets Stock - - - - - - Trade & otherreceivables - - 174 - - 174 Cash & cash - - - - - -equivalents ---------- -------- -------- -------- -------- ---------------------------- - - 174 - - 174 Assets held for sale - - - - - -------------------- ---------- -------- -------- -------- -------- --------- - - 174 - - 174 Current Liabilities Trade & otherpayables - - - 1,227 - 1,227 Current tax - - - - - - Provisions - - - - - - Obligations under - - - - - -finance leases Bank loans & - - - - - -overdrafts ---------- -------- -------- -------- -------- ---------------------------- - - - 1,227 - 1,227 ------------------- ---------- -------- -------- -------- -------- --------- Net currentliabilities - - 174 1,227 - 1,401------------------- ---------- -------- -------- -------- -------- --------- Total assetsless currentliabilities (154) - - 1,227 - 1,073 Non-currentliabilities Bank loans - - - - - - Unsecured convertible - - - - - -loan notes Obligations under - - - - - -finance leases Deferredincome - - - (2,273) - (2,273) Provisions - - - - - - Deferred tax - 6 - 314 (3,990) (3,670)------------------- ---------- -------- -------- -------- -------- --------- - 6 - (1,959) (3,990) (5,943) ------------------- ---------- -------- -------- -------- -------- ---------Net assets (154) 6 - (732) (3,990) (4,870)------------------- ---------- -------- -------- -------- -------- --------- Capital and reserves - - - - - -Called up share - - - - - -capitalShare premium - - - - - -accountCapital reserve - own - - - - - -sharesEquity reserve - 108 - - - 108Profit andloss account (154) (102) - (732) (3,990) (4,978)------------------- ---------- -------- -------- -------- -------- ---------Equityshareholders'funds (154) 6 - (732) (3,990) (4,870)------------------- ---------- -------- -------- -------- -------- --------- Regent Inns plcAppendix BIFRS Restatements - UK GAAP to IFRS Consolidated Profit and Loss Account adjustments for the 52 weeks ended 2 July2005------------------------------------------------------------------------------- IFRS 3 IFRS 2 IAS 17 SIC-15 IAS 12 Deferred tax on Share- rolled- Business based Lease Lease over Total Combinations payments premiums incentives gains adjustments £000 £000 £000 £000 £000 £000 ------------------- ---------- -------- -------- -------- -------- ---------Continuing - - - - - -operations Revenue - - - - - -Operatingcosts 431 (204) - (325) - (98)------------------- ---------- -------- -------- -------- -------- --------- Operatingprofit beforeexceptionals &goodwillamortisation - (204) - (325) - (529)Exceptional items - - - - - -Goodwillamortisation 431 - - - - 431 Profit/(loss) on sale - - - - - -of fixed assets ---------- -------- -------- -------- -------- ---------------------------- Operatingprofit 431 (204) - (325) - (98) Profit/(loss) on sale - - - - - -of fixed assets Net finance charges - - - - - -------------------- ---------- -------- -------- -------- -------- --------- Profit beforetaxation 431 (204) - (325) - (98) Taxation - 91 - 98 480 669------------------- ---------- -------- -------- -------- -------- --------- Profit fromcontinuingoperations 431 (113) - (227) 480 571 Loss from - - - - - -discontinued ---------- -------- -------- -------- -------- ---------operations------------------- Profit for theperiodattributable 431 (113) - (227) 480 571 to equityshareholders ---------- -------- -------- -------- -------- ---------------------------- Regent Inns plcAppendix CIFRS Restatements - UK GAAP to IFRS Consolidated Balance Sheet adjustments as at 2 July 2005-------------------------------------------------------- IFRS 3 IFRS 2 IAS 17 SIC-15 IAS 12 Deferred tax on Share- rolled- Business based Lease Lease over Total Combinations payments premiums incentives gains adjustments £000 £000 £000 £000 £000 £000 ------------------- ---------- -------- -------- -------- -------- ---------Non-current assets Goodwill 277 - - - - 277Intangible assets - - - - - -Property,plant &equipment - - (2,790) - - (2,790)Othernon-currentassets - - 2,647 - - 2,647------------------- ---------- -------- -------- -------- -------- --------- 277 - (143) - - 134Current assets Stock - - - - - - Trade & otherreceivables - - 143 - - 143 Cash & cash - - - - - -equivalents ---------- -------- -------- -------- -------- ---------------------------- - - 143 - - 143 Assets held for - - - - - -sale ---------- -------- -------- -------- -------- ---------------------------- Current Liabilities Trade & otherpayables - - - 813 - 813 Current tax - - - - - - Provisions - - - - - - Obligations under - - - - - -finance leases Bank loans & - - - - - -overdrafts ---------- -------- -------- -------- -------- ---------------------------- - - - 813 - 813 ------------------- ---------- -------- -------- -------- -------- --------- Net currentliabilities - - 143 813 - 956------------------- ---------- -------- -------- -------- -------- --------- Total assetsless currentliabilities 277 - - 813 - 1,090 Non-currentliabilities Bank loans - - - - - - Unsecured convertible - - - - - -loan notes Obligations under - - - - - -finance leases Deferredincome - - - (2,184) - (2,184) Provisions - - - - - - Deferred tax - 93 - 411 (3,510) (3,006)------------------- ---------- -------- -------- -------- -------- --------- - 93 - (1,773) (3,510) (5,190) ------------------- ---------- -------- -------- -------- -------- ---------Net assets 277 93 - (960) (3,510) (4,100)------------------- ---------- -------- -------- -------- -------- --------- Capital andreservesCalled up share - - - - - -capitalShare premium - - - - - -accountCapital reserve - own - - - - - -sharesEquity reserve - 308 - - - 308Profit andloss account 277 (215) - (960) (3,510) (4,408)------------------- ---------- -------- -------- -------- -------- ---------Equityshareholders'funds 277 93 - (960) (3,510) (4,100)------------------- ---------- -------- -------- -------- -------- --------- Regent Inns plc Appendix DIFRS Restatements - UK GAAP to IFRS Consolidated Profit and Loss Account adjustments for the 26 weeks ended 1January 2005-------------------------------------------------------------------------- IFRS 3 IFRS 2 IAS 17 SIC-15 IAS 12 Deferred tax on Share- rolled- Business based Lease Lease over Total Combinations payments premiums incentives gains adjustments £000 £000 £000 £000 £000 £000 ------------------ ---------- -------- -------- -------- -------- ---------Continuing - - - - - -operations Revenue - - - - - -Operatingcosts 214 (77) - (163) - (26)------------------ ---------- -------- -------- -------- -------- --------- Operatingprofit beforeexceptionals &goodwillamortisation - (77) - (163) - (240)Exceptional items - - - - - -Goodwillamortisation - - - - - 214 Profit/(loss) on - - - - - -sale of fixed ---------- -------- -------- -------- -------- ---------assets------------------ Operatingprofit 214 (77) - (163) - (26) Profit/(loss) on - - - - - -sale of fixedassets Net finance - - - - - -charges ---------- -------- -------- -------- -------- --------------------------- Profit beforetaxation 214 (77) - (163) - (26) Taxation - 28 - 49 - 77------------------ ---------- -------- -------- -------- -------- --------- Profit fromcontinuingoperations 214 (49) - (114) - 51 Loss from - - - - - -discontinued ---------- -------- -------- -------- -------- ---------operations------------------ Profit for theperiodattributableto equityshareholders 214 (49) - (114) - 51------------------ ---------- -------- -------- -------- -------- --------- Regent Inns plcAppendix EIFRS Restatements - UK GAAP to IFRS Consolidated Balance Sheet adjustments as at 1 January 2005-------------------- --------- ------- ------- -------- ------- -------- IFRS 3 IFRS 2 IAS 17 SIC-15 IAS 12 Deferred tax on Share- rolled- Business based Lease Lease over Total Combinations payments premiums incentives gains adjustments £000 £000 £000 £000 £000 £000 ----------------- ---------- -------- -------- -------- -------- ---------Non-current assets Goodwill 60 - - - - 60Intangible assets - - - - - -Property,plant &equipment - - (3,574) - - (3,574)Othernon-currentassets - - 3,400 - - 3,400----------------- ---------- -------- -------- -------- -------- --------- 60 - (174) - - (114)Current assets - Stock - - - - - - Trade & otherreceivables - - 174 - - 174 Cash & cash - - - - - -equivalents ---------- -------- -------- -------- -------- -------------------------- - - 174 - - 174 Assets held for - - - - - -sale ---------- -------- -------- -------- -------- -------------------------- CurrentLiabilities Trade & otherpayables - - - 1,020 - 1,020 Current tax - - - - - - Provisions - - - - - - Obligations under - - - - - -finance leases Bank loans & - - - - - -overdrafts ---------- -------- -------- -------- -------- -------------------------- - - - 1,020 - 1,020 ----------------- ---------- -------- -------- -------- -------- --------- Net currentliabilities - - 174 1,020 - 1,194----------------- ---------- -------- -------- -------- -------- --------- Total assetsless currentliabilities 60 - - 1,020 - 1,080 Non-currentliabilities Bank loans - - - - - - Unsecured - - - - - -convertible loannotes Obligations under - - - - - -finance leases Deferredincome - - - (2,229) - (2,229) Provisions - - - - - - Deferred tax - 34 - 363 (3,990) (3,593)----------------- ---------- -------- -------- -------- -------- --------- - 34 - (1,866) (3,990) (5,822) ----------------- ---------- -------- -------- -------- -------- ---------Net assets 60 34 - (846) (3,990) (4,742)----------------- ---------- -------- -------- -------- -------- --------- Capital andreservesCalled up share - - - - - -capitalShare premium - - - - - -accountCapital reserve - - - - - - -own sharesEquity reserve - - - - - 185Profit andloss account 60 (151) - (846) (3,990) (4,927)----------------- ---------- -------- -------- -------- -------- ---------Equityshareholders'funds 60 34 - (846) (3,990) (4,742)----------------- ---------- -------- -------- -------- -------- --------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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