21st Feb 2006 07:02
Paragon Group Of Companies PLC21 February 2006 Page 55 ILLUSTRATIVE RESTATEMENT OF 1 OCTOBER 2005 BALANCE SHEET UNDER IFRS Introduction This section presents the balance sheet of the Group as at 1 October 2005,restated on the basis which the Group expects to use in compiling its financialstatements for the year ending 30 September 2006. Basis of preparation The Group is required to prepare its consolidated financial statements for theyear ending 30 September 2006 in accordance with the International FinancialReporting Standards which are expected to be effective and endorsed by theEuropean Union at 30 September 2006. This section should be read in conjunction with the information presented in theearlier sections. The treatment shown represents the Group's present understanding of the effectwhich the full application of IFRS will have on the Group's accounting in theaccounts for the year ending 30 September 2006. It is therefore possible thatthese treatments may change, in the light of any changes to IFRS or itsinterpretation or in emerging market practice before those accounts are produced. IFRS 1 Exemptions IFRS 1 sets out procedures which the Group must follow when it adopts IFRSfor the first time as the basis of preparation of its consolidated financialstatements. The Group is required to determine appropriate accounting policiesin compliance with IFRS and, in general, to apply them retrospectively indetermining the opening IFRS balance sheet at its date of transition, 1 October2004. The particular exemptions being applied by the Group are discussed in theearlier sections of this document. IFRS 1 allows that IAS 32 - 'Financial Instruments: Disclosure and Presentation'and IAS 39 - 'Financial Instruments: Recognition and Measurement' be appliedwith effect from 1 October 2005, without retrospective restatement of figuresreported for earlier periods. The Group has taken advantage of this exemptionand this section shows how the adoption of these standards affects theconsolidated balance sheet at that date. Under IAS 39 hedge accounting is permitted, but the standard requires thathedges are designated and fully documented at their inception. IFRS 1 extendsthis to allow hedge accounting for any existing hedges at 1 October 2005, solong as the appropriate documentation is in place at that date, and the Grouphas taken advantage of this exemption. IFRS 1 restricts the hedge accountingadjustments at 1 October 2005 to the lower of the hedge adjustment arising onthe hedged item and that arising on the hedging instrument. Accounting policies The Group's accounting policies have been revised to comply with IFRS. Thosechanges required to adopt the Proforma basis are described in the previoussection on pages 38 to 46. The additional changes to policies to adopt IFRS infull (the 'On-going basis'), and their impact on the Group's balance sheet at 1October 2005, are described below and shown in the table on page 57. Fair Values and hedging Under IAS 39 certain financial instruments are carried at fair value, includingall derivatives. Movement in these fair values is shown in the income statementfor the period, but this effect is mitigated where the derivative is used forhedging purposes and can be shown to be 'highly effective', subject to the hedgeaccounting criteria of IAS 39 being met.________________________________________________________________________________ Page 56 ILLUSTRATIVE RESTATEMENT OF 1 OCTOBER 2005 BALANCE SHEET UNDER IFRS Where a derivative is designated as a fair value hedge, the carrying value ofhedged items is adjusted for those changes in fair value relating to the hedgedrisk and this adjustment is offset against the movement in the fair value of thederivative in the income statement. Where a derivative is designated as a cashflow hedge, only that part of the movement in fair value relating toinefficiency in the hedging arrangement affects profit, the remainder beingtaken to equity. Any gains or losses taken to equity will be recognised in theincome statement at the same time as the effect of the hedged item. Compared to the Group's balance sheet at 30 September 2005 prepared under theProforma basis (which excludes fair value and hedging impacts), application ofthe full requirements of IAS 32 and IAS 39 reduces the Group's net assets andtotal equity by £4.1m.________________________________________________________________________________ Page 57 ILLUSTRATIVE RESTATEMENT OF 1 OCTOBER 2005 BALANCE SHEET UNDER IFRS ------------------------------------------------------------------------------------------------------------------------ Analysis of adjustments to the Balance Sheet1 October 2005 ======================================================================================================================== UK GAAP Statutory Statutory Proforma Proforma Fair value On-going basis basis basis basis adjustments IFRS adjustments adjustments basis £m £m £m £m £m £m £mNon-currentassetsIntangibleassets (9.9) 10.2 0.3 - 0.3 - 0.3Property,plant andequipment 8.7 11.0 19.7 - 19.7 - 19.7Financialassets 5,538.7 990.0 6,528.7 (97.6) 6,431.1 23.9 6,455.0Deferred taxasset - 5.7 5.7 29.2 34.9 1.7 36.6 --------------------------------------------------------------------------------- 5,537.5 1,016.9 6,554.4 (68.4) 6,486.0 25.6 6,511.6 ---------------------------------------------------------------------------------CurrentassetsOtherreceivables 7.8 (1.2) 6.6 - 6.6 (2.3) 4.3Cash and cashequivalents 445.2 85.2 530.4 - 530.4 - 530.4 --------------------------------------------------------------------------------- 453.0 84.0 537.0 - 537.0 (2.3) 534.7 ---------------------------------------------------------------------------------Total assets 5,990.5 1,100.9 7,091.4 (68.4) 7,023.0 23.3 7,046.3 =================================================================================Equityshareholders'fundsShare 12.1 - 12.1 - 12.1 - 12.1capitalShare 70.2 - 70.2 - 70.2 - 70.2premiumMerger (70.2) - (70.2) - (70.2) - (70.2)reserveCash flowhedge reserve - - - - - (2.6) (2.6)Profit andloss account 318.7 4.8 323.5 (68.4) 255.1 (1.5) 253.6 ---------------------------------------------------------------------------------Share capitaland reserves 330.8 4.8 335.6 (68.4) 267.2 (4.1) 263.1Own shares (22.8) - (22.8) - (22.8) - (22.8) --------------------------------------------------------------------------------- 308.0 4.8 312.8 (68.4) 244.4 (4.1) 240.3 ---------------------------------------------------------------------------------CurrentliabilitiesFinancialliabilities - 0.9 0.9 - 0.9 - 0.9Current taxliabilities - 12.9 12.9 - 12.9 - 12.9Otherliabilities 81.7 (21.8) 59.9 - 59.9 (1.6) 58.3 --------------------------------------------------------------------------------- 81.7 (8.0) 73.7 - 73.7 (1.6) 72.1 ---------------------------------------------------------------------------------Non-currentliabilitiesFinancialliabilities - 6,684.8 6,684.8 - 6,684.8 29.0 6,713.8Deferred taxliability - 0.7 0.7 - 0.7 - 0.7Retirementbenefitobligations - 14.6 14.6 - 14.6 - 14.6Provisions 2.8 (0.7) 2.1 - 2.1 - 2.1Otherliabilities 5,598.0 (5,595.3) 2.7 - 2.7 - 2.7 --------------------------------------------------------------------------------- 5,600.8 1,104.1 6,704.9 - 6,704.9 29.0 6,733.9 --------------------------------------------------------------------------------- 5,990.5 1,100.9 7,091.4 (68.4) 7,023.0 23.3 7,046.3 =================================================================================----------------------------------------------------------------------------------------------______________________________________________________________________________________________ Page 58 PRESENTATIONAL CHANGES TO 2005 UK GAAP RESULTS The presentation of financial information under IFRS is governed by IAS 1. Insome cases this will require the presentation of an item in a differentposition, or the use of a different description in the IFRS income statement orbalance sheet to that adopted in the UK GAAP profit and loss account or balance sheet. To aid understanding, in the preceding sections UK GAAP financial information ispresented in accordance with IFRS formats. This section demonstrates how thatinformation is derived from that published in the Annual Report and Accounts forthe year ended 30 September 2005 and the Interim Report for the six months ended31 March 2005. This section includes adjustments to reclassify balances held within the Group'scontract hire business, because this better reflects the nature of the assetsand liabilities. There is no impact on the profit and loss account from thischange. All other changes arise from relocation of items. Any changes which relate tothe adoption of a different accounting policy, or the inclusion on the face ofthe primary financial statements of items previously shown in notes to theaccounts are dealt with in the preceding sections. -------------------------------------------------------------------------------- Conversion of UK GAAP Profit and Loss Account to IFRS formatYear to 30 September 2005 ================================================================================Profit and Loss £m £m £m £m UK GAAP information inAccount presented IFRS Income Statementunder UK GAAP formatInterestreceivable 484.4 - 484.4 Interest receivableInterestpayable andsimilarcharges (387.5) - (387.5) Interest payable -------------------------Net interestincome 96.9 - 96.9 Net interest incomeOtheroperatingincome 35.9 - 35.9 Other operating income ------------------------- Totaloperatingincome 132.8 - 132.8 Total operating incomeOperating expenseOtheroperatingexpenses (44.2) Amortisationof negativegoodwill 4.1 ---------Totaloperatingexpenses (40.1) (4.1) (44.2) Operating expensesProvisions forlosses (15.9) - (15.9) Impairment losses ---------------- (4.1) 72.7 4.1 4.1 Amortisation of negative ------------------------- goodwillOperatingprofit beingprofit onordinaryactivitiesbeforetaxation 76.8 - 76.8 Operating profit before taxationTax charge onprofit onordinaryactivities (16.1) - (16.1) Taxation -------------------------Profit onordinaryactivitiesafter taxationfor thefinancial year 60.7 - 60.7 Operating profit after =============== taxation Equity dividend (14.4) ----------Retained profit 46.3 ========== -------------------------------------------------------------------------------- Under IFRS dividends are shown as a deduction from reserves rather than on theface of the income statement.________________________________________________________________________________ Page 59 PRESENTATIONAL CHANGES TO 2005 UK GAAP RESULTS -------------------------------------------------------------------------------- Conversion of UK GAAP balance sheet to IFRS format30 September 2005================================================================================ Balance Sheet £m £m £m £m UK GAAP information inpresented under IFRS Balance SheetUK GAAP formatAssets EmployedFixed assets Non-current assetsIntangibleassetsNegativegoodwill (9.9) - (9.9) Intangible assetsTangibleassets 3.6 5.1 8.7 Property, plant and equipmentInvestmentsAssets subjecttonon-recoursefinance 1,116.0Non-recoursefinance (1,075.2) ---------- 40.8Loans tocustomers 5,497.9 5,538.7 - 5,538.7 Financial assets - Deferred tax asset ---------------------------- 5,532.4 5.1 5,537.5 ------------------ Current assets Current assetsStocks 3.0 (3.0)Debtorsfalling duewithin oneyear 7.7 0.1 7.8 Other receivablesInvestments 285.7 (285.7)Cash at bank Cash and cashand in hand 159.5 285.7 445.2 equivalents ---------- ------------------ 455.9 (2.9) 453.0 ---------------------------- 5,988.3 2.2 5,990.5 ============================Financed byEquity Equity shareholders'shareholders' fundsfundsCalled-upshare capital 12.1 - 12.1 Share capitalShare premiumaccount 70.2 - 70.2 Share premiumMerger reserve (70.2) - (70.2) Merger reserveProfit and Profit and lossloss account 318.7 - 318.7 account ---------- 318.7 ----------------------------Share capital Share capital andand reserves 330.8 - 330.8 reservesOwn shares (22.8) - (22.8) Own shares ---------------------------- 308.0 - 308.0 -----------------Provisions forliabilitiesand charges 2.8 (2.8) Current liabilities - Financial liabilitiesCreditors - Current tax liabilitiesAmountsfalling duewithin oneyear 80.6 1.1 81.7 Other liabilities ------------------ 1.1 81.7 ------------------ Non-current liabilities - Financial liabilities - Deferred tax liabilities - Retirement benefit obligations 2.8 2.8 ProvisionsAmountsfalling dueafter morethan one year 5,596.9 1.1 5,598.0 Other liabilities ---------- ------------------ 5,677.5 3.9 5,600.8 ---------------------------- 5,988.3 2.2 5,990.5 ============================ -------------------------------------------------------------------------------- ________________________________________________________________________________ Page 60 PRESENTATIONAL CHANGES TO 2005 UK GAAP RESULTS -------------------------------------------------------------------------------- Conversion of UK GAAP Profit and Loss Account to IFRS formatSix months to 31 March 2005 ================================================================================ Profit and Loss £m £m £m £m UK GAAP information inAccount presented IFRS Income Statementunder UK GAAP formatInterestreceivable 240.9 - 240.9 Interest receivableInterestpayable andsimilarcharges (194.9) - (194.9) Interest payable ------------------------Net interest income 46.0 - 46.0 Net interest incomeOtheroperatingincome 17.0 - 17.0 Other operating income ------------------------Totaloperatingincome 63.0 - 63.0 Total operating incomeOperating expenseOtheroperatingexpenses (20.6)Amortisationof negativegoodwill 2.2 ---------Totaloperatingexpenses (18.4) (2.2) (20.6) Operating expensesProvisions forlosses (8.5) - (8.5) Impairment losses ---------------- (2.2) 33.9 2.2 2.2 Amortisation of negative ------------------------ goodwillOperatingprofit beingprofit onordinaryactivitiesbeforetaxation 36.1 - 36.1 Operating profit before taxationTax charge onprofit onordinaryactivities (7.6) - (7.6) Taxation ------------------------Profit onordinaryactivitiesafter taxationfor thefinancial year 28.5 - 28.5 Operating profit after ============== taxationEquity dividend (6.0) ---------Retained profit 22.5 =========--------------------------------------------------------------------------------Under IFRS dividends are shown as a deduction from reserves rather than on theface of the income statement.________________________________________________________________________________ Page 61 PRESENTATIONAL CHANGES TO 2005 UK GAAP RESULTS -------------------------------------------------------------------------------- Conversion of UK GAAP Balance Sheet to IFRS format31 March 2005 ================================================================================ Balance Sheet £m £m £m £m UK GAAP information inpresented under UK IFRS Balance SheetGAAP formatAssets EmployedFixed assets Non-current assetsIntangibleassetsNegativegoodwill (11.8) - (11.8) Intangible assetsTangibleassets 3.7 5.4 9.1 Property, plant and equipmentInvestmentsAssets subjecttonon-recoursefinance 1,341.2Non-recoursefinance (1,297.8) ---------- 43.4Loans tocustomers 4,842.5 ---------- 4,885.9 - 4,885.9 Financial assets - Deferred tax asset -------------------------- 4,877.8 5.4 4,883.2 ---------------Current assets Current assetsStocks 3.2 (3.2)Debtorsfalling duewithin oneyear 7.5 0.1 7.6 Other receivablesCash at bankand Cash and cashinvestments 452.5 - 452.5 equivalents ---------- --------------- 463.2 (3.1) 460.1 -------------------------- 5,341.0 2.3 5,343.3 ==========================Financed byEquity Equity shareholders'shareholders' fundsfundsCalled-upshare capital 12.0 - 12.0 Share capitalShare premiumaccount 69.5 - 69.5 Share premiumMerger reserve (70.2) - (70.2) Merger reserveProfit and Profit and lossloss account 293.8 - 293.8 account -------------------------- Share capital Share capital andand reserves 305.1 - 305.1 reservesOwn shares (13.8) - (13.8) Own shares -------------------------- 291.3 - 291.3 ---------------Provisions forliabilitiesand charges 4.5 (4.5) Current liabilities - Financial liabilitiesCreditors - Current tax liabilitiesAmountsfalling duewithin oneyear 77.8 1.1 78.9 Other liabilities --------------- 1.1 78.9 --------------- Non-current liabilities - Financial liabilities - Deferred tax liabilities - Retirement benefit obligations 4.5 4.5 ProvisionsAmountsfalling dueafter morethan one year 4,967.4 1.2 4,968.6 Other liabilities --------------- 5.7 4,973.1 -------------------------- 5,341.0 2.3 5,343.3 ========================== --------------------------------------------------------------------------------________________________________________________________________________________ Page 62 PRESENTATIONAL CHANGES TO 2005 UK GAAP RESULTS -------------------------------------------------------------------------------- Conversion of UK GAAP Balance Sheet to IFRS format30 September 2004 ================================================================================ Balance Sheet £m £m £m £m UK GAAP information inpresented under IFRS Balance SheetUK GAAP formatAssets EmployedFixed assets Non-current assetsIntangibleassetsNegativegoodwill (14.0) - (14.0) Intangible assetsTangibleassets 3.4 6.1 9.5 Property, plant and equipmentInvestmentsAssets subjecttonon-recoursefinance 1,557.7Non-recoursefinance (1,520.3) ---------- 37.4Loans tocustomers 4,492.5 ---------- 4,529.9 - 4,529.9 Financial assets - Deferred tax asset ----------------------------- 4,519.3 6.1 4,525.4 -------------------Current assets Current assetsStocks 3.4 (3.4)Debtorsfalling duewithin oneyear 8.8 0.1 8.9 Other receivablesInvestments 230.5 (230.5)Cash at bank Cash and cashand in hand 172.0 230.5 402.5 equivalents ---------- ------------------- 414.7 (3.3) 411.4 ----------------------------- 4,934.0 2.8 4,936.8 =============================Financed byEquity Equity shareholders'shareholders' fundsfundsCalled-upshare capital 12.0 - 12.0 Share capitalShare premiumaccount 68.8 - 68.8 Share premiumMerger reserve (70.2) - (70.2) Merger reserveProfit and Profit and lossloss account 270.1 - 270.1 account ---------- 268.7 -----------------------------Share capital Share capital andand reserves 280.7 - 280.7 reservesOwn shares (12.3) - (12.3) Own shares ----------------------------- 268.4 - 268.4 -------------------Provisions forliabilitiesand charges 5.6 (5.6) Current liabilities - Financial liabilitiesCreditors - Current tax liabilitiesAmountsfalling duewithin oneyear 66.4 1.6 68.0 Other liabilities ------------------- 1.6 68.0 ------------------- Non-current liabilities - Financial liabilities - Deferred tax liabilities - Retirement benefit obligations 5.6 5.6 ProvisionsAmountsfalling dueafter morethan one year 4,593.6 1.2 4,594.8 Other liabilities ---------- ------------------- 4,660.0 6.8 4,600.4 ----------------------------- 4,934.0 2.8 4,936.8 =============================--------------------------------------------------------------------------------________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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