24th Feb 2006 07:01
Pochin's PLC24 February 2006 Section 4 Consolidated balance sheetAs at 31 May 2005 Adjustments £'000 UK GAAP (1) (2) (3) (4) (5) (6) 31-May-05 Business Proposed Deferred Retirement Share £'000 combinations dividends tax benefits optionsNon current assetsIntangible assets 1,164 406 (258)Property, plant andequipment 8.232Investment properties 30,021InvestmentsJoint ventures -Share of gross assets 10,286Share of gross liabilities (6,006)Goodwill 925Associates 2,585Other 2,157Total non current assets 49,364 406 (258) - - - - Current assetsInventories 38,251Trade and other receivables 22,583Cash and cash equivalents 12,906Total current assets 73,740 - - - - - -Total assets 123,104 406 (258) - - - - EquityShare capital (5,200)Own shares 847Revaluation reserve (10,848)Retained earnings (34,549) (406) 258 (1,061) 2,086 3,074Minority interest (223)Total equity (49,973) (406) 258 (1,061) 2,086 3,074 - Non current liabilitiesBank loans (10,351)Retirement benefit obligation - (4,391)Deferred tax liabilities (1,308) (2,086) 1,317Long term provisions (712)Obligations under finance leases (219)Other payables (3,675)Total non current liabilities (16,265) - - - (2,086) (3,074) - Current liabilitiesTrade and other payables (16,260)Tax liabilities (1,941)Obligations under finance leases (176)Bank loans & overdrafts (37,428)Dividends payable (1,061) 1,061Financial derivatives -Total current liabilities (56,866) - - 1,061 - - -Total liabilities (73,131) - - 1,061 (2,086) (3,074) -Total equity and liabilities (123,104) (406) 258 - - - - Adjustments £'000 (7) (8) (9) (10) (11) IFRS Interest Property Revaluation 31-May-05 Investments rate sales gains Reallocate £'000 swapNon current assetsIntangible assets 1,312Property, plant and equipment 8,232Investment properties 30.021InvestmentsJoint ventures 5,205 5,205Share of gross assets (10,286) -Share of gross liabilities 6,006 -Goodwill (925) -Associates 2,585Other 2,157Total non current assets - - - - - 49,512 Current assetsInventories 2,560 40,811Trade and other receivables (4,490) 18,093Cash and cash equivalents 12,906Total current assets - - (1,930) - - 71,810Total assets - - (1,930) - - 121,322 EquityShare capital (5,200)Own shares 847Revaluation reserve 2,459 7.793 (596)Retained earnings 262 1,351 (2,459) (7,793) (39,237)Minority interest (223)Total equity - 262 1,351 - - (44,409) Non current liabilitiesBank loans (10,351)Retirement benefit obligation (4,391)Deferred tax liabilities 113 579 (1,385)Long term provisions (712)Obligations under financeleases (219)Other payables (3,675)Total non current liabilities - 113 579 - - (20,733) Current liabilitiesTrade and other payables (16,260)Tax liabilities (1,941)Obligations under financeleases (176)Bank loans & overdrafts (37,428)Dividends payable -Financial derivatives (375) (375)Total current liabilities - (375) - - - (56,180)Total liabilities - (262) 579 - - (76,913)Total equity and liabilities - - 1,930 - - (121,322) Consolidated balance sheetAs at 30 November 2004 Adjustments £'000 UK GAAP (1) (2) (3) (4) (5) (6) (7) (9) (11) IFRS 30-Nov-04 Business Proposed Deferred Retirement Share Property 30-Nov-04 £'000 combinations dividends tax benefits options Investments sales Reallocate £'000Non currentassets Intangible 990 161 (95) 1,056assetsProperty, 17,579 17,579plant andequipmentInvestment 21,118 21,118propertiesInvestmentsJoint ventures - 3,210 3,210Share of 9,228 (9,228) -gross assets Share of (6,943) 6,943 -grossliabilitiesGoodwill 925 (925) -Associates 2,564 2,564Other 2,157 2,157Total non 47,618 161 (95) - - - - - - - 47,684current assetsCurrent assetsInventories 32,593 1,131 33,724Trade and 16,538 (1,715) 14,823otherreceivablesCash and cash 11,521 11,521equivalents Total current 60,652 - - - - - - - (584) - 60,068assets Total assets 108,270 161 (95) - - - - - (584) - 107,752 Equity Share capital (5,200) (5,200)Own shares 847 847Revaluation (8,725) 7,911 (814)reserveRetained (32,445) (161) 95 (520) 1,630 3,452 - 375 (7,911) (35,485)earningsMinority (211) (211)interest Total equity (45,734) (161) 95 (520) 1,630 3,452 - - 375 - (40,863) Non currentliabilities Bank loans (10,172) (10,172)Retirement - (4,932) (4,932)benefitobligationDeferred tax (878) (1,630) 1,480 - 161 (867)liabilitiesLong term (753) (753)provisionsObligations (792) (792)under financeleasesOther payables (3,464) 48 (3,416) Total non (16,059) - - - (1,630) (3,452) - - 209 - (20,932)currentliabilities CurrentliabilitiesBank loans (27,283) (27,283)& overdraftsObligations (253) (253)under financeleasesTrade and (18,134) - (18,134)other payablesTax (287) (287)liabilitiesDividends (520) 520 -payable Total current (46,477) - - 520 - - - - - - (45,957)liabilities Total (62,536) - - 520 (1,630) (3,452) - - 209 - (66,889)liabilities Total equity (108,270) (161) 95 - - - - - 584 - (107,752)andliabilities Consolidated balance sheetAs at 1 June 2004 Adjustments £'000 UK GAAP (3) (4) (5) (6) (7) (9) (11) IFRS 31-May-04 Proposed Deferred Retirement Share Property 31-May-04 £'000 dividends tax benefits options Investments sales Reallocate £'000Non currentassetsIntangible 443 443assetsProperty, 11,348 11,348plant andequipmentInvestment 21,118 21,118propertiesInvestmentsJoint - 10,034 10,034venturesShare of 20,228 (20,228) -grossassetsShare of (11,182) 11,182 -grossliabilitiesGoodwill 988 (988) -Associates 2,547 2,547Other 2,157 2,157 Total non 47,647 - - - - - - - 47,647currentassets Current assetsInventories 20,077 1,859 21,936Trade and 11,342 (2,250) 9,092otherreceivablesCash and 10,780 10,780cashequivalents Total 42,199 - - - - - (391) - 41,808currentassets Total 89,846 - - - - - (391) - 89,455assets EquityShare (5,200) (5,200)capitalOwn shares 607 607Revaluation (8,807) 7,911 (896)reserveRetained (32,357) (967) 1,726 2,435 274 (7,911) (36,800)earningsMinority (208) (208)interest Total (45,965) (967) 1,726 2,435 - - 274 - (42,497)equity Non currentliabilitiesBank loans (300) (300)Retirement - (3,479) (3,479)benefitobligationDeferred (862) (1,726) 1,044 117 (1,427)taxliabilitiesLong term (852) (852)provisionsObligations (395) (395)underfinanceleasesOther (2,674) (2,674)payables Total non (5,083) - (1,726) (2,435) - - 117 - (9,127)currentliabilities CurrentliabilitiesTrade and (13,168) (13,168)otherpayablesLoan notes (110) (110)Tax (1,350) (1,350)liabilitiesObligations (192) (192)underfinanceleasesBank loans (23,011) (23,011)& overdraftsDividends (967) 967 -payable Total (38,798) 967 - - - - - - (37,831)currentliabilities Total (43,881) 967 (1,726) (2,435) - - 117 - (46,958)liabilities Total (89,846) - - - - - 391 - (89,455)equity andliabilities Changes in accounting policies - balance sheet Explanatory notes on the impact of IFRS adjustments to the consolidated balancesheet at 31 May 2005 (1) & (2) IFRS 3 - Business combinations Under UK GAAP, goodwill arising on consolidation and purchased goodwill werecapitalised on the balance sheet and amortised over the assets' useful economiclives. IFRS 3 requires goodwill acquired in a business combination to be recognised bythe acquirer as an asset from the date of acquisition and prohibits theamortisation of goodwill and instead requires the goodwill to be tested forimpairment annually, or more frequently if events or changes in circumstancesindicate that the asset might be impaired. As a result, goodwill amortised post 31 May 2004, under UK GAAP, is to bereinstated. With regard to goodwill which had been recognised prior to 1 June 2004 this isto be frozen at the current level with there being no requirement to write backpreviously written off goodwill. The group and company has a 79% interest in a business which under UK GAAP meetsthe definition of a quasi-subsidiary, and was treated as if it were a legalsubsidiary. This investment is treated as a subsidiary undertaking under IAS 27. (3) IAS 10 - Dividends Under UK GAAP, dividends declared to equity shareholders after the balance sheetdate were recognised as a liability at the balance sheet date. IAS 10 states that if an entity declares dividends to equity shareholders afterthe balance sheet date the entity should not recognise those dividends as aliability at the balance sheet date because they do not meet the definition of apresent obligation under IAS 37. As a result, the proposed dividends of £967,000, £520,000 and £1,061,000included in the financial statements at 31 May 2004, 30 November 2004 and 31 May2005 respectively, should not be recognised as liabilities. (4) IAS 12 - Income taxes Under IAS, deferred tax is to be applied in respect of all revalued assetsincluded in the accounts, taking into account indexation of the base cost. (5) IAS 19 - Employee benefits The increase in the present value of the liabilities of the group's definedbenefit pension scheme expected to arise from employee service in the period ischarged to the profit from operations. The expected return on the scheme'sassets and the increase during the period in the present value of the scheme'sliabilities arising from the passage of time are included in finance income orfinance costs respectively. Actuarial gains and losses are recognised in theconsolidated statement of recognised income and expense. The related deferredtax impact of defined benefits is presented with other deferred tax under IFRS. Effect on balance sheet 31-May-05 30-Nov-04 £'000 £'000Deficit in scheme at beginning of period 3,479 3,479Movement in period:Current service cost 557 279Past service costs 132 132Net finance charge 70 35Contributions (474) (237)Actuarial loss/(gain) 627 1,244Deficit in scheme at end of period 4,391 4,932 (6) IFRS 2 - Share based payments The group has long-term incentive plans for several directors and key employeesunder which share options have been issued and, subject to certain performanceconditions, will vest to the relevant option holders over a period of threeyears. In accordance with IFRS 2, the group is required to recognise an expensefor options granted on or after 7 November 2002 which have not vested as at 1January 2005. The options have been valued at the date of grant and an expense recognised overthe period that the service benefit is to be provided by the employees under theterms of the scheme. (7) IAS 28 - Investments in associates and IAS 31 - Interests in joint ventures Under UK GAAP, disclosures made under FRS 9 gross equity method are no longerrequired on the face of the balance sheet. This is to be replaced by the equitymethod under IFRS with a single line entry appearing on the face of the balancesheet. (8) IAS 32 & IAS 39 - Interest rate swaps Derivative financial instruments such as interest rate swaps create rights andobligations that have the effect of transferring between the parties to theinstrument one or more of the financial risks inherent in an underlying primaryfinancial instrument. On inception, derivative financial instruments give one party a contractualobligation to exchange financial assets or liabilities with another party thatare potentially favourable or unfavourable. Under IAS 39, derivatives are classified as held for trading instruments and areremeasured to fair value with movements being taken to the income statement. At31 May 2005 the liability had been quantified at £375,000 before tax. Under UK GAAP, this liability had merely been disclosed by way of note to thefinancial statements. (9) IAS 18 - Revenue recognition Property sales have been recognised based on the completion of contract asoppose to the exchange of unconditional contract. (10) & (11) IAS 16 - Property, plant and equipment and IAS 40 - Surpluses/deficits on revaluation of investment properties Under IFRS, changes in the fair value of investment properties are recognisedseparately in the income statement. Under UK GAAP, such revaluation surpluses/deficits are recognised as a net movement within equity. When first applying IAS 40 revaluation surpluses on investment properties are tobe reclassified in retained earnings. The balance remaining in the revaluationreserve represents revaluation surpluses arising on concrete pumps. Section 5 Consolidated cashflow statementYear ending 31 May 2005 Adjustments £'000 UK GAAP Impairment Retirement Share Interest Property IFRS £'000 Goodwill of assets benefits options rate sales £'000 swapNet cash fromoperatingactivitiesProfit for the 6,505 406 (258) (215) (24) (375) (1,539) 4,500yearDepreciation 1,577 1,577chargeGoodwill 406 (406) 258 258impairmentProfit on sale of (94) (94)fixed assetsIncome from joint 284 284ventures Operating profit 8,678 - - (215) (24) (375) (1,539) 6,525before changes inworking capitaland provisionsIncrease in (9,025) (701) (9,726)inventoriesIncrease in (6,738) 2,240 (4,498)receivablesDecrease in (1,357) 215 24 375 (743)payables Cash generated (8,442) - - - - - - (8,442)from operationsInterest paid (886) (886)Income taxes paid (2,052) (2,052) Net cash used in (11,380) - - - - - - (11,380)operatingactivities Investing activitiesInterest received 396 396Purchase of (2,741) (2,741)subsidiaryundertakingPurchase of (3,677) (3,677)property, plantand equipmentProceeds from 827 827sale of property,plant andequipmentReceipt of 585 585government grantsNet cash on 2,972 2,972purchase ofsubsidiaryundertakingIncrease in (1,602) (1,602)interest in jointventuresPurchase of (2,445) (2,445)intangible assetsPurchase of own (240) (240)sharesCash withdrawn at (1,275) (1,275)call and shortnotice Net cash used in (7,200) - - - - - - (7,200)investingactivities FinancingactivitiesProceeds from 11,000 11,000issue of loancapitalPayment of loan (4,832) (4,832)capitalPayment of (192) (192)finance leaseliabilitiesDividends paid (1,487) (1,487) Net cash from 4,489 - - - - - - 4,489financingactivities Net decrease in (14,091) - - - - - (14,091)cash and cashequivalents Cash and cash (22,607) (22,607)equivalents atbeginning of year Cash and cash (36,698) - - - - - - (36,698)equivalents atend of year Section 6 Statement of Pochin's PLC accounting policies under IFRS The preparation of financial statements in conformity with IFRS requires thedirectors to make judgments and assumptions that affect the reported amounts ofassets and liabilities and income and expense during the reported periods.Although these judgments and assumptions are based on the directors' bestknowledge of the amount, events or actions, actual results may differ from theseestimates. Basis of accounting The financial statements will be prepared in accordance with InternationalFinancial Reporting Standards as adopted by the European Union. In addition theywill be prepared in accordance with International Financial Reporting Standardsas issued by the International Auditing Standards Board. The following principalaccounting policies have been applied consistently in dealing with items thatare considered material in relation to the group's financial statements. Basis of consolidation The group financial statements include the accounts of Pochin's PLC andsubsidiaries controlled by the group. Control exists where the company has thepower, directly or indirectly, to govern the financial and operating policies ofan entity so as to obtain benefits from its activities. In assessing control,potential voting rights that are presently exercisable are taken into account.The financial statements of subsidiaries are included in the consolidatedfinancial statements from the date that control commences until the date thatcontrol ceases. Associates are operations over which the group has the power to exercisesignificant influence but not control, generally accompanied by a share ofbetween 20% and 50% of the voting rights. Associates are accounted for using theequity method. The group financial statements include the group's share of its joint venturesassets, liabilities, revenue and expenses from the date the venture commencesuntil to the date of cessation. Intra group balances and transactions together with any unrealised gains/lossesarising from intra group transactions are eliminated in preparing theconsolidated financial statements. Unrealised gains/losses arising fromtransactions with joint ventures are eliminated to the extent of the group'sinterest in the entity. The group's share of unrealised gains/losses arisingfrom transactions with associates is also eliminated. Revenue Revenue is measured at the fair value of the consideration received orreceivable in respect of construction work executed during the year, developmentrevenue and other revenue and services as supplied, but excludes value addedtax. Development revenue is recognised on completion of contracts. Goodwill Goodwill represents the excess of the fair value of the cost of acquisition overthe group's interest in the fair value of the identifiable assets andliabilities of a subsidiary, joint venture or associate at the date ofacquisition. Positive goodwill is stated at cost less any impairment losses and is reviewedfor impairment at least annually. Any impairment is recognised immediately inthe income statement. Negative goodwill arising on an acquisition is recogniseddirectly in the income statement. Other intangible assets Other intangible assets are carried at cost less accumulated amortisation andimpairment losses. Amortisation begins when an asset is available for use and iscalculated on a straight-line basis to allocate the cost of assets over theirestimated useful lives. Subsequent expenditure on capitalised intangible assetsis capitalised only when it increases the future economic benefits embodied inthe specific asset to which it relates. All other expenditure is expensed asincurred. Construction contracts Where the outcome of a construction contract can be estimated reliably and it isprobable that the contract will be profitable, revenue and costs are recognisedby reference to the stage of completion of the contract activity at the balancesheet date, as measured by the proportion that contract costs incurred for workperformed to date compare to the estimated contract costs. When it is probable that total contract costs will exceed total contractrevenue, the expected loss is recognised as an expense immediately. Where the outcome of a contract cannot be estimated reliably, contract revenueis recognised to the extent of contract costs incurred that it is probable willbe recoverable. Construction work in progress is stated at cost plus profitrecognised to date less a provision for foreseeable losses and less progressbillings. Cost includes all expenditure related directly to specific projectsand an allocation of fixed and variable overheads incurred in the group'scontract activities based on normal operating capacity. Property, plant and equipment The cost of non-current assets is their purchase cost, together with anyincidental costs of acquisition. Depreciation is provided on the original cost or valuation of assets, in equalinstalments over the assets useful economic lives. The following terms aregenerally applicable: Freehold buildings over 40 yearsLeasehold buildings over 40 years or the term of the lease if lessPlant and machinery over 3 to 8 yearsVehicles over 4 to 5 yearsFreehold land is not depreciated. Investment properties IAS 40 allows entities to choose either a fair value model, under which aninvestment property is measured at fair value with changes in fair valuerecognised in the income statement or a cost model, under which an investmentproperty is measured at depreciated cost. In the case of Pochin's, investment properties are recorded at fair value withmovements on revaluation included in the income statement, unlike UK GAAP wherethey are recorded in the Statement of Total Recognised Gains and Losses (STRGL). Taxation The tax expense represents the sum of the tax currently payable and deferredtax. The tax currently payable is based on the taxable profit for the year. Taxableprofit differs from net profit as reported in the income statement because itexcludes items of income or expense that are never taxable or deductible. Thegroup's liability for current tax is calculated using tax rates and laws thathave been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. The carrying amount of deferred tax assets is reviewed at eachbalance sheet date. Such assets and liabilities are not recognised if thetemporary difference arises from the initial recognition of goodwill or otherassets and liabilities (other than in a business combination) in a transactionthat affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates and interests in jointventures, except where the group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will notreverse in the foreseeable future.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. Deferred tax ischarged or credited in the income statement except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Leases Leases are classified as finance leases where substantially all the risks andrewards of ownership are transferred to the group. Finance leases arecapitalised at the inception of the lease at the lower of the fair value of theleased asset and the present value of the minimum lease payments. Lease paymentsare apportioned between the liability and finance charge to produce a constantrate of interest on the finance lease balance outstanding. Assets capitalisedunder finance leases are depreciated over the shorter of the useful life of theasset or the lease term and adjusted for impairment losses. The interest expensecomponent is recognised in the income statement. Leases other than finance leases are classified as operating leases. Paymentsmade under operating leases are recognised as an expense in the income statementon a straight-line basis over the lease term. Inventories Inventories are stated at the lower of cost and net realisable value. Development work in progress includes development land and buildings and isstated at the lower of cost and net realisable value. Under IAS23, the benchmark is that borrowing costs shall be recognised as anexpense in the income statement except in circumstances where they may becapitalised. In circumstances where the costs are directly attributable to aspecfic development the borrowing costs are to be carried forward as developmentwork in progress. Trade and other receivables Trade and other receivables are stated at cost less impairment losses. Retirement benefit obligations The group operates a pension scheme providing benefits based on finalpensionable salary. The assets of the scheme are held separately from those ofthe group. Pension scheme assets are measured using market values. Pension schemeliabilities are measured using a projected unit method and discounted at thecurrent rate of return on a high quality corporate bond of equivalent term andcurrency to the liability. The liability recognised in the balance sheet inrespect of defined benefit pension plans is the present value of the definedbenefit obligation less the fair value of scheme assets at the balance sheetdate. The increase in the present value of the liabilities of the group's definedbenefit pension scheme expected to arise from employee service in the period ischarged to the profit from operations. The expected return on the scheme'sassets and the increase during the period in the present value of the scheme'sliabilities arising from the passage of time are included in finance income orfinance costs respectively. Actuarial gains and losses are recognised in theconsolidated statement of recognised income and expense. The group is adopting from their date of transition the Amendment to IAS 19Employee Benefits : Actuarial Gains and Losses, Group Plans and Disclosures. Share based payments For equity settled share options, the services received from employees aremeasured by reference to the fair value of the share options. The fair value iscalculated at grant date and recognised in the income statement, together with acorresponding increase in shareholders' equity, on a straight line basis overthe vesting period, based on an estimate of the number of options that willeventually vest. Vesting conditions, other than market conditions, are not takeninto account when estimating the fair value. IFRS 2 has been applied, in accordance with IFRS 1, to equity settled shareoptions granted on or after 7 November 2002 and not vested at 1 January 2005. Financial instruments Derivative financial instruments are measured at fair value and those utilisedby the group's treasury operations include interest rate swaps. Any gain or lossis recognised in the income statement. The group has applied IAS 32 and 39 from the date of transition and have nottaken advantage of the exemption in IFRS 1 not to restate their comparativeyear. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and othershort term highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value Trade and other receivables Trade and other receivables are recognised at fair value on initial recognition(net of transaction costs) and carried subsequently at amortised cost. Trade payables Trade payables are initially measured at fair value , and are subsequentlymeasured at amortised cost, using the effective interest rate method. Bank borrowings Interest bearing bank loans and overdrafts are initially measured at fair value,and are subsequently measured at amortised cost, using the effective interestrate method. Any difference between the proceeds (net of transaction costs) andthe settlement or redemption of borrowings is recognised over the term of theborrowings. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Pacific Global