10th Mar 2006 07:01
Centaur Holdings PLC10 March 2006 10 March 2006 Centaur Holdings plc Adoption of International Financial Reporting Standards Highlights This Statement is intended to explain the effect of the adoption ofInternational Financial Reporting Standards ("IFRS") on the consolidatedaccounts of Centaur Holdings plc. The Group's first results to be publishedunder IFRS are the interim accounts for the six months ended 31 December 2005which are also announced today. The key effects on the Group's results arising from adoption of IFRS arehighlighted below in respect of the profits reported under UK GAAP for the yearended 30 June 2005: £'000 Profit before tax under UK GAAP 2,616Goodwill no longer amortised 7,034Employee benefit charges (447)--------------------------------------------------------------------------------Profit before tax under IFRS 9,203================================================================================ 1. Introduction From 1 July 2005, Centaur Holdings plc ("Centaur") is required to prepare itsconsolidated financial statements in accordance with International FinancialReporting Standards ("IFRS"), as adopted by the European Union ("EU") andapplicable to all listed companies in the EU for financial reporting periodsbeginning on or after 1 January 2005. The Group's first results to be publishedunder IFRS are for the six months ended 31 December 2005. The comparativeinformation in those financial statements must be restated to IFRS and thereforethe Group's transition date for the adoption of IFRS is 1 July 2004. This reportis to inform shareholders of the impact on Centaur's financial position andresults for 2005 due to the change from reporting under UK Generally AcceptedAccounting Principles ("UK GAAP") to IFRS. The information presented in thisdocument sets out the adjustments between the audited UK GAAP preparedstatements for the year ended 30 June 2005, the reviewed UK GAAP preparedstatements for the six months ended 31 December 2004 and the unaudited IFRSresults for the same periods. 2. Summary impact for the year ended 30 June 2005 UK GAAP IFRS (audited) (unaudited) Variance £'000 £'000 £'000 Turnover 72,215 72,215 - EBITDA before exceptionalcosts 12,202 12,212 10 Profit before tax 2,616 9,203 6,587 (Loss) / profit for thefinancial year (144) 6,449 6,593 The component adjustments to profit for the year ended 30 June 2005 are asfollows: Profit before Tax (Loss) / profit tax before tax £'000 £'000 £'000 UK GAAP (audited) 2,616 (2,760) (144) Amortisation ofgoodwill 7,034 - 7,034 Share based paymentsand other employeebenefits (447) 6 (441)--------------------------------------------------------------------------------IFRS (unaudited) 9,203 (2,754) 6,449 ========================================================= 3. Basis of preparation The financial information presented in this document has been prepared on thebasis that all relevant International Financial Reporting Standards ("IFRSs"),including interpretations of both the Standing Interpretations Committee and theInternational Financial Reporting Interpretations Committee ("IFRIC"), issued bythe International Accounting Standards Board are effective for Centaur'sreporting for the year ended 30 June 2006. As at the date of this announcement IFRS's are subject to ongoing review andendorsement by the European Commission. These potential changes could result inthe need to change the basis of accounting or presentation of certain financialinformation from that presented in this document. A summary of the significant accounting policies expected to be used in thepreparation of the 2006 financial statements under IFRS is provided in section 6of this document. IFRS 1, First Time Adoption of IFRS, outlines how to apply IFRS for the firsttime. Centaur's transition date is 1 July 2004, and the standard permits certainexemptions from the full requirements of IFRS as at that date. Centaur has taken advantage of the following exemptions or options available attransition; a) Business combinations Centaur has taken the option not to restate business combinations that occurredprior to 1 July 2004 on an IFRS 3, Business Combinations basis. Consequently,goodwill balances relating to Centaur's acquisition of the CentaurCommunications Group in March 2004 have been frozen at 1 July 2004. b) Share based payments Centaur has applied IFRS 2, Share-based payments only to equity instruments thatwere granted after 7 November 2002, and which had not vested before 1 July 2005.The grants and exercise prices of options which create a charge to the incomestatement are: Award Grant date Number at 30 Exercise price June 2005 Approved and unapproved 09/03/2004 3,438,692 100pApproved and unapproved 29/09/2004 1,540,000 88.5p c) Financial instruments Centaur has chosen not to apply IAS 32 and IAS 39 for the year ended 30 June2005. The requirements of IAS 32 and IAS 39 will be applied prospectively from 1July 2005, as permitted by IFRS 1. 4. Principal changes under International Financial Reporting Standards a) Presentation adjustments Section 5 of this report contains reconciliations to assist in understanding thenature and value of the differences between UK GAAP and IFRS. The financial information is in IFRS format and reflects a number of differencesin presentation between UK GAAP and IFRS as follows; i) The classification of software that is not an integral part of operating hardware, including website development costs, as an intangible asset separate from property plant and equipment on the balance sheet and the classification of the related depreciation as amortisation. ii) The disclosure of goodwill as separate from intangible assets on the balance sheet. iii) The reclassification of provisions as current or non current liabilities. iv) The classification of dividends as a movement in equity. v) The disclosure of current tax liabilities as separate from creditors falling due within one year. vi) The disclosure of loan notes as separate from creditors falling due within one year. vii) The disclosure of deferred shares as other reserves. viii) The separate disclosure of deferred tax assets and liabilities. b) Share-based payments IFRS 2 requires a charge to be made to the income statement for the cost ofproviding share options to employees. The expense is calculated as the fairvalue of the award on the date of the grant, and is recognised over the vestingperiod of the scheme. A stochastic model has been used to calculate the fairvalue of options on their grant date. Centaur has applied the provisions of IFRS2 only to awards made after 7 November 2002, an exemption allowed on transitionby IFRS 1. There was no net impact on the balance sheet at 1 July 2004 as aresult of adopting IFRS 2. In the six months to 31 December 2004 and in the year to 30 June 2005, theapplication of IFRS 2 results in pre tax charges to the income statement of£261,000 and £457,000 respectively. The application of IFRS 2 results in a tax credit of £9,000 in the six months to31 December 2004 and a tax credit of £6,000 in the year to 30 June 2005. 4. Principal changes under International Financial Reporting Standards (continued) c) Business combinations Under UK GAAP, goodwill arising on business combinations is amortised over aperiod not exceeding 20 years. Under IFRS 3, regular amortisation of goodwill isprohibited. Instead, an annual impairment test is required to support thecarrying value of goodwill. This test was carried out at 30 June 2004 and 30June 2005. No impairment of goodwill was noted at either of these dates. Amortisation of goodwill arising on the acquisition of the CentaurCommunications Group in March 2004 ceased on 1 July 2004, resulting in anincrease of pre tax profits of £3,555,000 for the six months to 31 December 2004and £7,034,000 for the year to 30 June 2005. d) Employee benefits Under UK GAAP, no provision is made for annual leave accrued. Under IAS 19, theexpected cost of compensated short term absences should be recognised at thetime the related service is provided. As a result, on transition, a provision of£441,000 has been recognised. There is a credit of £441,000 for the six monthsended 31 December 2004 and a credit of £10,000 for the year ended 30 June 2005. e) Dividends Interim dividends declared are not considered a liability under IFRS until theyare paid. Final dividends declared are recognised as a liability under IFRS inthe period in which they are approved by the shareholders in general meeting. Centaur has restated its liabilities in respect of dividend payments ontransition, in the six months to 31 December 2004 and in the year to 30 June2005. 5. Reconciliations to International Financial Reporting Standards (i) Consolidated balance sheet at 30 June 2004. UK GAAP Presentation adjustments Employee Dividends IFRS benefits £ 4 (a) 4 (a) 4 (a) 4 (a) 4 (a) 4(d) 4 (e) £ (i) (ii) (iii) (vii) (viii)Assets----------------------------------------------------------------------------------------------------------Non-current assetsGoodwill - - 138,512 - - - - - 138,512Intangible assets 138,701 3,433 (138,512) - - - - - 3,622 Property, plant andequipment 5,311 (3,433) - - - - - - 1,878 Investments accounted for using equity method 185 - - - - - - - 185Deferred tax assets - - - - - 2,107 14 - 2,121---------------------------------------------------------------------------------------------------------- 144,197 - - - - 2,107 14 - 146,318----------------------------------------------------------------------------------------------------------Current assetsInventories 1,185 - - - - - - - 1,185Trade and other receivables 14,771 - - - - (995) - - 13,776Cash and cash equivalents 9,132 - - - - - - - 9,132---------------------------------------------------------------------------------------------------------- 25,088 - - - - (995) - - 24,093----------------------------------------------------------------------------------------------------------Liabilities Current liabilitiesTrade and other payables (23,426) - - - - - (441) 1,480 (22,387)Provisions - - - (887) - - - - (887)---------------------------------------------------------------------------------------------------------- (23,426) - - (887) - - (441) 1,480 (23,274)----------------------------------------------------------------------------------------------------------Net current assets 1,662 - - (887) - (995) (441) 1,480 819----------------------------------------------------------------------------------------------------------Non-current liabilitiesDeferred tax liabilities - - - - - (1,112) - - (1,112)Provisions (3,387) - - 887 - - - - (2,500)---------------------------------------------------------------------------------------------------------- (3,387) - - 887 - (1,112) - - (3,612)----------------------------------------------------------------------------------------------------------Net assets 142,472 - - - - - (427) 1,480 143,525----------------------------------------------------------------------------------------------------------Shareholders' equityOrdinary shares 14,879 - - - (80) - - - 14,799Share premium 127,047 - - - - - - - 127,047Other reserves 1,486 - - - 80 - - - 1,566Retained earnings (940) - - - - - (427) 1,480 113----------------------------------------------------------------------------------------------------------Total shareholders' equity 142,472 - - - - - (427) 1,480 143,525========================================================================================================== 5. Reconciliations to International Financial Reporting Standards (continued) (ii) Consolidated profit and loss account for the 6 months ended 31 December 2004. UK GAAP Presentation Share-based Business Employee IFRS adjustment payments combinations benefits £ 4 (a) (i) 4 (b) 4 (c) 4 (d) £ Revenue 31,602 - - - - 31,602 Cost of sales (18,317) - - - - (18,317)--------------------------------------------------------------------------------------- Gross Profit 13,285 - - - - 13,285 Distributioncosts (1,994) - - - - (1,994)Administrativeexpenses (14,145) - (261) 3,555 441 (10,410)--------------------------------------------------------------------------------------- EBITDA beforeexceptionalcosts 2,406 - - - 441 2,847 Depreciationof property,plant andequipment (1,215) 779 - - - (436)Amortisationof intangibles (3,560) (779) - 3,555 - (784)Share basedpayments - (261) - - (261)Exceptionaladministrativecosts (485) - - - - (485)---------------------------------------------------------------------------------------Operating (loss) /profit (2,854) - (261) 3,555 441 881 Interest payable and similarcharges (5) - - - - (5)Interestreceivable 127 - - - - 127Share ofprofit fromassociate 39 - - - - 39---------------------------------------------------------------------------------------(Loss) / profit before tax (2,693) - (261) 3,555 441 1,042 Taxation (414) - 9 - - (405)--------------------------------------------------------------------------------------- (Loss) / profit for the year (3,107) - (252) 3,555 441 637======================================================================================= 5. Reconciliations to International Financial Reporting Standards (continued) (iii) Consolidated balance sheet at 31 December 2004. UK GAAP Presentation adjustments Share-based Business Dividends IFRS payments combinations £ 4 (a) 4 (a) 4 (a) 4 (a) 4 (a) 4 (b) 4 (c) 4 (e) £ (i) (ii) (iii) (vii) (viii)AssetsNon-current assetsGoodwill - - 134,871 - - - - 3,555 - 138,426Intangible assets 135,049 3,418 (134,871) - - - - - - 3,596 Property, plant andequipment 5,180 (3,418) - - - - - - - 1,762 Investments accounted for using equitymethod 224 - - - - - - - - 224Deferred tax assets - - - - - 1,693 56 - - 1,749------------------------------------------------------------------------------------------------------------------- 140,453 - - - - 1,693 56 3,555 - 145,757-------------------------------------------------------------------------------------------------------------------Current assetsInventories 1,529 - - - - - - - - 1,529Trade and otherreceivables 14,790 - - - - (581) - - - 14,209Cash and cashequivalents 9,167 - - - - - - - 9,167------------------------------------------------------------------------------------------------------------------- 25,486 - - - - (581) - - - 24,905-------------------------------------------------------------------------------------------------------------------LiabilitiesCurrent liabilitiesTrade and other (24,268) - - - - - - - 740 (23,528)payablesProvisions - - - (546) - - - - (546)------------------------------------------------------------------------------------------------------------------- (24,268) - - (546) - - - - 740 (24,074)-------------------------------------------------------------------------------------------------------------------Net current assets 1,218 - - (546) - (581) - - 740 831-------------------------------------------------------------------------------------------------------------------Non-current liabilitiesDeferred taxliabilities - - - - - (1,112) - - - (1,112)Provisions (3,046) - - 546 - - - - - (2,500)------------------------------------------------------------------------------------------------------------------- (3,046) - - 546 - (1,112) - - - (3,612)-------------------------------------------------------------------------------------------------------------------Net assets 138,625 - - - - - 56 3,555 740 142,976-------------------------------------------------------------------------------------------------------------------Shareholders' equityOrdinary shares 14,879 - - - (80) - - - - 14,799Share premium 127,047 - - - - - - - - 127,047Other reserves 1,486 - - - 80 - 261 - - 1,827Retained earnings (4,787) - - - - - (205) 3,555 740 (697)-------------------------------------------------------------------------------------------------------------------Total shareholders'equity 138,625 - - - - - 56 3,555 740 142,976=================================================================================================================== 5. Reconciliations to International Financial Reporting Standards (continued) (iv) Consolidated profit and loss account for the year ended 30 June 2005. UK GAAP Presentation Share-based Business Employee IFRS adjustment payments combinations benefits £ 4 (a) (i) 4 (b) 4 (c) 4 (d) £ Revenue 72,215 - - - - 72,215 Cost of sales (39,248) - - - - (39,248)----------------------------------------------------------------------------------------Gross Profit 32,967 - - - - 32,967 Distributioncosts (4,164) - - - - (4,164)Administrativeexpenses (26,506) - (457) 7,034 10 (19,919)---------------------------------------------------------------------------------------- EBITDA beforeexceptionalcosts 12,202 - - - 10 12,212 Depreciationof property,plant andequipment (2,368) 1,811 - - - (557)Amortisationof intangibles (7,052) (1,811) - 7,034 - (1,829)Share basedpayments - - (457) - - (457)Exceptionaladministrativecosts (485) - - - - (485)----------------------------------------------------------------------------------------Operating profit 2,297 - (457) 7,034 10 8,884 Interest payable and similarcharges (3) - - - - (3)Interestreceivable 295 - - - - 295Share ofprofit fromassociates 27 - - - - 27----------------------------------------------------------------------------------------Profit before tax 2,616 - (457) 7,034 10 9,203 Taxation (2,760) - 6 - - (2,754)---------------------------------------------------------------------------------------- (Loss) / profit for the year (144) - (451) 7,034 10 6,449======================================================================================== 5. Reconciliations to International Financial Reporting Standards (continued) (v) Consolidated balance sheet at 30 June 2005. UK GAAP Presentation adjustments Share-based Business Employee Dividends IFRS payments combinations benefits £ 4 (a) 4 (a) 4 (a) 4 (a) 4(a) 4 (b) 4 (c) 4 (d) 4 (e) £ (i) (ii) (v) (vii) (viii)AssetsNon-currentassetsGoodwill - - 131,392 - - - - 7,034 - - 138,426Intangibleassets 132,062 3,406 (131,392) - - - - - - - 4,076 Property, plant and equipment 5,502 (3,406) - - - - - - - - 2,096 Investmentsaccounted forusing equitymethod 212 - - - - - - - - - 212Deferred taxassets 1,175 74 1,249------------------------------------------------------------------------------------------------------------------------ 137,776 - - - - 1,175 74 7,034 - - 146,059------------------------------------------------------------------------------------------------------------------------Current assetsInventories 1,320 - - - - - - - - - 1,320Trade and otherreceivables 15,761 - - - - (63) - - - - 15,698Cash and cashequivalents 12,480 - - - - - - - - - 12,480------------------------------------------------------------------------------------------------------------------------ 29,561 - - - - (63) - - - - 29,498------------------------------------------------------------------------------------------------------------------------LiabilitiesCurrentliabilitiesTrade and other (24,621) - - 461 - - - - (431) 1,792 (22,799)payablesCurrent taxliabilities - - - (461) - - - - - - (461)Provisions - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------- (24,621) - - - - - - - (431) 1,792 (23,260)------------------------------------------------------------------------------------------------------------------------Net currentassets 4,940 - - - - (63) - - (431) 1,792 6,238 ------------------------------------------------------------------------------------------------------------------------Non-currentliabilitiesDeferred taxliabilities - - - - - (1,112) - - - - (1,112)Provisions (2,500) - - - - - - - - - (2,500)------------------------------------------------------------------------------------------------------------------------ (2,500) - - - - (1,112) - - - - (3,612)------------------------------------------------------------------------------------------------------------------------Net assets 140,216 - - - - - 74 7,034 (431) 1,792 148,685------------------------------------------------------------------------------------------------------------------------Shareholders'equityOrdinary shares 15,012 - - - (80) - - - - - 14,932Share premium 287 - - - - - - - - - 287Other reserves 1,486 - - - 80 - 457 - - - 2,023Retainedearnings 123,431 - - - - - (383) 7,034 (431) 1,792 131,443------------------------------------------------------------------------------------------------------------------------Totalshareholders'equity 140,216 - - - - - 74 7,034 (431) 1,792 148,685======================================================================================================================== 6. Accounting policies expected to be adopted for the year ended 30 June 2006 The principal accounting policies adopted in the preparation of these financialstatements are set out below. These policies have been consistently applied toall the years presented, unless otherwise stated. Basis of preparation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards and IFRIC interpretations and with those parts ofthe Companies Act, 1985 applicable to companies reporting under IFRS. Thefinancial statements have been prepared under the historical cost convention. Asummary of the more important group accounting policies is set out below. The preparation of financial statements in conformity with generally acceptedaccounting principles requires the use of estimates and assumptions that affectthe reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Although these estimates are based on management's bestknowledge of the amount, events or actions, the actual results may ultimatelydiffer from those estimates. Consolidation The consolidated financial statements incorporate those of Centaur Holdings plcand all its subsidiaries for the years made up to 30 June 2005 and 2006,together with the attributable share of results and reserves of associatedundertakings, adjusted where appropriate to conform with Centaur's accountingpolicies. A subsidiary is an entity controlled by Centaur. Control exists when the Companyhas the power, directly of indirectly, to govern the financial and operatingpolicies of an entity so as to benefit from its activities. Associates are those entities in which Centaur has significant influence, butnot control over the financial and reporting policies. Associates are equityaccounted for. Intragroup balances and transactions and any unrealised gains or losses arisingfrom intragroup transactions, are eliminated in preparing the consolidatedfinancial statements. Revenue recognition Revenue represents sales of advertising space, subscriptions and individualpublications and revenue from exhibitions and conferences, exclusive of valueadded tax. Sales of advertising space are recognised in the period in which publicationoccurs. Sales of publications are recognised in the period in which the sale ismade. Revenue received in advance for exhibitions and conferences is deferredand recognised in the period in which the event takes place. Revenue from subscriptions to publications and online services is deferred andrecognised in the profit and loss account on a straight-line basis over thesubscription period. Investments Investments in subsidiaries are stated at cost less provision for impairment invalue in the Company financial statements. Investments in associates are stated at cost, identifying any goodwill arising.The carrying amount of the investment is adjusted by the Group's share of theresults of its associate. Goodwill Where the cost of a business acquisition exceeds the fair values attributable tothe separable net assets acquired, the resulting goodwill is capitalised.Goodwill has an indefinite useful life and is tested for impairment annually orwhere indicators imply that the carrying value is not recoverable. For the purposes of impairment testing, goodwill is allocated to cash generatingunits and is then tested for impairment at the level of the reportable segments.Cash generating units are considered to be individual magazine titles as eachmagazine title generates profits and cash flows that are largely independentfrom other units. On the disposal of a cash generating unit, the attributable amount of goodwillis included in the determination of the profit and loss on disposal. Intangibles (a) Brands and publishing rights Brands and publishing rights are carried at cost less accumulated amortisation.They are amortised on a straight line basis over their useful economic lives of20 years. (b) Computer Software Computer software that is not integral to the operation of the related hardwareis carried at cost less accumulated amortisation. Computer software is amortisedon a straight line basis over its useful economic life of between 3-5 years. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation.The cost of property, plant and equipment is the purchase cost together with anyincidental costs of acquisition. Depreciation is calculated to write off thecost, less estimated residual value, of assets, on a straight line basis overthe expected useful economic lives to the Group over the following periods: Useful economic life Leasehold property 20 years or the length of the lease if shorter Fixtures and fittings 10 years Computer equipment 3 - 5 years Motor Vehicles 4 years Residual values, where applicable are reviewed annually against prevailingmarket rates at the balance sheet date for equivalent aged assets anddepreciation rates adjusted accordingly on a prospective basis. A review of theestimated useful economic life of each asset is carried out annually to ensuredepreciation rates are adequate. Impairment of assets Assets that are subject to depreciation or amortisation are reviewed forimpairment whenever events indicate that the carrying value may not berecoverable. An impairment loss is recognised to the extent that the carryingvalue exceeds the higher of the asset's fair value less cost to sell and itsvalue in use. An assets value in use is calculated by discounting an estimate offuture cash flows by Centaur's pre tax weighted average cost of capital. Taxation including deferred tax The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxableprofit differs from profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in otheryears and it further includes items that are never taxable or deductible.Centaur's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is the tax accounted for in respect of temporary 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. Such assets and liabilities are not recognised if the temporarydifference arises from goodwill or the initial recognition (other than in abusiness combination) of other assets and liabilities in a transaction thataffects neither the tax profit nor the accounting profit. Deferred tax is calculated at the tax rates that are expected to apply inthe period when the liability is settled or the asset is realised. Deferred taxis charged or credited to 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. Inventories Inventories are stated at the lower of cost and net realisable value. For rawmaterials, cost is the purchase price. Work in progress comprises costs incurredrelating to publications, exhibitions and conferences prior to the publicationdate or the date of the event. For goods for resale, cost is the purchase price,or, in the case of publications, the direct cost of production. Net realisable value is based on estimated future selling price less all thefurther costs to completion and all relevant marketing, selling and distributioncosts. Inventories are reviewed regularly and full provision is made for obsolete, slowmoving or defective stock. Leases All leases held by Centaur are considered to be operating leases. Rental chargeson operating leases are charged to the profit and loss account on a straightline basis over the life of the lease. Employee benefit cost Centaur contributes to a defined contribution pension scheme for the benefit ofemployees. The assets of the scheme are held separately from those of the groupin an independently administered fund. Contributions to defined contributionschemes are charged to the profit and loss account at the time that the relatedservice is provided. The expected cost of compensated holidays is recognised at the time that therelated service is provided. Share-based payment Centaur has equity settled share based payment compensation plans. The fairvalue of equity settled share based payments is measured at the date of thegrant using the stochastic option pricing model. The fair value of the estimateof the number of options that are expected to be exercised is expensed on astraight line basis over the vesting period. In accordance with the transition provisions of IFRS 1, Centaur has applied thisfair value calculation to share options that were made after 7 November 2002. Provisions Provisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event, when it is probable that an outflowof resources will be required to settle the obligation and where a reliableestimate can be made of the amount of the obligation. Segmental reporting A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments Substantially all of Centaur's net assets are located and all turnover andprofit are generated in the United Kingdom and therefore the primary reportingformat is by business segment based on the Group's management and internalreporting structure. Financial instruments • 2005 financial statements Within the 2005 financial statements, Centaur has applied UK GAAP inaccounting for financial instruments. Financial assets and financial liabilities are recognised when Centaur becomes aparty to the contractual provisions of the relevant instrument and derecognisedwhen it ceases to be a party to such provisions. Financial instruments are used by Centaur to hedge interest rate and foreigncurrency exposure where these circumstances arise. Discounts and premiums arecharged or credited to the income statement over the life of the asset orliability to which they relate. Centaur does not hold or issue derivativefinancial instruments for trading purposes. Income and expenditure arising on financial instruments is recognised on theaccruals basis and credited or charged to the income statement in the financialperiod to which it relates. • 2006 financial statements Within the 2006 financial statements, Centaur has applied IAS 32, FinancialInstruments: Disclosure and Presentation, and IAS 39, Financial Instruments:Recognition and Measurement, as outlined below. Derivative financial instruments Derivative financial instruments are used by Centaur to hedge interest rate andforeign currency exposure where these circumstances arise. Discounts andpremiums are charged or credited to the income statement over the life of theasset or liability to which they relate. Centaur does not hold or issuederivative financial instruments for trading purposes. Derivative financial assets and liabilities are stated at fair value. Changes tofair value are recognised directly in equity, to the extent that they areeffective, with the ineffective portion being recognised in the income statementin the financial period to which it relates. Trade receivables Trade receivables do not carry any interest and are stated at their fair valuemeasured on an amortised cost basis, as reduced by appropriate allowances forestimated irrecoverable amounts incurred up the balance sheet date. Trade payables Trade payables are non interest bearing and are stated at their fair value. Loan notes Loan notes are recorded at the proceeds received, net of issue costs. Thecarrying value of loan notes includes accrued interest payable. Finance chargesare accounted for on an accruals basis and charged to the income statement usingthe effective interest method. Cash and cash equivalents Cash and cash equivalents includes cash in hand and deposits repayable on demandor maturing within three months of the balance sheet date, less any overdraftsrepayable on demand. Share capital and share premium Ordinary shares are classified as equity. The excess of consideration receivedin respect of shares issued over the nominal value of those shares is held inthe share premium account. Centaur also holds a non-distributable reserve representing the fair value ofshare options. Dividends are recognised as a liability in the period in which they are paid orapproved by the shareholders in general meeting. Significant judgements All significant judgements relating to accounting policies are disclosed in thedetailed notes to the accounts. Key assumptions and estimates No assumptions regarding the future are made during the preparation of thefinancial statements which have the ability to cause material adjustment to thebalance sheet during the next financial year. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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