16th Jun 2006 14:38
Low & Bonar PLC16 June 2006 LOW & BONAR PLC UPDATE ON ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS Low & Bonar PLC ("Low & Bonar") is preparing for the adoption of InternationalFinancial Reporting Standards ("adopted IFRS") as its primary accounting basisfor the year ending 30 November 2006. As part of this transition Low & Bonar ispresenting today financial information prepared in accordance with InternationalAccounting Standards and adopted IFRS for the six months ended 31 May 2005 andthe year ended 30 November 2005. Low & Bonar PLC has previously reported financial information under UK GenerallyAccepted Accounting Practice ("UK GAAP"). The primary changes to Low & Bonar's reported financial information from theadoption of adopted IFRS are as a result of the: - Requirement not to amortise goodwill - Requirement not to recycle goodwill previously written off to reserves under UK GAAP through the income statement on disposal - Recognition of deferred tax liabilities on a different basis - Inclusion of a fair value charge in relation to employee share awards - Recognition of all employee benefit related assets and obligations, principally pensions; and the - Requirement to recognise dividends in the period in which they are declared Caroline Thomas, Interim Group Finance Director, commented: "The financial information provided today shows how adopted IFRS impacts on Low& Bonar's previously reported results in advance of the adoption of IFRS by Low& Bonar in the current financial year. The most significant changes relate to the accounting for business combinations.Low & Bonar will no longer amortise goodwill but will amortise intangible assetsarising on acquisition. Low & Bonar has acquired six businesses since 2003. Furthermore, under adopted IFRS the result from the Plastics division disposedof during 2005 is disclosed on the face of the income statement in a single lineand there is no requirement to charge the goodwill previously written offthrough reserves to the income statement on disposal. These two changes result in a clearer presentation of underlying businessperformance. Under UK GAAP, Low & Bonar adopted FRS 17 in the year ended 30 November 2005which consequently brought the pension fund deficit onto the Group balance sheetat that time. Low & Bonar's preferred profit measure under UK GAAP has been profit before tax,exceptional items and amortisation of goodwill. This is referred to asNormalised Profit. Under adopted IFRS the definition of Normalised Profit is theprofit before tax, non-recurring items, and amortisation which is considered tobe the equivalent measure of profitability. The UK GAAP definition included theresult from discontinued operations, but the IFRS definition excludes it. Theimpact of the change to adopted IFRS on Normalised Profit for the year ended 30November 2005 is a reduction of £417,000 from £12,569,000 to £12,152,000comprising: Year ended 30 November 2005 -------- £000Normalised profit under UK GAAP 12,569 Financing costs (deferred consideration) (98)Employee benefits (57)Share based payment 20Software depreciation reclassified asamortisation under adopted IFRS 210Discontinued business (492) (417) --------Normalised profit under adopted IFRS 12,152 -------- For the year ended 30 November 2005 the impact of the change to adopted IFRS isto reduce the loss after tax for the year by £21,235,000, from £28,133,000 to£6,898,000 comprising: Year ended 30 November 2005 -------- £000Loss on ordinary activities after taxationunder UK GAAP (28,133) Goodwill written off on disposal of Plasticsunder UK GAAP 20,637UK GAAP amortisation of goodwill written back 1,310Adopted IFRS intangible amortisation charge (922)Financing costs (98)Employee benefits (57)Share based payment 20Taxation effects 345 21,235 --------Loss for the year under adopted IFRS (6,898) -------- The impact of the change to adopted IFRS on net assets as reported under UK GAAPat 30 November 2005 is an increase of £3,634,000, from £65,191,000 to£68,825,000, the main impact being that the final dividend of £3,006,000 for theyear ended 30 November 2005 as reported under UK GAAP will be included in the2006 accounts under adopted IFRS. Year ended 30 November 2005 ----------- £000Net assets as reported under UK GAAP 65,191 Final dividend 3,006Share based payment 392Taxation 62Employee benefits (394)Business combinations 568 3,634 -----------Net assets under adopted IFRS 68,825 ----------- The full detail of Low & Bonar's restatement of financial information forthe year ended 30 November 2005 and the unaudited six months ended 31 May 2005under IAS and adopted IFRS can be found on our website at www.lowandbonar.com For further information: Low & Bonar PLCCaroline Thomas, Interim Group Finance Director 020 7535 3180 TulchanDavid Trenchard, Peter Hewer 020 7353 4200 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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