International Financial Reporting Standards (IFRS) : Group Financial Controller

Transcription

1 International Financial Reporting Standards (IFRS) Andrew Fisher Andrew Lewis : Group Finance Director : Group Financial Controller

2 IFRS presentation Background to IFRS Overview of status of EU standards and assumptions adopted Significant changes in accounting policies Restated financial results for 2004/5 (full year) Reconciliation from UK GAAP to IFRS

3 Background to IFRS EU approved application of IFRS for listed companies for periods commencing on or after 1 January 2005 Applies to Premier Farnell for the financial year ending 29 January 2006 First IFRS results Quarter ending 1 May 2005 Comparatives to be restated IFRS opening balance sheet 2 February 2004 (transition date) IFRS1 allows companies to take certain exemptions when adopting IFRS for the first time

4 EU standards and assumptions adopted Financial information prepared on the basis of the application of all applicable IFRS published to date Subject to ongoing amendment Certain areas open to interpretation Development of best practice over time

5 IFRS has no impact on... Underlying business performance or business strategy Trading cash flows Approach to ordinary dividend payments Financing arrangements

6 Premier Farnell s accounting policies not impacted by IFRS are... Revenue recognition Catalogue costs Valuation of inventory and receivables Reportable segments and application of IAS 32 and 39 with respect to derivatives has no significant impact on Premier Farnell

7 IFRS impacts Premier Farnell in the following areas... Goodwill 0.8p Share-based payments Pensions Preference shares 2004/5 impact on eps (pence) (0.9)p (0.3)p (0.3)p plus Timing of dividend recognition (no eps impact)

8 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Share-based Ordinary Goodwill payments Pensions Taxation dividend m m m m m m m Revenue Cost of sales (462.2) (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) Profit before taxation (2.4) (1.6) Taxation (13.8) - (0.7) (14.0) Profit after taxation (3.1) (1.1) Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p Net assets as at 30 January 2005 ( m) (38.7) (1.4)

9 Goodwill UK GAAP Goodwill amortised over its estimated useful life (20 years) IFRS Goodwill considered to have an indefinite life No amortisation, annual test for impairment 2004/5 impact Goodwill amortisation of 2.7 million reversed

10 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Share-based Ordinary Goodwill payments Pensions Taxation dividend m m m m m m m Revenue Cost of sales (462.2) (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) Profit before taxation (2.4) (1.6) Taxation (13.8) - (0.7) (14.0) Profit after taxation (3.1) (1.1) Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p Net assets as at 30 January 2005 ( m) (38.7) (1.4)

11 Share-based payments UK GAAP (prior to FRS 20) Charge based on intrinsic value of award No charge arising on share options or SAYE Charge arising on LTIP based on market value at grant date and vesting expectation IFRS Charge based on fair value of award at grant date and spread over the vesting period Includes share options, LTIP and SAYE Use of option pricing models

12 Share-based payments (continued) IFRS exemption on transition Option to apply to awards made after 7 November 2002 not taken by Premier Farnell in order to maintain consistency across reporting periods 2004/5 impact IFRS charge of 2.8 million compared to 0.4 million under UK GAAP

13 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Share-based Ordinary Goodwill payments Pensions Taxation dividend m m m m m m m Revenue Cost of sales (462.2) (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) Profit before taxation (2.4) (1.6) Taxation (13.8) - (0.7) (14.0) Profit after taxation (3.1) (1.1) Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p Net assets as at 30 January 2005 ( m) (38.7) (1.4)

14 Pensions 2004/5 Profit and loss account Balance sheet 30 January 2005 SSAP 24 FRS 17 IAS 19 SSAP 24 FRS 17 IAS 19 m m m m m m US scheme UK scheme (0.7) (0.4) (0.3) - (18.2) (20.9) Other schemes - (0.3) (0.3) (1.0) (1.7) (1.7) Pre-tax profit Net surplus Net deferred tax liability (30.3) (12.7) (9.8) Net asset impact Premier Farnell has adopted the amendment to IAS 19 actuarial gains and losses accounted through the Statement of Recognised Income and Expense, similar to FRS17 Treatment of scheme expenses and non-service related benefits

15 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Share-based Ordinary Goodwill payments Pensions Taxation dividend m m m m m m m Revenue Cost of sales (462.2) (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) Profit before taxation (2.4) (1.6) Taxation (13.8) - (0.7) (14.0) Profit after taxation (3.1) (1.1) Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p Net assets as at 30 January 2005 ( m) (38.7) (1.4)

16 Taxation UK GAAP Deferred tax recognised on the basis of timing differences being the difference between accounting profit and taxable profit IFRS Deferred tax recognised on the basis of temporary differences, being the difference between the carrying value of an asset or liability and its tax base Deferred tax assets and liabilities disclosed separately on the balance sheet in certain circumstances 2004/5 Impact Increase in deferred tax liability of 1.4 million at transition date relating to the revaluation of properties Deferred tax provided on IFRS adjustments where appropriate

17 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Share-based Ordinary Goodwill payments Pensions Taxation dividend m m m m m m m Revenue Cost of sales (462.2) (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) Profit before taxation (2.4) (1.6) Taxation (13.8) - (0.7) (14.0) Profit after taxation (3.1) (1.1) Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p Net assets as at 30 January 2005 ( m) (38.7) (1.4)

18 Ordinary dividends UK GAAP Ordinary dividends accrued for in the period to which they relate IFRS Ordinary dividends not recognised until approved (interim dividend: September Board Meeting; final dividend: June AGM) 2004/5 impact Final dividend for 2004/5 reversed (to be approved at June 2005 AGM)

19 Preference shares UK GAAP Convertible, redeemable preference shares included within shareholders funds with the preference dividend charged after profit after tax IFRS Convertible redeemable preference shares split in to debt and equity component with the preference dividend reclassified as a finance cost ( 6.6 million) Fair value of debt based on discounted cashflows to the date of maturity and implied premium to redemption amortised each year through the profit and loss account ( 1.4 million)

20 2004/5 reconciliation from UK GAAP to IFRS (unaudited) UK GAAP IFRS ADJUSTMENTS IFRS Pro forma Pro forma Share-based Ordinary IAS 32/39 IFRS P&L Goodwill payments Pensions Taxation dividend Pref shares Account m m m m m m m m m Revenue Cost of sales (462.2) (462.2) - (462.2) Gross profit Total operating expenses (240.7) 2.7 (2.4) (1.6) - - (242.0) - (242.0) Operating profit (2.4) (1.6) Net finance cost (13.5) (13.5) (8.0) (21.5) Profit before taxation (2.4) (1.6) (8.0) 51.0 Taxation (13.8) - (0.7) (14.0) 0.4 (13.6) Profit after taxation (3.1) (1.1) (7.6) 37.4 Preference dividends (6.6) (6.6) Profit attributable to ordinary shareholders (3.1) (1.1) (1.0) 37.4 Earnings per share Basic and diluted 11.0p 0.8p (0.9)p (0.3)p p (0.3)p 10.3p Net assets as at 30 January 2005 ( m) (38.7) (1.4) (111.0) (8.5)

21 IFRS has no impact on... Underlying business performance or business strategy Trading cash flows Approach to ordinary dividend payments Financing arrangements

22 Q & A

23 Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the United States Private Securities Litigation Reform Act of 1995: The U.S. Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This press release contains certain forward-looking statements relating to the effect of the restatement of the financial information for the Group in accordance with International Financial Reporting Standards ( IFRS ). By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The actual effect of IFRS may differ materially from the Group's expectations contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group. These factors include, but are not limited to, the likelihood of the performance conditions being met in respect of the Group s share options scheme awards, accuracy of the Group s assumptions concerning the interpretation of IFRS by regulatory authorities, and potential changes in IFRS standards. Any forward-looking statement speaks only as of the date of this press release and the Group undertakes no obligation to publicly update or revise any forwardlooking statement to reflect future events or circumstances.