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Whatman PLC (WHM)

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Thursday 01 September, 2005

Whatman PLC

IFRS Reporting Standards

Whatman PLC
01 September 2005

1 September 2005


                                  Whatman plc

  Restatement of financial information under International Financial Reporting
                                   Standards

            Adoption of International Financial Reporting Standards

Overview

Whatman announces that with effect from 1 January 2005 it has adopted
International Financial Reporting Standards (IFRS). The first set of results to
be published under IFRS will be the Interim financial statements for the six
months ended 30 June 2005. These will be released on 12 September 2005. The
Group's first Annual Report in accordance with IFRS will be for the year ended
31 December 2005.

This press release explains the impact of converting to IFRS on the Group's
prior period results for 2004. These comparatives will form the base for 2005
performance in both the interim financial statements and the Annual Report.
Restated comparatives are set out for the income statement and cash flow
statement for the half year and full year ended 30 June 2004 and 31 December
2004. Balance sheet comparatives are restated as at 1 January 2004, 30 June 2004
and 31 December 2004. As 1 January 2004 is the start of the earliest period for
comparison, this constitutes the date for transition to IFRS.

The overall impact of adopting IFRS was to increase full year 2004 Operating
Profit from £1.8 million under UK GAAP to £1.9 million under IFRS. This arises
as a result of reduced goodwill amortisation under IFRS 3 (Business
combinations) £0.5 million, and other adjustments including IAS 21 (Foreign
Exchange) totalling £0.1 million, offset by a charge for share options under
IFRS 2 (Share based payments) £0.3 million and an increase in pension costs
under IAS 19 (Employee benefits) £0.2 million.

Summary of changes

The table shows financial information for the full year ended 31 December 2004
and half year ended 30 June 2004. Information set out under UK GAAP is audited.
Information set out under IFRS is unaudited. Sections VIII - XII of the appendix
to this press release carry detailed reconciliations for the income statement
and balance sheet for the periods ended 30 June 2004 and 31 December 2004 as
well as the opening balance sheet at 1 January 2004.


Summary of impact of IFRS on key           UK GAAP        IFRS      Change       UK GAAP        IFRS      Change
performance indicators                     H1 2004     H1 2004          H1          2004        2004        2004
                                                £m          £m          £m            £m          £m          £m

Revenue                                       39.2        39.2           -          82.8        82.8           -
Operating profit                               8.2         8.3         0.1           1.8         1.9         0.1
Profit / (loss) attributable to equity         6.1         5.9        (0.2)         (0.5)       (1.5)       (1.0)
shareholders
Basic profit/(loss) per share (pence         4.78p       4.63p       (0.15p)       (0.41p)     (1.20p)     (0.79p)
per share)
Diluted profit / (loss) per share            4.71p       4.56p       (0.15p)       (0.41p)     (1.18p)     (0.77p)
(pence per share)
Basic earnings per share before              4.78p       4.41p       (0.37p)       10.48p       8.98p      (1.50p)
exceptional items (pence per share)
Net assets                                    50.6        45.6        (5.0)         40.2        38.4        (1.8)


Enquiries:

Whatman plc                                        Tel:               020 8326 1740
Phil Greenhalgh, CFO

Financial Dynamics                                 Tel:               020 7831 3113
David Yates / Ben Atwell


Explanation of adjustments

IFRS 2 Share based payments

IFRS 2 requires shares and share options awarded to employees since November
2002 to be fair valued at the date of grant and charged to the income statement
over the relevant vesting period. Under the exemption available in IFRS 1, IFRS
2 has not been applied to share options and share awards issued since November
2002 and vesting before 1 January 2005.

Awards were fair valued using the Black-Scholes valuation model for the SAYE
scheme and Monte Carlo valuation model for all other schemes. This adjustment
has given rise to a charge of £0.1m for the 6 months ended 30 June 2004 and
£0.3m for the year ended 31 December 2004 in the income statement. The Group has
recognised a share award reserve within retained earnings on the balance sheet
which reflects the cumulative charge under IFRS 2 in respect of outstanding
share awards. At 30 June 2004 this was £0.1m and at 31 December 2004 it was
£0.3m.

Under UK GAAP, no recognition is required in the profit and loss account.

The deferred tax impact is a debit to deferred tax on the balance sheet of £0.1m
at 31 December 2004. Income tax in the income statement is reduced by £0.1m for
the year ended 31 December 2004. There is no material effect at 30 June 2004.

IFRS 3 Business combinations

The Group acquired Schleicher & Schuell on 30 November 2004. Goodwill arising on
acquisition was capitalised and amortised over its estimated useful life. In
accordance with IFRS 3, goodwill is deemed to have an indefinite useful life and
tested for impairment annually. Under UK GAAP, after 1 January 1998, goodwill is
amortised over its estimated useful life. Before 1 January 1998, goodwill was
written off against reserves until disposal of the asset when the profit or loss
after disposal is recycled to the profit and loss account.

The credit of £0.5m in the income statement for the year ended 31 December 2004
is the write back of amortisation with a corresponding increase in goodwill and
intangibles on the balance sheet. The credit of £0.2m in the income statement
for the half year ended 30 June 2004 is the write back of amortisation with a
corresponding increase in goodwill arising from other acquisitions on the
balance sheet.

IAS 19 Employee benefits

Under UK GAAP, the pension cost for defined benefit schemes is recognised in the
profit and loss account over the remaining expected service lives of scheme
members. Differences between the amounts charged or credited to the profit and
loss account and payments made are classified as either assets or liabilities.

Under IFRS, the net pension obligation on the balance sheet is calculated by
discounting the future pension benefit that employees have earned in return for
their service in the current and prior periods and subtracting the plan assets.
Costs recognised in the income statement are made up of two components, the
current service cost and the interest cost. The current service cost is the
present value of the future pension benefit earned by employees in the current
period and is recognised within operating profit. The interest cost is the
finance charge of the time value of the net pension liability and is included
within net finance costs on the income statement.

In accordance with the exposure draft "Actuarial gains and losses, group plans
and disclosures", actuarial gains and losses are taken to equity in the year in
which they arise.

The adjustments arising are a decrease in net assets of £5.8m as at 1 January
2004 of which £2.5m is a decrease in the deferred tax liability; £6.0m as at 30
June 2004 of which £2.5m is a decrease in the deferred tax liability; and £4.4m
as at 31 December 2004 of which £1.9m is a decrease in the deferred tax
liability.

The adjustments to the income statement are an increase of £0.1m to operating
profit, an increase of £0.4m to net finance costs and £0.1m to income tax for
the 6 months ended 30 June 2004. For the year ended 31 December 2004, the
adjustments are a decrease of £0.2m to operating profit, an increase of £1.0m to
net finance costs and an increase of £0.4m to income tax.

IAS 32 and 39 Financial instruments

IAS 32 "Financial Instruments: Disclosure and Presentation" and IAS 39 "
Financial Instruments: Recognition and Measurement" have been adopted from 1
January 2005 and comparative information of 2004 has not been restated in
accordance with the optional exemptions within IFRS 1 "First time adoption of
International Financial Reporting Standards".  The following paragraph
highlights the principal items that will be impacted by the adoption of this
standard from 1 January 2005.

The principal derivative instruments used by the group are interest rate swaps
and forward foreign exchange contracts. Under UK GAAP, fair values are not
recognised on the balance sheet. Under IAS 39, the Group recognises the
derivatives at fair value with movements going to the income statement at
subsequent reporting dates.

The adoption of these two standards will result in an increase in net assets of
£0.2m as at 1 January 2005 which reflects the fair values of the interest rate
swaps and forward foreign exchange contracts as at that date.

IAS 10 Events after the balance sheet date

In accordance with IAS 10, dividends declared after the balance sheet date are
not recognised as a liability in the balance sheet. Under UK GAAP, proposed
dividends are recognised as a liability in the balance sheet.

As at 1 January 2004, net assets increased by £3.4m, £2.2m as at 30 June 2004
and £3.7m as at 31 December 2004.

IAS 12 Income taxes

In accordance with IAS 12, deferred tax has been fully provided on taxable
temporary differences. Temporary differences are those differences between the
carrying value of an asset or liability and its tax base. Under UK GAAP,
deferred tax was fully provided on an incremental liability approach on timing
differences. Timing differences are those differences between accounting profit
that arises in the financial statements and taxable profits that arise in tax
assessments. The changes to deferred tax arose as a result of the adoption of
IAS 12.

Net assets decreased by £1.2m as at 1 January 2004, £0.8m as at 30 June 2004 and
£1.2m as at 31 December 2004. For the year ended 31 December 2004, income tax
expense increased by £0.6m. Income tax expense increased as a result of the
recognition of a deferred tax asset in respect of gains on outstanding share
options in the 1 January 2004 balance sheet.

Other adjustments

IAS 16 Property plant & equipment

In accordance with IAS 16 material components of assets with shorter useful
lives have been depreciated separately.  The depreciation charge was increased
by £0.1m for both the half year to 30 June 2004 and the full year to 31 December
2004, with a corresponding decrease in net assets of £0.1m at each period end.

IAS 21 Foreign Exchange

Under IAS 21 foreign currency monetary assets and liabilities are valued at spot
rates not forward contract rates.  This resulted in a decrease in net assets of
£0.2m as at 1 January 2004, £0.1m as at 30 June 2004 with no change as at 31
December 2004.

IAS 38 Intangible assets

Under UK GAAP, computer software was classified as tangible fixed assets. IAS 38
requires these to be classified as an intangible asset where they are not
integral to the physical substance of the tangible fixed asset. As a result,
£0.2m of computer software has been reclassified as at 1 January 2004, £0.1m as
at 30 June 2004 and £0.1m as at 31 December 2004.

In addition, a prepaid royalty arising on the acquisition of intellectual
property rights was classified as a prepayment under UK GAAP. IAS 38 requires
this to be classified as an intangible asset. Previously, the prepayment was
released to the profit and loss account in line with sales. £1.8m of the
prepayment was reclassified to intangibles as at 1 January 2004; £1.8m as at 30
June 2004 and £1.7m as at 31 December 2004. The corresponding decrease in net
income on the income statement was £0.1m for the 6 months ended 30 June 2004 and
£0.1m for the year ended 31 December 2004 reflecting the change from releasing
to the income statement in line with sales to a straight line amortisation over
16 years being the life of the intangible. The decrease to net assets at 1
January 2004 was £0.4m as a result of this change; a decrease of £0.4m as at 30
June 2004 and a decrease of £0.4m as at 31 December 2004.

IAS 7 Cash flow statements

The cash flow statement has been prepared in accordance with IAS 7. While this
gives rise to a change in the reporting format, there are no changes to the
Group's cash flow and cash balances. As required by IAS 7, short-term
investments are presented separately from cash and cash equivalents. Short-term
investments represent those deposits with a maturity greater than 3 months from
inception.

Other

Under IFRS, provisions are analysed as those expected to be utilised in less
than one year and more than one year. As at 1 January 2004, £1.9m has been
reclassified from non-current liabilities to current liabilities, £1.8m as at 30
June 2004 and £2.2m as at 31 December 2004. These changes have been reflected in
the column headed 'Previously reported under UK GAAP'.
     
I    Basis of preparation

The historic financial information contained in this document has been prepared
on the basis of all IFRS and Standing Interpretations Committee (SIC) and
International Financial Reporting Interpretations Committee (IFRIC) issued by
the IASB effective for 2005 reporting.

In adopting current IFRS, the Group has assumed that the international
accounting standard "Actuarial gains and losses, group plans and disclosures"
which amends IAS 19 "Employee Benefits" will be endorsed by the EU.

As listed companies in a large number of countries are adopting IFRS for the
first time, there is limited established practice upon which to draw in matters
of interpretation and application.  Furthermore, it is possible that new
standards and new interpretations may be issued which will affect the Group.
Consequently it is not possible at this stage to definitively quantify the
impact of the adoption of IFRS and therefore the comparative information in
subsequent reporting may differ from that presented in this document.
     
II   Transitional arrangements

IFRS 1, First Time Adoption of International Financial Reporting Standards,
permits those companies adopting IFRS for the first time to take some exemptions
from the full requirements of IFRS in the transition period. Whatman has taken
advantage of the following exemptions:

  • Business combinations: Business combinations prior to the transition date
    of 1 January 2004 have not been restated onto an IFRS basis

  • Fair value or revaluation as deemed cost of fixed assets: the net book
    value of property, plant and equipment under UK GAAP has been adopted as the
    deemed cost in the opening balance sheet at the transition date

  • Employee benefits: the exemption under IFRS 1 allows actuarial gains and
    losses on defined benefit schemes to be fully recognised on the opening
    balance sheet but gives the option of use of a "corridor" approach for
    future recognised gains and losses through the income statement. This has
    largely been superseded by the international accounting standard "Actuarial
    gains and losses, group plans and disclosures" that enables actuarial gains
    and losses to be recognised immediately through equity. This option has been
    adopted by Whatman but is subject to endorsement by the EU

  • Cumulative translation differences: under IAS 21 foreign exchange gains
    and losses relating to translation differences on overseas operations are
    taken to a separate translation reserve. IFRS 1 allows a first time adopter
    an exemption from the need to calculate these cumulative translation
    differences prior to the transition date, consequently the differences have
    been set to zero at 1 January 2004 and exchange differences arising prior to
    this date will not be recycled to the income statement.

  • Comparative information: IFRS 1 allows first time adopters to account for
    Financial Instruments for the prior year comparative as at 30 June 2004 and
    the opening balance sheet as at 1 January 2004 under UK GAAP. This exemption
    applies only to the requirements of IAS 32 and 39

  • Share based payments: IFRS 2 has not been applied to share options and
    shares awarded which have been issued since November 2002 and vested before
    1 January 2005 under the exemption available in IFRS 1
     
III  Accounting policies

The following are the principal accounting policies that the group has applied
in preparing the restated financial information under IFRS contained in this
document.  The same policies are expected to be used in preparation of the 2005
interim and annual reports subject to amendments necessary to reflect the
adoption of IAS 32 and 39 from 1 January 2005.

Statement of compliance

This statement of compliance will apply to the Group's first Annual Report
produced in accordance with IFRS for the year ended 31 December 2005.
                             
The consolidated financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS) adopted by the International
Accounting Standards Board (IASB). In adopting current IFRS, the Group has
assumed that the international accounting standard "Actuarial gains and losses,
group plans and disclosures" which amends IAS 19 "Employee Benefits" will be
endorsed by the EU.

Basis of preparation and accounting

The financial information is prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair values:

  • Investments available for sale
  • Financial assets and financial liabilities including derivative
    instruments

The accounting policies set out below have been applied consistently to all
periods presented and in preparing an opening IFRS balance sheet at 1 January
2004 for the purposes of the transition to IFRS.

The accounting policies have been applied consistently by Group entities.

The preparation of the financial information in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
balance sheet and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.

Basis of consolidation

The Group financial information is the consolidation of the financial
information of the Company and all of its subsidiary undertakings. Entities over
which the Group has the ability to exercise control are accounted for as
subsidiaries. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. Interests acquired in entities are
consolidated from the effective date of acquisition, when control commences.
Interests sold are consolidated up to the date of disposal, when control ceases.

Transactions and balances between subsidiaries are eliminated. No profit is
taken on sales between subsidiaries until the products are sold to customers
outside the Group. Deferred tax relief on unrealised intra-Group profit is
accounted for only to the extent that it is considered recoverable.

Assets and liabilities of overseas subsidiaries are translated into sterling at
rates of exchange ruling at the balance sheet date. The results and cash flows
of overseas subsidiaries are translated into sterling using average rates of
exchange.

After 1 January 2004, the date of transition to IFRS, exchange adjustments
arising when the opening net assets and the profits for the year retained by
overseas subsidiaries are translated into sterling, less exchange differences on
related foreign currency borrowings which hedge the Group's net investment in
these operations, are taken to a separate component of equity. Exchange
adjustments arising before the date of transition to IFRS in respect of all
overseas subsidiaries are not taken to a separate component of equity.

Foreign currency transactions

Foreign currency transactions by Group companies are booked in functional
currency at the exchange rate ruling on the date of the transaction. Foreign
currency assets and liabilities are retranslated into the functional currency at
rates of exchange ruling at the balance sheet date. Exchange differences are
included in the income statement.

Revenue

Revenue is recognised in the income statement when goods or services are
despatched to external customers and generally when title and risk of loss
passes to the customer. No revenue is recognised if there are significant
uncertainties regarding the recovery of the consideration due or the possible
return of the goods.

Revenue represents net invoice value after the deduction of discounts and
allowances given and accruals for estimated future rebates and returns.
Estimates for rebates and returns are made on the basis of contractual and
historical information and past experience. Revenue excludes value added tax and
other sales taxes.

Expenditure

Expenditure is recognised in respect of goods and services received when
supplied in accordance with contractual terms.

Net financing costs include interest payable on borrowings, interest receivable
on funds invested, foreign exchange gains and losses and gains and losses on
hedging instruments that are recognised in the income statement. Interest income
is recognised in the income statement as it accrues.

Research and development(1)

Research and development expenditure is charged to the income statement in the
period in which it is incurred. Development expenditure is capitalised when the
criteria for recognising an asset are met. The expenditure capitalised includes
the cost of materials, direct labour and an appropriate proportion of overheads.
Property, plant and equipment used for research and development is depreciated
in accordance with the Group's policy.

Property, plant and equipment

Property, plant and equipment is stated at cost of purchase, construction or
revalued amount less accumulated depreciation and impairment losses. Financing
costs are not capitalised.

Depreciation is calculated to write off the cost less any residual value of
property, plant and equipment, using the straight line basis over its expected
useful life. The normal expected useful lives of the major categories of
property, plant and equipment are:

Freehold buildings                                   20 - 50 years
Leasehold land and buildings                         Lease term or 20 - 50 years
Plant and machinery (excluding paper making machines)4 - 10 years
Paper making machines                                20 years

Certain items of property that had been revalued in 1996 are carried at the
revalued amount. The Group has adopted a policy of not revaluing properties
since the revaluations carried out in 1996.

Goodwill(1)

Goodwill represents amounts arising on the acquisition of a business. For
acquisitions since 1 January 2004, goodwill is the difference between the cost
of the acquisition and the fair value of the identifiable net assets acquired
less any subsequent impairments. Goodwill is deemed to have an indefinite useful
life and is tested for impairment annually. Goodwill is no longer amortised.

For acquisitions prior to this date, goodwill is included at the amount recorded
previously under UK GAAP. The classification and accounting treatment of
business combinations that occurred prior to 1 January 2004 has not been
reconsidered in preparing the Group's opening balance sheet at 1 January 2004.
Goodwill is stated at cost less provision for amortisation and impairment.
Goodwill arising on acquisitions prior to 1 January 1998 was written off to
reserves.

Intangible assets(1)

Intangible assets comprise patents, licences, marketing rights, development
costs and computer software.

Intangible assets acquired separately or as part of a business combination are
stated at cost less provision for amortisation and impairment.

Amortisation is calculated to write off the cost of intangible assets in equal
annual instalments over the lower of their legal and estimated useful lives. The
carrying values of intangible assets together with their useful lives are
subject to annual review and any impairment is charged to the income statement.
The amortisation periods currently being used range from 10 to 20 years.

The cost of acquiring and developing computer software for internal use and
internet sites for external use are capitalised as intangible assets where the
software supports a significant business system. ERP systems software is
amortised over 5 years and other computer software over 3 - 5 years.

Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less cost to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest level for which there are
separately identifiable cash flows (cash generating units).

Taxation(1)

The tax expense for the year comprises current and deferred tax. Tax is
recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.

Current tax expense is based on the results for the year as adjusted for items
that are not taxable or not deductible. Current tax is calculated using tax
rates and laws that have been enacted or substantively enacted at the balance
sheet date.

Deferred tax is accounted for using the balance sheet liability method, and is
the tax expected to be payable or recoverable on temporary differences between
the carrying amount of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit. Deferred
tax is calculated based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates that are expected
to apply to the year of realisation or settlement based on tax rates and laws
enacted or substantively enacted at the balance sheet date.  Deferred tax
liabilities are generally recognised for all taxable temporary differences.

Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, associates and joint ventures except
where the reversal of the temporary difference can be controlled and it is
probable that the difference will not reverse in the foreseeable future.

Deferred tax assets are recognised to the extent it is probable that taxable
profits will be available against which the deductible temporary differences can
be utilised. The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.

Deferred tax assets and liabilities are not recognised if the temporary
differences arise from goodwill not deductible for tax purposes, or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.

Inventories

Inventories are included in the financial information at the lower of cost and
net realisable value. Cost includes the direct cost of raw materials, direct
labour, other direct costs and related production overheads. Cost is determined
on a first in first out basis.

Available for sale investments

Available for sale investments are initially recorded at cost and then
remeasured at subsequent reporting dates to fair value. Unrealised gains and
losses are recognised directly in equity.

On disposal or impairment of the investments, the gains and losses in equity are
recycled into the income statement.

Equity investments are recorded in non current assets unless they are expected
to be sold within one year of the reporting date.

Provisions

A provision is recognised when an obligation exists for a future liability in
respect of a past event and where the amount of the obligation can be reliably
estimated.

A provision for restructuring is recognised in respect of the direct
expenditures of a business reorganisation where the plans are sufficiently
detailed and well advanced and where the appropriate communication to those
affected has been undertaken at the balance sheet date. Future operating costs
are not provided.

A provision for an onerous contract is recognised when the expected benefits to
be derived by the Group from a contract are lower than the unavoidable cost of
meeting its obligations under the contract.

Leases

Lease agreements which transfer to the Group substantially all the benefits and
risks of ownership of an asset are treated as finance leases, as if the asset
had been purchased outright.

The assets are included in property, plant and equipment. The capital elements
of the leasing commitments are shown as obligations under finance leases. Assets
held under finance leases are depreciated on a basis consistent with similar
owned assets or the lease term if shorter. The interest element of the lease
rental is included in the income statement.

All other leases are operating leases and the annual rentals are included in the
income statement on a straight line basis over the lease term.

Land and buildings leased to third parties under operating leases have been
capitalised at fair value under the acquisition method of accounting. Operating
lease income is recognised in the income statement on a straight line basis with
any rental increases recognised in any period to which they relate.

Employee benefits(1)

Obligations for contributions to defined contribution plans are recognised as an
expense in the income statement as incurred.

The Group's net obligation in respect of defined benefit pension plans is
calculated separately for each plan by estimating the amount of the future
benefit that employees have earned in return for their service in the current
and prior periods. The benefit is discounted to determine the present value and
the fair value of any plan assets is deducted. The discount rate is the yield at
balance sheet date on AAA credit rated bonds that have maturity dates
approximating the terms of the Group's obligations. The calculation is performed
by a qualified actuary using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit
relating to past service by employees is recognised as an expense in the income
statement on a straight line basis over the average period until the benefits
become vested. To the extent that the benefits vest immediately, the expense is
recognised immediately in the income statement.

All actuarial gains and losses as at 1 January 2004, the date of transition to
IFRS, were recognised. After 1 January 2004 all cumulative actuarial gains or
losses are taken directly to equity in the year in which they arise.

Incentives in the form of shares are provided to employees under share option
and share award schemes. These options and awards are fair valued at their grant
dates and the cost is charged to the income statement over the relevant vesting
periods.

Financial risk management

The Group is exposed to a number of risks through its multi-national operations
and significant debt financing. The most significant of these include interest
rate risks, liquidity risks and effects of foreign currency exchange rates.

Derivative financial instruments are used to hedge the Group's exposure to
foreign exchange and interest rate risks arising from operational, financing and
investment activities. The principal derivative instruments used are interest
rate swaps and forward foreign exchange contracts. The Group does not hold or
issue derivative financial instruments for trading or speculative purposes.

The Board considers each of these risks on a regular basis and the Group's
policy towards each of these risks has remained unchanged during the year.

Interest rate risk

The Group finances its operations through a mixture of equity capital, retained
profits, cash, bank overdrafts and bank borrowings. The Group finances its
acquisitions primarily through bank borrowings. The Group borrows in the desired
currencies mainly at floating rates of interest and uses interest rate swaps, as
deemed appropriate, to manage the Group's exposure to interest rate
fluctuations.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and
flexibility through the use of bank overdrafts and bank borrowings. The Group
predominantly uses a medium term credit facility incorporating a term loan
facility and a revolving credit facility from a London bank. In addition, the
Group maintains undrawn committed borrowing facilities, after taking into
account anticipated expenditure on acquisitions, of at least 10% of borrowing
facilities, in order to provide flexibility in the management of the Group's
liquidity. Short term flexibility is achieved by the use of bank overdrafts.

Foreign currency risk

The Group has a significant investment in overseas operations, primarily in the
US and Continental Europe. As a result, the Group's sterling balance sheet can
be significantly affected by movements in the US Dollar and Euro exchange rates.
The Group seeks to reduce the effect of these currency exposures by matching its
currency borrowings with the overseas foreign currency assets to the extent that
total borrowings do not significantly exceed funding requirements. Approximately
60% of the Group's investments in non-sterling operations are hedged in this
way.

The Group also has a transactional exposure with significant sales and a smaller
element of purchases being made in a currency other than the functional currency
of the operating units. In addition, the Group has an exposure in translating
the profits of overseas operations into sterling. The Group's policy is to
actively manage the currency risk by covering 100% of the anticipated exposures
in major foreign currencies for a period of between one and two years using
forward foreign exchange contracts.

Credit risk

The Group has no significant credit risk. Policies have been implemented which
require the assessment of the credit worthiness of potential customers prior to
a sale.

Derivative financial instruments

The following UK GAAP policies for financial instruments have been applied in
the preparation of the group's 2004 comparative information.

Assets and liabilities in foreign currencies are translated into sterling at the
rates of exchange ruling at the balance sheet date. The results of overseas
subsidiary undertakings are translated at average rates of exchange. Differences
on the translation of the opening balance sheets of overseas subsidiary
undertakings are taken directly to reserves, net of differences on related
currency borrowings.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, bank deposits repayable on
demand, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.

(1)Policy change to align with requirements of IFRS.
     
IV   Consolidated income statement


Consolidated income statement                                                     Unaudited         Unaudited
For the periods ended 30 June 2004 and 31 December 2004                      Half Year 2004    Full Year 2004
                                                                                         £m                £m
Continuing operations
Revenue                                                                                39.2              82.8
Cost of sales                                                                         (19.2)            (48.4)
Gross profit                                                                           20.0              34.4
Distribution costs                                                                     (5.8)            (14.3)
R & D costs                                                                            (0.8)             (1.9)
Amortisation of intangibles                                                            (0.2)             (0.5)
Administrative expenses                                                                (4.9)            (15.8)
Operating profit                                                                        8.3               1.9
Interest payable & similar charges                                                     (1.4)             (3.1)
Interest receivable                                                                     0.8               1.7
Profit before tax                                                                       7.7               0.5
Income tax expense                                                                     (1.8)             (2.0)
Profit / (loss) attributable to equity shareholders                                     5.9              (1.5)

Basic earnings/(loss) per share                                                        4.63p            (1.20p)
Diluted earnings/(loss)  per share                                                     4.56p            (1.18p)

Operating profit for the full year 2004 is after charging £15.4 million of
exceptional charges comprising a restructuring provision for Schleicher &
Schuell of £11.4 million, other restructuring and onerous lease provisions of
£1.9 million, ongoing litigation against Biometra of £1.1 million, a stock write
down of £0.8 million arising from the product rationalisation programme and
other items of £0.2 million.  Operating profit for the half year 2004 includes a
£0.4 million write back of restructuring provisions.
     
V    Statement of recognised income and expense

Statement of recognised income and expense                                        Unaudited         Unaudited
For the periods ended 30 June 2004 and 31 December 2004                           Half year         Full year
                                                                                       2004              2004
                                                                                         £m                £m

Currency translation adjustments                                                       (1.9)             (2.0)
Net investment hedge                                                                    1.3              (0.1)
Tax on net investment hedge                                                            (0.4)             (0.1)
Actuarial gains and losses                                                                -               2.2
Net (expense)/income recognised directly in equity                                     (1.0)                -
Income/(expense) for the period                                                         5.9              (1.5)
Total recognised income/(expense) for the period                                        4.9              (1.5)
     
VI   Consolidated balance sheet

Consolidated balance sheet                                                        Unaudited         Unaudited
As at 30 June 2004 and 31 December 2004                                           Half year         Full year
                                                                                       2004              2004
                                                                                         £m                £m
Assets
Property, plant and equipment                                                          28.1              31.5
Goodwill                                                                                5.2              34.4
Other intangible assets                                                                 3.7               5.7
Deferred tax assets                                                                     6.0               5.4
Trade & other receivables                                                               0.3               0.9
Total non current assets                                                               43.3              77.9
Current assets
Inventories                                                                            12.1              16.7
Trade and other receivables                                                            14.6              21.0
Other current assets                                                                    4.5               3.4
Available for sale investments                                                            -               5.1
Cash & cash equivalents                                                                 4.8               9.1
Total current assets                                                                   36.0              55.3
Total assets                                                                           79.3             133.2
Non current liabilities
Borrowings                                                                             (1.5)            (39.3)
Employee benefits                                                                      (4.1)             (9.7)
Deferred tax                                                                           (0.1)             (0.5)
Provisions                                                                             (9.6)             (2.2)
Total non current liabilities                                                         (15.3)            (51.7)
Current liabilities
Borrowings                                                                             (5.5)             (0.1)
Trade and other payables                                                              (11.1)            (21.6)
Provisions                                                                             (1.8)            (21.4)
Total current liabilities                                                             (18.4)            (43.1)
Total liabilities                                                                     (33.7)            (94.8)
Net assets                                                                             45.6              38.4
Equity
Share capital                                                                          16.0              17.4
Other reserves                                                                          4.8               5.8
Retained earnings                                                                      24.8              15.2
Total equity                                                                           45.6              38.4
     
VII  Consolidated cash flow statement

Consolidated cash flow statement                                                 Unaudited         Unaudited
For the periods ended 30 June 2004 and 31 December 2004                          Half year         Full year
                                                                                      2004              2004
                                                                                        £m                £m
Cash flows from operating activities
Cash generated from operations                                                         6.0              14.0
Interest received                                                                        -               0.1
Interest paid                                                                         (0.1)             (1.0)
Tax paid                                                                              (0.4)             (0.4)
Net cash from operating activities                                                     5.5              12.7
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)                                       -             (28.9)
Purchase of property, plant and equipment                                             (2.3)             (4.3)
Purchase of intangible fixed assets                                                      -              (0.3)
Net cash used in investing activities                                                 (2.3)            (33.5)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital                                      0.9               1.7
Net proceeds from issue of new bank loan                                               5.5              39.1
Repayment of borrowings                                                               (9.4)            (13.0)
Dividends                                                                             (3.4)             (5.6)
Net cash used in financing activities                                                 (6.4)             22.2
Net (decrease)/increase in cash & cash equivalents                                    (3.2)              1.4
Effects of exchange rate changes                                                      (0.3)             (0.6)
Cash and cash equivalents at 1 January                                                 8.2               8.2
Cash and cash equivalents at period end                                                4.7               9.0
     
VIII Reconciliation of consolidated income statement for the half year ended 
     30 June 2004


Consolidated income statement                      Previously        
For the half year ended 30 June 2004                 Reported        IFRS 2         IFRS 3        IAS 19
                                                     under UK   Share based       Business      Employee   
                                                         GAAP      payments   combinations      benefits    
                                                           £m            £m             £m            £m
Continuing operations
Revenue                                                  39.2             -              -             -
Cost of sales                                           (19.1)            -              -             -
Gross profit                                             20.1             -              -             -
Distribution costs                                       (5.8)            -              -             -
R & D costs                                              (0.8)            -              -             -
Amortisation of intangibles                              (0.3)            -            0.2             -
Administrative expenses                                  (5.0)         (0.1)             -           0.1
Operating profit                                          8.2          (0.1)           0.2           0.1
Interest payable                                         (0.1)            -              -          (1.2)
Interest receivable                                         -             -              -           0.8
Profit before tax                                         8.1          (0.1)           0.2          (0.3)
Income tax expense                                       (2.0)            -              -           0.1
Profit attributable to equity shareholders                6.1          (0.1)           0.2          (0.2)

Basic earnings/(loss) per share                          4.78p        (0.04p)         0.15p        (0.16p)
Diluted earnings/(loss) per share                        4.71p        (0.04p)         0.15p        (0.16p)

                                                                                                         
Consolidated income statement                        IAS 10                                              Restated 
For the half year ended 30 June 2004                  After        IAS 12                 Total IFRS   under IFRS 
                                              balance sheet  Income taxes        Other   adjustments    Unaudited 
                                                         £m            £m           £m            £m           £m       
                                 
Continuing operations
Revenue                                                   -             -            -             -         39.2
Cost of sales                                             -             -         (0.1)         (0.1)       (19.2)
Gross profit                                              -             -         (0.1)         (0.1)        20.0
Distribution costs                                        -             -            -             -         (5.8)
R & D costs                                               -             -            -             -         (0.8)
Amortisation of intangibles                               -             -         (0.1)          0.1         (0.2)
Administrative expenses                                   -             -          0.1           0.1         (4.9)
Operating profit                                          -             -         (0.1)          0.1          8.3
Interest payable                                          -             -         (0.1)         (1.3)        (1.4)
Interest receivable                                       -             -            -           0.8          0.8
Profit before tax                                         -             -         (0.2)         (0.4)         7.7
Income tax expense                                        -             -          0.1           0.2         (1.8)
Profit attributable to equity shareholders                -             -         (0.1)         (0.2)         5.9

Basic earnings/(loss) per share                           -             -        (0.10p)       (0.15p)       4.63p
Diluted earnings/(loss) per share                         -             -        (0.10p)       (0.15p)       4.56p

     
IX   Reconciliation of consolidated income statement for the year ended 
     31 December 2004

Consolidated income statement                      Previously        
For the year ended 31 December 2004                  Reported        IFRS 2         IFRS 3        IAS 19
                                                     under UK   Share based       Business      Employee   
                                                         GAAP      payments   combinations      Benefits
                                                           £m            £m             £m            £m
Continuing operations
Revenue                                                  82.8             -              -             -
Cost of sales                                           (48.4)            -              -             -
Gross profit                                             34.4             -              -             -
Distribution costs                                      (14.3)            -              -             -
R & D                                                    (1.9)            -              -             -
Amortisation of intangibles                              (0.7)            -            0.5             -
Administrative expenses                                 (15.7)         (0.3)             -          (0.2)
Operating profit                                          1.8          (0.3)           0.5          (0.2)
Interest payable                                         (0.5)            -              -          (2.6)
Interest receivable                                       0.1                                        1.6
Profit before tax                                         1.4          (0.3)           0.5          (1.2)
Income tax expense                                       (1.9)          0.1              -           0.4
Loss attributable to equity shareholders                 (0.5)         (0.2)           0.5          (0.8)

Basic (loss)/earnings per share                         (0.41p)       (0.14p)         0.39p        (0.66p)
Diluted (loss)/earnings per share                       (0.41p)       (0.14p)         0.39p        (0.65p)


Consolidated income statement                        IAS 10                                              
For the year ended 31 December 2004                   After                                              Restated
                                                    balance        IAS 12                 Total IFRS   under IFRS
                                                      sheet  Income taxes        Other   adjustments    Unaudited
                                                         £m            £m           £m            £m           £m
Continuing operations
Revenue                                                   -             -            -             -         82.8
Cost of sales                                             -             -            -             -        (48.4)
Gross profit                                              -             -            -             -         34.4
Distribution costs                                        -             -            -             -        (14.3)
R & D                                                     -             -            -             -         (1.9)
Amortisation of intangibles                               -             -         (0.3)          0.2         (0.5)
Administrative expenses                                   -             -          0.4          (0.1)       (15.8)
Operating profit                                          -             -          0.1           0.1          1.9
Interest payable                                          -             -            -          (2.6)        (3.1)
Interest receivable                                                                              1.6          1.7
Profit before tax                                         -             -          0.1          (0.9)         0.5
Income tax expense                                        -          (0.6)           -          (0.1)        (2.0)
Loss attributable to equity shareholders                  -          (0.6)         0.1          (1.0)        (1.5)

Basic (loss)/earnings per share                           -         (0.49p)       0.11p        (0.79p)      (1.20p)
Diluted (loss)/earnings per share                         -         (0.48p)       0.11p        (0.77p)      (1.18p)
     
X    Reconciliation of consolidated balance sheet as at 1 January 2004

Consolidated balance sheet                         Previously        
As at 1 January 2004                                 reported        IFRS 2         IFRS 3        IAS 19
                                                     under UK   Share based       Business      Employee   
                                                         GAAP      payments   combinations      benefits     
                                                           £m            £m             £m            £m
Assets
Property, plant and equipment                            28.0             -              -             -
Goodwill                                                  4.9             -            0.1             -
Other intangible assets                                   2.0             -           (0.1)            -
Deferred tax assets                                       7.2             -              -             -
Trade & other receivables                                 4.7             -              -          (4.4)
Total non current assets                                 46.8             -              -          (4.4)
Current assets
Inventories                                              11.1             -              -             -
Trade and other receivables                              16.5             -              -             -
Other current assets                                      6.8             -              -             -
Cash & cash equivalents                                   8.5             -              -             -
Total current assets                                     42.9             -              -             -
Total assets                                             89.7             -              -          (4.4)
Non current liabilities
Employee benefits                                           -             -              -          (4.1)
Deferred tax                                             (1.0)            -              -           2.5
Provisions                                               (1.9)            -              -             -
Total non current liabilities                            (2.9)            -              -          (1.6)
Current liabilities
Borrowings                                              (11.3)            -              -             -
Trade and other payables                                (15.9)            -              -           0.2
Provisions                                              (12.6)            -              -             -
Total current liabilities                               (39.8)            -              -           0.2
Total liabilities                                       (42.7)            -              -          (1.4)
Net assets                                               47.0             -              -          (5.8)
Equity
Share capital                                            14.5             -              -             -
Other reserves                                            6.6             -              -             -
Retained earnings                                        25.9             -              -          (5.8)
Total equity                                             47.0             -              -          (5.8)

                                                                                                         
Consolidated balance sheet                           IAS 10       IAS 12                                 Restated
As at 1 January 2004                                  After       Income                 Total IFRS    under IFRS
                                              balance sheet        taxes        Other   adjustments     Unaudited  
                                                         £m           £m           £m            £m            £m       
                     
Assets
Property, plant and equipment                             -            -         (0.2)         (0.2)         27.8
Goodwill                                                  -          0.4         (0.1)          0.4           5.3
Other intangible assets                                   -            -          2.1           2.0           4.0
Deferred tax assets                                       -          0.1            -           0.1           7.3
Trade & other receivables                                 -            -            -          (4.4)          0.3
Total non current assets                                  -          0.5          1.8          (2.1)         44.7
Current assets
Inventories                                               -            -            -             -          11.1
Trade and other receivables                               -            -         (2.6)         (2.6)         13.9
Other current assets                                      -            -            -             -           6.8
Cash & cash equivalents                                   -            -            -             -           8.5
Total current assets                                      -            -         (2.6)         (2.6)         40.3
Total assets                                              -          0.5         (0.8)         (4.7)         85.0
Non current liabilities
Employee benefits                                         -            -            -          (4.1)         (4.1)
Deferred tax                                              -         (1.7)         0.2           1.0             -
Provisions                                                -            -            -             -          (1.9)
Total non current liabilities                             -         (1.7)         0.2          (3.1)         (6.0)
Current liabilities
Borrowings                                                -            -            -             -         (11.3)
Trade and other payables                                3.4            -          0.1           3.7         (12.2)
Provisions                                                -            -            -             -         (12.6)
Total current liabilities                               3.4            -          0.1           3.7         (36.1)
Total liabilities                                       3.4         (1.7)         0.3           0.6         (42.1)
Net assets                                              3.4         (1.2)        (0.5)         (4.1)         42.9
Equity
Share capital                                             -          0.5         (0.2)          0.3          14.8
Other reserves                                            -        (0.9)          0.1          (0.8)          5.8
Retained earnings                                       3.4        (0.8)         (0.4)         (3.6)         22.3
Total equity                                            3.4        (1.2)         (0.5)         (4.1)         42.9
     
XI   Reconciliation of consolidated balance sheet as at 30 June 2004

Consolidated balance sheet                         Previously        
As at 30 June 2004                                   Reported        IFRS 2         IFRS 3        IAS 19
                                                     under UK   Share based       Business      Employee   
                                                         GAAP      payments   combinations      benefits     
                                                           £m            £m             £m            £m
Assets
Property, plant and equipment                            28.3             -              -             -
Goodwill                                                  4.7             -            0.2             -
Other intangible assets                                   1.8             -              -             -
Deferred tax assets                                       6.1             -              -             -
Trade & other receivables                                 4.9             -              -          (4.6)
Total non current assets                                 45.8             -            0.2          (4.6)
Current assets                                                                                    
Inventories                                              12.1             -              -             -
Trade and other receivables                              17.1             -              -             -
Other current assets                                      4.5             -              -             -
Cash & cash equivalents                                   4.8             -              -             -
Total current assets                                     38.5             -              -             -
Total assets                                             84.3             -            0.2          (4.6)
Non current liabilities
Borrowings                                               (1.5)            -              -             -
Employee benefits                                           -             -              -          (4.1)
Deferred tax                                             (1.5)            -              -           2.5
Provisions                                               (9.6)            -              -             -
Total non current liabilities                           (12.6)            -              -          (1.6)
Current liabilities
Borrowings                                               (5.5)            -              -             -
Trade and other payables                                (13.8)            -              -           0.2
Provisions                                               (1.8)            -              -             -
Total current liabilities                               (21.1)            -              -           0.2
Total liabilities                                       (33.7)            -              -          (1.4)
Net assets                                               50.6             -            0.2          (6.0)
Equity
Share capital                                            15.4           0.1              -             -
Other reserves                                            6.6             -              -             -
Retained earnings                                        28.6          (0.1)           0.2          (6.0)
Total equity                                             50.6             -            0.2          (6.0)


Consolidated balance sheet                           IAS 10        IAS 12        Other    Total IFRS     Restated
As at 30 June 2004                                    After  Income taxes              adjustments   under IFRS
                                              balance sheet            £m              Unaudited

                                                         £m                         £m            £m          £m
Assets
Property, plant and equipment                             -             -         (0.2)         (0.2)       28.1
Goodwill                                                  -           0.4         (0.1)          0.5         5.2
Other intangible assets                                   -             -          1.9           1.9         3.7
Deferred tax assets                                       -          (0.1)           -          (0.1)        6.0
Trade & other receivables                                 -             -            -          (4.6)        0.3
Total non current assets                                  -           0.3          1.6          (2.5)       43.3
Current assets
Inventories                                               -             -            -             -        12.1
Trade and other receivables                               -             -         (2.5)         (2.5)       14.6
Other current assets                                      -             -            -             -         4.5
Cash & cash equivalents                                   -             -            -             -         4.8
Total current assets                                      -             -         (2.5)         (2.5)       36.0
Total assets                                              -           0.3         (0.9)         (5.0)       79.3
Non current liabilities
Borrowings                                                -             -            -             -        (1.5)
Employee benefits                                         -             -            -          (4.1)       (4.1)
Deferred tax                                              -          (1.4)         0.3           1.4        (0.1)
Provisions                                                -             -            -             -        (9.6)
Total non current liabilities                             -          (1.4)         0.3          (2.7)      (15.3)
Current liabilities
Borrowings                                                -             -            -             -        (5.5)
Trade and other payables                                2.2           0.3            -           2.7       (11.1)
Provisions                                                -             -            -             -        (1.8)
Total current liabilities                               2.2           0.3            -           2.7       (18.4)
Total liabilities                                       2.2          (1.1)         0.3             -       (33.7)
Net assets                                              2.2          (0.8)        (0.6)         (5.0)       45.6
Equity
Share capital                                             -           0.8         (0.3)          0.6        16.0
Other reserves                                            -          (0.8)        (0.9)         (1.7)        4.9
Retained earnings                                       2.2          (0.8)         0.6          (3.9)       24.7
Total equity                                            2.2          (0.8)        (0.6)         (5.0)       45.6
     
XII  Reconciliation of consolidated balance sheet as at 31 December 2004

Consolidated balance sheet                         Previously        
As at 31 December 2004                               Reported        IFRS 2         IFRS 3        IAS 19
                                                     under UK   Share based       Business      Employee   
                                                         GAAP      payments   combinations      benefits     
                                                           £m            £m             £m            £m
Assets
Property, plant and equipment                            31.8             -              -             -
Goodwill                                                 32.7             -            0.6             -
Other intangible assets                                   3.9             -           (0.1)            -
Deferred tax assets                                       7.5             -              -             -
Trade & other receivables                                 8.0             -              -          (4.9)
Total non current assets                                 83.9             -            0.5          (4.9)
Current assets
Inventories                                              16.7             -              -             -
Trade and other receivables                              21.2             -              -             -
Other current assets                                      3.4             -              -             -
Available for sale investments                            5.1             -              -             -
Cash & cash equivalents                                   9.1             -              -             -
Total current assets                                     55.5             -              -             -
Total assets                                            139.4             -            0.5          (4.9)
Non current liabilities
Borrowings                                              (39.3)            -              -             -
Employee benefits                                        (8.2)            -              -          (1.5)
Deferred tax                                             (2.6)          0.1              -           1.9
Provisions                                               (2.2)            -              -             -
Total non current liabilities                           (52.3)          0.1              -           0.4
Current liabilities
Borrowings                                               (0.1)            -              -             -
Trade and other payables                                (25.4)            -              -           0.1
Provisions                                              (21.4)            -              -             -
Total current liabilities                               (46.9)            -              -           0.1
Total liabilities                                       (99.2)          0.1              -           0.5
Net assets                                               40.2           0.1            0.5          (4.4)
Equity
Share capital                                            16.0           0.3              -             -
Other reserves                                            6.4             -              -           2.2
Retained earnings                                        17.8          (0.2)           0.5          (6.6)
Total equity                                             40.2           0.1            0.5          (4.4)


Consolidated balance sheet                           IAS 10                                              
As at 31 December 2004                                After                                              Restated
                                                    balance        IAS 12                Total IFRS    under IFRS  
                                                      sheet  Income taxes       Other   adjustments     Unaudited
                                                         £m            £m          £m            £m            £m
Assets
Property, plant and equipment                             -             -        (0.3)         (0.3)         31.5
Goodwill                                                  -           1.1           -           1.7          34.4
Other intangible assets                                   -             -         1.9           1.8           5.7
Deferred tax assets                                       -          (2.2)        0.1          (2.1)          5.4
Trade & other receivables                                 -             -        (2.2)         (7.1)          0.9
Total non current assets                                  -          (1.1)       (0.5)         (6.0)         77.9
Current assets
Inventories                                               -             -           -             -          16.7
Trade and other receivables                               -             -        (0.2)         (0.2)         21.0
Other current assets                                      -             -           -             -           3.4
Available for sale investments                            -             -           -             -           5.1
Cash & cash equivalents                                   -             -           -             -           9.1
Total current assets                                      -             -        (0.2)         (0.2)         55.3
Total assets                                              -          (1.1)       (0.7)         (6.2)        133.2
Non current liabilities
Borrowings                                                -             -           -             -         (39.3)
Employee benefits                                         -             -           -          (1.5)         (9.7)
Deferred tax                                              -          (0.1)        0.2           2.1          (0.5)
Provisions                                                -             -           -             -          (2.2)
Total non current liabilities                             -          (0.1)        0.2           0.6         (51.7)
Current liabilities
Borrowings                                                -             -           -             -          (0.1)
Trade and other payables                                3.7             -           -           3.8         (21.6)
Provisions                                                -             -           -             -         (21.4)
Total current liabilities                               3.7             -           -           3.8         (43.1)
Total liabilities                                       3.7          (0.1)        0.2           4.4         (94.8)
Net assets                                              3.7          (1.2)       (0.5)         (1.8)         38.4
Equity
Share capital                                             -           1.1           -           1.4          17.4
Other reserves                                            -          (0.8)       (2.0)         (0.6)          5.8
Retained earnings                                       3.7          (1.5)        1.5          (2.6)         15.2
Total equity                                            3.7          (1.2)       (0.5)         (1.8)         38.4
     
XIII Reconciliation of movement in equity for the half year ended 30 June 2004

Reconciliation in movement of equity               Previously        
Half year ended 30 June 2004                         Reported        IFRS 2           IFRS 3        IAS 19
                                                     under UK   Share based         Business      Employee   
                                                         GAAP      payments     combinations      benefits     
                                                           £m            £m               £m            £m

Profit attributable to equity shareholders                6.1          (0.1)             0.2          (0.2)
Dividends                                                (2.2)            -                -
Other recognised losses for the half year                (1.1)            -                -
Employee share option schemes                             0.8           0.1                -
Net increase in equity shareholders' funds for            3.6             -              0.2          (0.2)
half year
Equity shareholders funds at 1 January                   47.0             -                -          (5.8)
Equity shareholders' funds at 30 June                    50.6             -              0.2          (6.0)


Reconciliation in movement of equity                 IAS 10                                             
Half year ended 30 June 2004                          After       IAS 12                                Restated
                                                    Balance       Income                 Total IFRS   under IFRS 
                                                      sheet        taxes        Other   adjustments    Unaudited
                                                         £m           £m           £m            £m           £m

Profit attributable to equity shareholders                -            -         (0.1)         (0.2)         5.9
Dividends                                              (1.2)                        -          (1.2)        (3.4)
Other recognised losses for the half year                 -          0.1            -           0.1         (1.0)
Employee share option schemes                             -          0.3            -           0.4          1.2
Net increase in equity shareholders' funds             (1.2)         0.4         (0.1)         (0.9)         2.7
for half year
Equity shareholders funds at 1 January                  3.4         (1.2)        (0.5)         (4.1)        42.9
Equity shareholders' funds at 30 June                   2.2         (0.8)        (0.6)         (5.0)        45.6
     
XIV  Reconciliation of movement in equity for the year ended 31 December 2004

Reconciliation in movement of equity               Previously        
Year ended 31 December 2004                          Reported        IFRS 2          IFRS 3        IAS 19
                                                     under UK   Share based        Business      Employee   
                                                         GAAP      payments    combinations      benefits     
                                                           £m            £m              £m            £m

Loss attributable to equity shareholders                 (0.5)         (0.2)            0.5          (0.8)
Dividends                                                (5.9)            -               -             -
Other recognised losses for the year                     (2.1)            -               -           2.2
Employee Benefit Trust Shares                            (0.4)            -               -             -
Employee share option schemes                             2.1           0.3               -             -
Net decrease in equity shareholders' funds for           (6.8)          0.1             0.5           1.4
half year
Equity shareholders funds at 1 January                   47.0             -               -          (5.8)
Equity shareholders' funds at 31 December                40.2           0.1             0.5          (4.4)


Reconciliation in movement of equity                 IAS 10                              
Year ended 31 December 2004                           After       IAS 12                                Restated
                                                    Balance       Income                 Total IFRS   under IFRS 
                                                      sheet        taxes        Other   adjustments    Unaudited
                                                         £m           £m           £m            £m           £m


Loss attributable to equity shareholders                  -         (0.6)         0.1          (1.0)        (1.5)
Dividends                                               0.3            -            -           0.3         (5.6)
Other recognised losses for the year                      -            -         (0.1)          2.1            -
Employee Benefit Trust Shares                             -            -            -             -         (0.4)
Employee share option schemes                             -          0.6            -           0.9          3.0
Net decrease in equity shareholders' funds              0.3            -            -           2.3         (4.5)
for half year
Equity shareholders funds at 1 January                  3.4         (1.2)        (0.5)         (4.1)        42.9
Equity shareholders' funds at 31 December               3.7         (1.2)        (0.5)         (1.8)        38.4



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