Adoption of IFRS
Dechra Pharmaceuticals PLC
19 October 2005
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Wednesday, 19 October 2005
Immediate Release
DECHRA PHARMACEUTICALS PLC
ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
INTRODUCTION
Dechra Pharmaceuticals PLC ('the Group') has previously reported its results
under UK Generally Accepted Accounting Principles ('UK GAAP'). Following
adoption of Regulation 1606/2002 by the European Parliament in July 2002 all EU
listed companies are required to report their consolidated financial statements
under International Financial Reporting Standards ('IFRS') adopted for use in
the EU ('adopted IFRS') for accounting periods beginning on or after 1 January
2005. The Group's first annual report under IFRS will be for the year to 30 June
2006 with the first IFRS interim results for the six months ending 31 December
2005.
This announcement explains the main changes that are required to the Group's
financial statements on adoption of IFRS. The announcement is set out in the
following sections:
•Summary of IFRS changes
•Basis of preparation
•IFRS1 - first time adoption rules
•Summarised accounting policy changes and financial effect
•Consolidated income statement transition reconciliations for the year
ended 30 June 2005 and six months ended 31 December 2004
•Consolidated balance sheet transition reconciliations as at 1 July 2004,
31 December 2004 and 30 June 2005
•Consolidated statement of cash flows for the year ended 30 June 2005 in
IFRS format
•Consolidated statement of changes in shareholders' equity for the year
ended 30 June 2005
SUMMARY OF IFRS CHANGES
The changes to the 2005 results arising from the implementation of IFRS are
summarised in the table below.
Results for the year ended 30 June 2005 UK GAAP Adjustments IFRS
£'000 £'000 £'000
Operating profit before goodwill amortisation 10,976 279 11,255
Goodwill amortisation (564) 564 -
Operating profit 10,412 843 11,255
Net finance cost (1,554) - (1,554)
Profit before tax 8,858 843 9,701
Tax (2,590) (84) (2,674)
Profit after tax 6,268 759 7,027
EPS - basic (pence) 12.28p 1.49p 13.77p
EPS - adjusted (pence) 13.39p 0.38p 13.77p
continued...
-2-
The main effect of the IFRS changes to the balance sheet is to increase net
assets and distributable reserves by £3,120,000 as at 30 June 2005 (31 December
2004 : increase of £1,695,000) (1 July 2004: increase of £1,845,000).
BASIS OF PREPARATION
The financial information presented in this announcement has been prepared on
the basis of the recognition and measurement requirements of IFRSs in issue that
are either endorsed by the EU and effective (or available for early adoption) at
30 June 2006 or are expected to be endorsed and effective (or available for
early adoption) at 30 June 2006, the Group's first annual reporting date at
which it is required to report using adopted IFRSs. Based on these adopted and
unadopted IFRSs, the directors have made assumptions about the accounting
policies expected to be applied, which are summarised later in this
announcement, when the first annual IFRS financial statements are prepared for
the year ending 30 June 2006.
In addition, the adopted IFRSs that will be effective (or available for early
adoption) in the annual financial statements for the year ending 30 June 2006
are still subject to change and to additional interpretations and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period will be determined finally only when the annual financial
statements are prepared for the year ending 30 June 2006.
A full set of IFRS accounting policies can be viewed on the Dechra corporate
web-site, www.dechra.com by clicking on the financial information section.
IFRS1 - FIRST TIME ADOPTION RULES
The Group has applied IFRS1 'First time adoption of International Financial
Reporting Standards' in its initial application of IFRS. The Group is required
to select appropriate accounting policies under IFRS and, subject to a few
exemptions detailed below, apply them retrospectively to its financial
statements such that all comparative information is presented on the same basis.
Accordingly this necessitates the restatement of the balance sheet at 1 July
2004, the date of transition, (this being the date of the beginning of the
earliest financial year for which full comparative information is required) as
well as at 30 June 2005.
IFRS1 permits certain exemptions to the full retrospective restatement. The
exemptions that have been adopted by the Group are as follows:
Business combinations - business combinations made prior to 1 July 2004 have not
been restated in accordance with IFRS3 'Business Combinations'.
Share based payments - IFRS2 'Share-based Payments' has only been applied to
awards of share options granted after 7 November 2002 which had not vested by 1
January 2005.
Financial instruments - IAS32 'Financial Instruments : Disclosure and
Presentation' and IAS 39 'Financial Instruments : Recognition and Measurement'
have been adopted prospectively from 1 July 2005 with no restatement of
comparative information which continues to be presented in accordance with UK
GAAP.
On 1 July 2005 there was an adjustment to reflect the change in treatment of
derivative financial instruments from UK GAAP, which carries such items at
amortised cost, to IAS 39, which requires derivatives to be recorded at fair
value. The impact on the balance sheet at 1 July 2005 was to reduce net assets
by £71,000 net of deferred taxation.
Restatement of Balance Sheet and Income Statement
Reconciliations required by IFRS1 are presented in this document, showing the
differences between UK GAAP and IFRS for the balance sheets on transition at 1
July 2004, 31 December 2004 and 30 June 2005, together with the income
statements for the year ended 30 June 2005 and the six months ended 31 December
2004. This financial information is unaudited.
continued...
-3-
Cash Flow
The adjustments from the conversion to IFRS will have no impact upon the cash
flows of the Group although there are a number of presentational differences
under IFRS.
SUMMARISED ACCOUNTING POLICY CHANGES AND FINANCIAL EFFECT
The principal changes the Group has made to its accounting policies on adoption
of IFRS to those presented in the relevant UK GAAP financial statements and
their effect on the financial statements are as follows.
1. Employee Benefits - Share Based Payments
Accounting Policy
The Group operates a number of equity-settled, share based payment programmes
that allow employees to acquire shares of the Company. The Group also operates a
Long Term Incentive Plan for Directors and Senior Executives.
The fair value of shares or options granted is recognised as an employee expense
in the income statement with a corresponding movement in equity. The fair value
is measured at grant date and spread on a straight line basis over the period
during which the employees become unconditionally entitled to the shares or
options (the vesting period). The fair value of the shares or options granted is
measured using a valuation model, taking into account the terms and conditions
upon which the shares or options were granted.
For schemes with no market related performance conditions, the amount recognised
as an expense in the income statement is adjusted to take into account an
estimate of the number of shares or options that are expected to vest together
with an adjustment to reflect the number of shares or options that actually do
vest. In the case of schemes that already contain market related performance
criteria no such adjustments are necessary.
The fair value of grants under the Long Term Incentive Plan has been determined
using the Monte Carlo simulation model.
The fair values of options granted under all other share option schemes have
been determined using the Black-Scholes option pricing model.
Financial Effect
Under UK GAAP, the cost of granting employee share options recognised in the
income statement is the intrinsic value of the option being the difference in
exercise price and market price at the date of grant of the option. Options
issued under Save As You Earn ('SAYE') schemes were exempt from this
requirement. Previously the Group has recognised a charge to the income
statement only in respect of the Long Term Incentive Plan.
Under IFRS2 'Share-based Payments', the cost recognised in the income statement
is based upon the excess of the fair value of the option over the exercise price
at the date of grant.
Although this results in an additional charge in respect of the Group's
Approved, Unapproved and SAYE share option schemes, there is a reduction in the
charge in respect of the Long Term Incentive Plan. The net result is a credit of
£55,000 for the year ended 30 June 2005.
There is no impact on net assets or distributable reserves as a result of this
adjustment which is taken directly to equity.
continued...
-4-
2. Dividends
Accounting Policy
Dividends are recognised in the period in which they are approved by the
Company's shareholders or, in the case of an interim dividend, when the dividend
is paid.
Financial Effect
Under IAS10 'Events After the Balance Sheet Date' final dividends are recognised
in the subsequent accounting period to which they would have been recognised
under UK GAAP. At 30 June 2005, the final dividend for 2005 of £1,789,000 (31
December 2004 : £867,000) (1 July 2004 : £1,606,000) has been added back to net
assets as part of distributable reserves and will appear as a deduction from
equity in the interim statement for the six months ending 31 December 2005. The
treatment in the cash flow statement remains the same.
3. Income Taxes - Deferred Tax
Accounting Policy
Deferred tax is provided using the balance sheet liability method, and
represents the tax payable or recoverable on most temporary differences which
arise between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes (the tax base).
Temporary differences are not provided on: goodwill that is not deductible for
tax purposes; the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit and do not arise from a business
combination; and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates
expected to apply in the period in which the liability is settled or the asset
is realised and is based upon tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is not probable
that the related tax benefit will be realised against future taxable profits.
The carrying amounts of deferred tax assets are reviewed at each balance sheet
date.
Financial Effect
The results under IAS12 in respect of deferred tax can be different from UK
GAAP, under which deferred tax is calculated based upon income statement timing
differences.
The overall effect is to increase the deferred tax asset at 30 June 2005 from
£4,000 to £406,000. The principal reason for the increase is that deferred tax
in respect of share based payments is calculated by reference to a figure which
differs from the charge for such payments in the income statement. Deferred tax
in respect of share based payments charged directly to the income statement is
also taken to the income statement but any excess tax relief over this amount is
taken directly to reserves.
continued...
-5-
4. Leases
Accounting Policy
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement evenly over the period of the lease, as an
integral part of the total lease expense.
Financial Effect
Under UK GAAP, the benefit of lease incentives received (in the form of rent
free periods) were spread over the period until the rent reverts to market
rates. Under IAS17 'Leases', the benefit must be spread over the entire lease
period. The effect is to reduce operating profit by £56,000 for the year ended
30 June 2005 (six months ended 31 December 2004 : £54,000). An amount of
£145,000 is carried forward at 30 June 2005 to be credited to the income
statement over future periods.
5. Revenue
Accounting Policy
Revenue from the sale of goods is recognised in the income statement when the
significant risks and rewards of ownership have been transferred to the buyer.
Appropriate provision is made, based on past experience, for the possible return
of goods and discounts given to customers.
Financial Effect
Under IAS18 'Revenue' certain items, such as the sale of trading data to
suppliers, have been reclassified to revenue.
For the year ended 30 June 2005, both revenue and cost of sales are increased by
£2,070,000 (six months ended 31 December 2004 : £1,000,000). There is no impact
on profit, earnings per share or net assets.
6. Intangible Fixed Assets
Accounting Policy
(i) Goodwill
All business combinations are accounted for by applying the purchase method.
Goodwill represents amounts arising on acquisition of subsidiaries, associates
and joint ventures. In respect of business acquisitions that have occurred since
1 July 2004, goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets acquired.
In respect of acquisitions prior to this date, goodwill is included on the basis
of its deemed cost, which represents the amount recorded under previous GAAP.
The classification and accounting treatment of business combinations that
occurred prior to 1 July 2004 has not been reconsidered in preparing the Group's
opening IFRS balance sheet at 1 July 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
no longer amortised but is allocated to cash generating units and is tested
annually for impairment.
continued...
-6-
(ii) Research and Development Costs
Expenditure on research activities, undertaken with the prospect of gaining new
scientific or technical knowledge and understanding, is recognised in the income
statement as an expense is incurred.
The Group is also engaged in development activity with a view to bringing new
pharmaceutical products to market. Costs of development are capitalised in the
balance sheet unless those costs cannot be measured reliably or it is not
probable that future economic benefits will flow to the Group, in which case the
relevant costs are expensed to the income statement as incurred. Due to the
strict regulatory process involved, there is inherent uncertainty as to the
technical feasibility of development projects often until regulatory approval is
achieved, with the possibility of failure even at a late stage. The Group
considers that this uncertainty means that the criteria for capitalisation are
not met unless it is probable that regulatory approval will be achieved and the
project is commercially viable.
Where development costs are capitalised, the expenditure includes the cost of
materials, direct labour and an appropriate proportion of overheads.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses.
(iii) Other Intangible Assets
Other intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and impairment losses.
(iv) Subsequent Expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when
it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is expensed as incurred.
(v) Amortisation
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Goodwill and intangible assets with an indefinite useful life are
systematically tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date that they are available for use.
The estimated useful lives are as follows:
software 5 years
capitalised development costs 5 - 10 years
patent rights Period of patent
marketing authorisations Indefinite life
product rights Period of product rights
Financial Effect
(i) Goodwill
Under UK GAAP, goodwill was amortised over its estimated useful life. Under
IFRS3 'Business Combinations', goodwill is not amortised but is subject to
annual impairment review. The financial effect is that goodwill on acquisitions
made up to 30 June 2004 is frozen at its 30 June 2004 level of £4,385,000.
Goodwill charged to the income statement for the year ended 30 June 2005 of
£564,000 (six months ended 31 December 2004 : £282,000) is added back to the
income statement and shareholders' funds.
continued...
-7-
(ii) Development Costs
Under UK GAAP the accounting policy of the Group was, in general, to write off
all development expenditure to the income statement as incurred. Under IAS38
'Intangible Assets', development costs must be capitalised provided they meet
the following criteria:
• the technical feasibility of completing the intangible asset is
established;
• there is an intention to complete or sell the asset;
• the Group has the ability to use or sell the asset;
• the asset will generate probable future economic benefits;
• the Group has available adequate technical, financial and other
resources to complete the development of the asset; and
• the expenditure attributable to the asset in the course of its
development can be measured reliably.
As part of its transitional work, the Group has reviewed all development
projects to determine whether the criteria in IAS 38 were met. A total of
£280,000 of expenditure incurred (less amortisation) in the year ended 30 June
2005 (six months ended 31 December 2004 : £130,000) has now been capitalised. A
total of £510,000 of development costs has been capitalised and is included in
the balance sheet at 30 June 2005 (31 December 2004 : £360,000) (1 July 2004 :
£230,000) as an intangible fixed asset.
(iii) Software Costs
Under IAS38, software costs are classed as intangible assets rather than
tangible assets. As at 30 June 2005, £255,000 of software costs have been
reclassified (31 December 2004: £203,000) (1 July 2004: £nil). There is no
impact on the income statement or net assets.
-8-
Consolidated Income Statement
For the Year Ended 30 June 2005
UK IFRS2 IAS17 IAS18 IFRS3 IAS38 IFRS
GAAP Share Lease Other Goodwill Development
IFRS Based Incentive Income Amortisation Costs
Format Payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 208,197 - - 2,070 - - 210,267
Cost of (178,480) - - (2,070) - - (180,550)
sales ---------------------------------------------------------------------------------
Gross 29,717 - - - - - 29,717
profit
Operating
expenses (19,305) 55 (56) - 564 280 (18,462)
---------------------------------------------------------------------------------
Operating 10,412 55 (56) - 564 280 11,255
profit
Finance 355 - - - - - 355
income
Finance (1,909) - - - - - (1,909)
expense ---------------------------------------------------------------------------------
Profit
before 8,858 55 (56) - 564 280 9,701
taxation
Income tax
expense (2,590) (17) 17 - - (84) (2,674)
---------------------------------------------------------------------------------
Profit
attributable 6,268 38 (39) - 564 196 7,027
to
equity
holders of
the parent
---------------------------------------------------------------------------------
Earnings per
share (pence)
Basic 12.28p 13.77p
------- -------
Diluted 12.08p 13.54p
------- -------
-9-
Consolidated Income Statement
For the Six Months Ended 31 December 2004
UK IFRS2 IAS17 IAS18 IFRS3 IAS38 IFRS
GAAP Share Lease Other Goodwill Development
IFRS Based Incentive Income Amortisation Costs
Format Payments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 103,263 - - 1,000 - - 104,263
Cost of (89,023) - - (1,000) - - (90,023)
sales --------------------------------------------------------------------------------
Gross 14,240 - - - - - 14,240
profit
Operating
expenses (9,097) 34 (54) - 282 130 (8,705)
--------------------------------------------------------------------------------
Operating 5,143 34 (54) - 282 130 5,535
profit
Finance 161 - - - - - 161
income
Finance (937) - - - - - (937)
expense
-------------------------------------------------------------------------------
Profit
before 4,367 34 (54) - 282 130 4,759
taxation
Income tax
expense (1,418) (10) 16 - - (39) (1,451)
-------------------------------------------------------------------------------
Profit
attributable 2,949 24 (38) - 282 91 3,308
to
equity
holders of
the parent
===============================================================================
Earnings per
share
(pence)
Basic 5.78p 6.49p
======== ========
Diluted 5.69p 6.38p
======== ========
-10-
Consolidated Balance Sheet
At 30 June 2005
UK IAS10 IAS12 IAS17 IFRS3 IAS38 IAS38 IFRS
GAAP Proposed Deferred Lease Goodwill Development Software
IFRS Dividend Tax Incentive Amortisation Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Assets
Intangible
assets
- goodwill 3,821 - - - 564 - - 4,385
- software - - - - - - 255 255
- other
intangibles 1,889 - - - - 510 - 2,399
Property,
plant & 5,201 - - - - - (255) 4,946
equipment
Deferred - - 406 - - - - 406
taxes
-----------------------------------------------------------------------------------------
Total
non-current 10,911 - 406 - 564 510 - 12,391
assets
-----------------------------------------------------------------------------------------
Current
Assets
Inventories 20,390 - - - - - - 20,390
Trade and
other 33,708 - - - - - - 33,708
receivables
Deferred 4 - (4) - - - - -
taxes ----------------------------------------------------------------------------------------
Cash and 13,924 - - - - - - 13,924
cash
equivalents
----------------------------------------------------------------------------------------
Total current
assets 68,026 - (4) - - - - 68,022
----------------------------------------------------------------------------------------
Total 78,937 - 402 - 564 510 - 80,413
assets
----------------------------------------------------------------------------------------
Current
Liabilities
Borrowings (1,502) - - - - - - (1,502)
Trade and
other (41,826) - - (145) - - - (41,971)
payables
Current tax
liabilities (2,057) - - - - - - (2,057)
Proposed
dividend (1,789) 1,789 - - - - - -
----------------------------------------------------------------------------------------
Total current
liabilities (47,174) 1,789 - (145) - - - (45,530)
----------------------------------------------------------------------------------------
-11-
UK IAS10 IAS12 IAS17 IFRS3 IAS38 IAS38 IFRS
GAAP Proposed Deferred Lease Goodwill Development Software
IFRS Dividend Tax Incentive Amortisation Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Liabilities
Borrowings (17,281) - - - - - - (17,281)
Provisions - - - - - - - -
Deferred - - - - - - - -
taxes
---------------------------------------------------------------------------------------------
Total
non-current (17,281) - - - - - - (17,281)
liabilities
=============================================================================================
Total
liabilities (64,455) 1,789 - (145) - - - (62,811)
=============================================================================================
Net assets 14,482 1,789 402 (145) 564 510 - 17,602
=============================================================================================
Equity
Issued share
capital 511 - - - - - - 511
Share premium
account 26,953 - - - - - - 26,953
Merger 1,720 - - - - - - 1,720
reserve
Retained
earnings (14,702) 1,789 402 (145) 564 510 - (11,582)
---------------------------------------------------------------------------------------------
Equity
holders 14,482 1,789 402 (145) 564 510 - 17,602
funds
attributable
to the
parent
=============================================================================================
-12-
Consolidated Balance Sheet
At 31 December 2004
UK IAS10 IAS12 IAS17 IFRS3 IAS38 IAS38 IFRS
GAAP Proposed Deferred Lease Goodwill Development Software
IFRS Dividend Tax Incentive Amortisation Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Assets
Intangible
assets
- goodwill 4,103 - - - 282 - - 4,385
- software - - - - - - 203 203
- other
intangibles 789 - - - - 360 - 1,149
Property,
plant & 5,276 - - - - - (203) 5,073
equipment
Deferred - - 155 - - - - 155
taxes ----------------------------------------------------------------------------------------
Total
non-current 10,168 - 155 - 282 360 - 10,965
assets
----------------------------------------------------------------------------------------
Current
Assets
Inventories 24,394 - - - - - - 24,394
Trade and
other 31,466 - - - - - - 31,466
receivables
Deferred - - - - - - - -
taxes
Cash and 6,224 - - - - - - 6,224
cash
equivalents
----------------------------------------------------------------------------------------
Total 62,084 - - - - - - 62,084
current
assets
----------------------------------------------------------------------------------------
Total 72,252 - 155 - 282 360 - 73,049
assets ----------------------------------------------------------------------------------------
Current
Liabilities
Borrowings (1,506) - - - - - - (1,506)
Trade and
other (37,726) - - (143) - - - (37,869)
payables
Current tax
liabilities (1,793) - - - - - - (1,793)
Proposed
dividend (867) 867 - - - - - -
-----------------------------------------------------------------------------------------
Total current
liabilities (41,892) 867 - (143) - - - (41,168)
-----------------------------------------------------------------------------------------
-13-
UK IAS10 IAS12 IAS17 IFRS3 IAS38 IAS38 IFRS
GAAP Proposed Deferred Lease Goodwill Development Software
IFRS Dividend Tax Incentive Amortisation Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Liabilities
Borrowings (17,903) - - - - - - (17,903)
Provisions - - - - - - - -
Deferred (174) - 174 - - - - -
taxes
---------------------------------------------------------------------------------------------
Total
non-current (18,077) - 174 - - - - (17,903)
liabilities
=============================================================================================
Total
liabilities (59,969) 867 174 (143) - - - (59,071)
=============================================================================================
Net assets 12,283 867 329 (143) 282 360 - 13,978
=============================================================================================
Equity
Called-up
share capital 510 - - - - - - 510
Share premium
account 26,828 - - - - - - 26,828
Merger 1,720 - - - - - - 1,720
reserve
Retained
earnings (16,775) 867 329 (143) 282 360 - (15,080)
---------------------------------------------------------------------------------------------
Equity
holders 12,283 867 329 (143) 282 360 - 13,978
funds
attributable
to the
parent
=============================================================================================
-14-
Opening Consolidated IFRS Balance Sheet
At 1 July 2004
UK IAS10 IAS12 IAS17 IAS38 IFRS
GAAP Proposed Deferred Lease Development
IFRS Dividend Tax Incentive Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Assets
Intangible
assets
- goodwill 4,385 - - - - 4,385
- software - - - - - -
- other 789 - - - 230 1,019
intangibles
Property,
plant & 5,224 - - - - 5,224
equipment
Deferred - - - - - -
taxes
---------------------------------------------------------------------
Total
non-current 10,398 - - - 230 10,628
assets ---------------------------------------------------------------------
Current
Assets
Inventories 16,979 - - - - 16,979
Trade and
other 32,889 - - - - 32,889
receivables
Deferred - - - - - -
taxes
Cash and cash - - - - - -
equivalents ---------------------------------------------------------------------
Total current
assets 49,868 - - - - 49,868
---------------------------------------------------------------------
Total 60,266 - - - 230 60,496
assets ---------------------------------------------------------------------
Current
Liabilities
Borrowings (5,347) - - - - (5,347)
Trade and
other (36,944) - - (89) - (37,033)
payables
Current tax
liabilities (1,275) - - - - (1,275)
Proposed (1,606) 1,606 - - - -
dividend
----------------------------------------------------------------------
Total current
liabilities (45,172) 1,606 - (89) - (43,655)
----------------------------------------------------------------------
-15-
UK IAS10 IAS12 IAS17 IAS38 IFRS
GAAP Proposed Deferred Lease Development
IFRS Dividend Tax Incentive Costs
Format
£'000 £'000 £'000 £'000 £'000 £'000
Non-Current
Liabilities
Borrowings (4,763) - - - - (4,763)
Provisions - - - - - -
Deferred (174) - 98 - - (76)
taxes
-----------------------------------------------------------------
Total
non-current (4,937) - 98 - - (4,839)
liabilities
-----------------------------------------------------------------
Total (50,109) 1,606 98 (89) - (48,494)
liabilities
=================================================================
Net assets 10,157 1,606 98 (89) 230 12,002
==================================================================
Equity
Called-up
share 510 - - - - 510
capital
Share premium
account 26,784 - - - - 26,784
Merger 1,720 - - - - 1,720
reserve
Retained (18,857) 1,606 98 (89) 230 (17,012)
earnings
------------------------------------------------------------------
Equity
holders
funds 10,157 1,606 98 (89) 230 12,002
attributable
to the parent
==================================================================
-16-
Consolidated Statement of Cash Flows Under IFRS
Year ended 30 June 2005
£'000
Cash flows from operating activities
Profit for the period 7,027
Adjustments for:
Depreciation 935
Amortisation 41
Gain on sale of property, plant and equipment (42)
Finance income (355)
Finance expense 1,909
Equity-settled share-based expenses 488
Income tax expense 2,674
---------
Operating profit before changes in working capital 12,677
Increase in inventories (3,411)
Increase in trade and other receivables (787)
Increase in trade and other payables 5,070
---------
Cash generated from operations 13,549
Interest paid (2,022)
Income taxes paid (1,996)
---------
Net cash from operating activities 9,531
Cash flows from investment activities
Proceeds from sale of property, plant and equipment 140
Interest received 355
Purchase of property, plant and equipment (644)
Capitalised development expenditure (321)
Purchase of other intangible fixed assets (1,100)
---------
Net cash from investing activities (1,570)
Cash flows from financing activities
Proceeds from the issue of share capital 138
New borrowings 13,160
Repayment of borrowings (1,538)
Dividends paid (2,473)
---------
Net cash from financing activities 9,287
Net increase in cash and cash equivalents 17,248
Cash and cash equivalents at start of period (3,324)
---------
Cash and cash equivalents at end of period 13,924
=========
Reconciliation of net cash to movement in net borrowings
Net increase in cash and cash equivalents 17,248
Repayment of borrowings 1,538
New borrowings (13,160)
New finance leases (438)
Other non-cash changes 63
---------
Movement in net borrowings in the period 5,251
Net borrowings at start of period (10,110)
---------
Net borrowings at end of period (4,859)
=========
-17-
Consolidated Statement of Changes in Shareholders' Equity
Year Ended 30 June 2005
Issued Share Merger Retained Total
Capital Premium Reserve Earnings
£'000 £'000 £'000 £'000 £'000
At 1 July 2004 under UK GAAP 510 26,784 1,720 (18,857) 10,157
Proposed dividend - - - 1,606 1,606
Deferred tax - - - 98 98
Lease incentive - - - (89) (89)
Development costs - - - 230 230
----------------------------------------------
At 1 July 2004 under IFRS 510 26,784 1,720 (17,012) 12,002
Profit for the year and total
recognised income and expense
for the year - - - 7,027 7,027
Dividends paid - - - (2,473) (2,473)
Share-based payments
including deferred tax taken
directly to equity - - - 876 876
Shares issued 1 169 - - 170
----------------------------------------------
At 30 June 2005 511 26,953 1,720 (11,582) 17,602
==============================================
Enquiries:
Simon Evans, Group Finance Director
Dechra(R) Pharmaceuticals PLC
Tel: 01782 771100
Mobile: 07775 642220
www.dechra.com
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