Adoption of IFRS
Ricardo PLC
21 December 2005
21 December 2005
Ricardo plc
Adoption of International Financial Reporting Standards ('IFRS')
SUMMARY
Ricardo plc, the leading UK independent automotive consultancy, has completed
its assessment of the impact of IFRS on the Group's reported financial
information. This document includes a commentary on the key issues and
appendices reconciling the UK GAAP and IFRS financial statements for the year
ended 30 June 2005 and the half year ended 31 December 2004.
Commenting on the changes, Andrew Goodburn, Finance Director said:
'The net effect of conversion to IFRS on the Group's reported profits after tax
for the year ended 30 June 2005 is minor. Under IFRS the amount of the deficit
on the Group's defined benefit pension scheme is very similar to the FRS17
deficit previously reported, but this is now included within the balance sheet
and therefore impacts Net Assets, and may cause some volatility in future
movements in reserves. Conversion to IFRS has no impact on Ricardo's operational
performance or ability to generate cash.'
The key impacts can be summarised as follows:
Year ended 30 June 2005 Net Assets
Profit after tax* Basic EPS at 30 June 2005
£m £m pence £m
Per UK GAAP 7.08 14.2 59.29
Impacts on profit before tax:
Pensions (0.13) (36.79)
Goodwill amortisation 1.00 1.00
Share Based Payments 0.04 0.02
Other impacts on profit
before tax (0.02) (0.09)
--------
0.89 1.7
Tax impact (0.81) (1.6) 10.16
Ordinary Dividends impact 3.15
----------------------------- ----------------
Per IFRS 7.16 14.3 36.74
----------------------------- ----------------
*attributable to equity shareholders
Further enquiries:
Ricardo plc
Andrew Goodburn, Finance Director Tel +44 (0)1273 455611
Gavin Anderson & Company
Charlotte Stone / Fergus Wylie Tel +44 (0)20 7554 1400
INTRODUCTION
As required by European Union law, the Group will prepare its financial
statements under International Financial Reporting Standards ('IFRS') with
effect from 1 July 2005. Previously the Group has applied United Kingdom
Generally Accepted Accounting Principles ('UK GAAP'). The first financial
statements that will be prepared for the Group under IFRS will be the interim
financial statements for the six months to 31 December 2005.
Standards currently in issue and adopted by the EU may be subject to change.
Additionally, IFRS is currently being applied in the UK and in a large number of
other countries almost simultaneously for the first time, and practice is
continuing to evolve. Therefore, at this preliminary stage, the full financial
effect of reporting under IFRS as it will be applied and reported on in the
Group's first IFRS financial statements for the six months ended 31 December
2005 and for the year ended 30 June 2006 may be subject to change.
During the assessment of the impact of IFRS on the Group and the preparation of
this press release the Group has worked closely with its auditors, but these
numbers are unaudited.
A copy of this document will be available from the company's website at
www.ricardo.com.
COMMENTARY ON THE KEY ISSUES
1 First-time Adoption of IFRS (IFRS 1)
IFRS 1 requires that IFRS is applied retrospectively to establish the Group's
balance sheet at the date of transition, 1 July 2004, unless a permitted
exemption is applied. Accordingly the Group has elected:
• to recognise in full all actuarial gains and losses relating to defined
benefit pension schemes both at 1 July 2004 and prospectively through the
statement of recognised income and expense,
• to deem cumulative translation differences for all foreign operations to
be zero as at 1 July 2004,
• not to apply IAS 32 Financial Instruments: Disclosure and Presentation
and IAS 39 Financial Instruments: Recognition and Measurement for the year
ended 30 June 2005, and to adopt these standards with effect from 1 July
2005,
• not to apply IFRS 2 Share-based Payments to share-based payments granted
before 7 November 2002, and
• not to apply IFRS 3 Business Combinations to business combinations that
occurred before 1 July 2004.
2 Employee Benefits (IAS 19)
Under UK GAAP, the Group accounted for its defined benefit pension scheme under
SSAP 24 Accounting for Pension Costs, and published the transitional disclosures
required under FRS 17 Retirement Benefits. Under SSAP 24, the cost of providing
the defined benefit pension was charged against operating profit. This included
the amortisation of the pension scheme surpluses and deficits over the remaining
service lives of participating employees.
IAS 19 covers all forms of employee benefits, in particular post retirement
benefits and defined benefit pension schemes. Under IAS 19, the defined benefit
pension scheme surplus or deficit is recognised as an asset or liability on the
balance sheet, together with the related deferred tax asset or liability. The
cost of providing pension benefits to employees relating to the current year's
service is included in the income statement in arriving at operating profit,
whilst the difference between the notional interest on scheme liabilities and
the expected return on scheme assets is included within finance costs. The Group
has elected to recognise the actuarial gains and losses in full in the period in
which they occur in the statement of recognised income and expense.
The impact of this on profit before tax for the year ended 30 June 2005 is a net
reduction of £0.13m, comprised of an increase in operating profit of £0.90m, and
an increase in finance costs of £1.03m. Net assets at 30 June 2005 are reduced
by £36.79m before the impact of deferred tax, and by £25.76m net of the deferred
tax impact. It should be noted that this is very similar to the impact that the
application of FRS 17 under UK GAAP would have had to the comparatives for the
year ended 30 June 2006 if the Group's accounts had remained under UK GAAP.
3 Intangible Assets (IAS 38)
(a) Goodwill
Under UK GAAP, goodwill arising on acquisition of businesses after 1 July 1998
was amortised on a straight line basis over its estimated useful life, which
varied between five and twenty years.
On transition to IFRS on 1 July 2004, amortisation ceased to be charged.
Instead, annual reviews of goodwill are performed to test for potential
impairment. Therefore, although it may be possible to carry goodwill for longer
than the normal maximum amortisation period of 20 years under UK GAAP, there is
the potential for increased volatility to be introduced to the income statement
by way of impairment charges if the forecast cash flows are not sufficient to
support the carrying value.
Impairment tests have been carried out for goodwill at 1 July 2004 and have
shown that there was no impairment.
The impact of this on profit before tax for the year ended 30 June 2005 and net
assets at 30 June is an increase of £1.00m, due to the reversal of the
amortisation charge. There is a deferred tax impact of £0.04m reducing profit
and net assets, for where UK corporation tax relief for amortisation of
purchased goodwill is obtained.
(b) Research and Development
Under UK GAAP, the Group's accounting policy was to write off expenditure on
research and development in the year in which it was incurred. Under IAS 38,
development costs must be capitalised as intangible assets if they satisfy
certain specified criteria.
Research and development, both internally and customer funded, is an integral
part of Ricardo's business. However, expenditure on research and development is
predominantly aimed either at under-pinning the Group's expertise or satisfying
a customer contract, rather than at launching new Ricardo products, and would
therefore not normally meet the criteria for capitalisation under IAS 38.
There is no impact of this on the Group's profit before tax for the year ended
30 June 2005 and net assets at 30 June, but the Group's accounting policies will
be changed to accommodate the possibility of some development costs being
capitalised under IAS 38 in the future.
4 Share-based Payments (IFRS 2)
Under UK GAAP, the Group accounted for its share incentive plans in accordance
with UITF 17. There was a charge to the profit and loss account in relation to
its Long Term Incentive Plan ('LTIP') to spread the estimated fair value of the
awards over the period to which the performance criteria related. There was no
charge to the profit and loss account in relation to either its executive share
option schemes or its savings related share option scheme.
IFRS 2 requires an expense to be recorded in the income statement for all forms
of share based payment granted after 7 November 2002 and not yet vested at 1
July 2005. The expense is based on the fair value of the award at the date the
award is granted, and detailed guidance is given on how fair values should be
calculated. The expense is spread over the period when the services are
received. Accordingly, the Group's executive share options and LTIPs awarded
after 7 November 2002 are now valued using appropriate valuation models and are
recorded in the income statement. No savings related share options have been
granted since 7 November 2002.
The net impact of these changes on profit before tax for the year ended 30 June
2005 is an increase of £0.04m.
5 Income Taxes (IAS 12)
Under UK GAAP, deferred tax had to be provided on timing differences except for
certain items, such as unrealised revaluations or rolled over gains, which were
not expected to reverse in the foreseeable future.
Under IAS 12, deferred tax has to be provided on all temporary differences
between the accounting and tax bases. Consequently deferred tax has been
provided on the IFRS adjustments affecting net assets, as those adjustments are
not expected to impact on the Group's corporation tax position for the year
ended 30 June 2005.
The impact of this on profit after tax for the year ended 30 June 2005 is a
decrease of £0.81m, principally due to provision for tax on the gain on an inter
group transfer of the ownership of the Group's main US subsidiary. The gain is
expected to be rolled over, but a deferred tax provision is nonetheless required
for this under IAS 12. The net impact on net assets at 30 June 2005 is an
increase of £10.16m, principally due to the deferred tax asset for the deficit
on the defined benefit pension scheme, partially offset by the deferred tax
provision on the rolled over gain.
6 Post Balance Sheet Events (IAS 10)
Under UK GAAP, proposed dividends were accrued by the Group in the accounting
period to which they related. Under IAS 10, dividends must be recognised in the
accounting period in which they are appropriately authorised and become no
longer at the discretion of the entity. Furthermore, dividends must be taken
directly to reserves rather than recognised within the income statement.
A provision for a final ordinary dividend of £3.15m was provided in the
financial statements for the year ended 30 June 2005 under UK GAAP. Under IFRS
this accrual has been reversed, resulting in an increase in net assets at 30
June 2005 of the same amount.
7 Financial Instruments: Recognition and Measurement (IAS 39)
IAS 39 will be adopted with effect from 1 July 2005, and therefore IAS 39 has no
impact on the Group's profit before tax for the year ended 30 June 2005 and net
assets at 30 June, however there are potential impacts going forwards.
(a) Net investment in overseas subsidiaries
The Group has foreign currency loans of €23m to hedge against the foreign
exchange currency risk relating to the Group's net investment in its German
operations. Hedge accounting will apply to this with effect from 4 October 2005,
and therefore from that date differences arising on the translation of these
foreign currency borrowings will be taken directly to reserves. No impact is
expected on profit before tax for the period between 1 July 2005 and 4 October
2005.
(b) Derivatives and hedge accounting
Under UK GAAP where foreign exchange forward contracts were taken out to
mitigate foreign exchange risks, these hedges were matched with the hedged
items, allowing open forward contracts not to be held at a value in the balance
sheet to the extent that they were hedges of future transactions such as
payments from customers for long term contracts priced in foreign currencies.
Under IAS 39, a similar accounting result can only be obtained if extensive
hedge accounting documentation requirements and effectiveness tests are met.
Open forward contracts must be accounted for at their fair market value at each
balance sheet date. To the extent that the hedge accounting requirements are
met, changes in the value of open forward contracts can be held in equity until
the hedged item is realised. If the documentation requirements are not met,
changes in the value of open forward contracts must be recognised in the Income
Statement.
The Group will continue to use foreign exchange forward contracts or other
financial derivatives as part of its risk management strategy. However it may
not be suitable for hedge accounting documentation to be put in place for all
such contracts, or the strict hedge accounting criteria may not be met. This may
lead to volatility in the Income Statement caused by gains or losses on a
hedging instrument being recorded in a different accounting period to the gain
or loss on the base transaction, the extent of which will not be known until the
exchange rates affecting the values of the items are known at the relevant
balance sheet date.
(c) Embedded Derivatives
Under IAS 39, where contracts are denominated in a currency other than the
functional currency of the customer or supplier, it is normally necessary to
treat the contract as having two separate elements: the 'host' contract which is
deemed to be in the currency of the customer or supplier, and the 'embedded
derivative' which introduces the third currency. If unrealised, the embedded
derivative must then be accounted for at its fair market value at each balance
sheet date, and changes in its value must be recognised in the Income Statement.
Depending on the contracts and exchange rates at future balance sheet dates,
this may also lead to volatility in the Income Statement.
8 Dividend Policy
It is expected that the Group's conversion to IFRS will have no impact on the
company's dividend policy.
OTHER ISSUES
Holiday accruals (Employee Benefits - IAS 19)
The Group has reviewed its compliance with IAS 19 with regard to holiday
accruals across the Group and as a result has increased its holiday accrual on
transition to IFRS at 1 July 2004 by £0.23m.
Software (Intangible Assets - IAS 38)
Under UK GAAP, the Group included purchased software within Tangible Fixed
Assets. Under IAS 38, software is included within the definition of intangible
assets. The impact of this is that a balance sheet re-classification is
required. There is no impact of this on the Group's profit before tax or net
assets.
Leases (IAS 17)
Under UK GAAP, the Group's operating lease incentives received were amortised
over the period from inception of the lease to the first open market rent
review. Under IAS 17, such lease incentives must be amortised over the whole of
the lease term. The impact of this on Profit before tax for the year ended 30
June 2005 is minimal at £0.01m. Net assets at 30 June 2005 are reduced by £0.10m
before considering the tax impact.
Borrowing Costs (IAS 23)
Under UK GAAP, the Group has treated dividends on preference shares of £0.01m as
an item not impacting on profit before tax. Under IAS 23 these will be treated
as finance costs.
Provisions (IAS 37)
Under UK GAAP, the Group has accounted for warranty provisions within creditors
falling due within one year due to their size. Under IAS 37 these will be
disclosed as short term provisions. The impact of this is that a balance sheet
re-classification is required.
Cash Flow Statements (IAS 7)
Under UK GAAP, the increase in cash in the year ended 30 June 2005 was £13.00m,
and an exchange loss on cash of £0.26m included in a reconciliation in the notes
to the accounts. Under IAS 7, the exchange loss will be included in the primary
cash flow statement. The other changes to the cash flow statement are layout
changes only. Therefore the net increase in cash and cash equivalents for the
year ended 30 June 2005 under IFRS was £12.74m. This is expected to be analysed
as follows:
£m
Net cash from operating activities 9.57
Net cash used in investing activities (6.10)
Net cash generated from financing activities 9.53
Effects of exchange rate changes (0.26)
------
Net increase in cash and cash equivalents 12.74
======
Half Year Results
This commentary where relevant refers to impacts on the Group's profit before
tax for the year ended 30 June 2005 and net assets at 30 June 2005. The key
issues which have an impact on the Group's profit before tax for the six months
ended 31 December 2004 and net assets at 31 December 2004 are the same, and the
detailed amounts are included in appendix II.
APPENDIX I: Reconciliations for the year ended 30 June 2005
Consolidated Income Statement for the year ended 30 June 2005
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 12 IAS 17 IAS 23 Restated
IFRS format Employee Intangible Share Based Income Leases Borrowing under IFRS
Benefits Assets Payments Taxes Costs
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Continuing
operations
Revenue 159,920 159,920
Cost of sales (113,241) (113,241)
-----------------------------------------------------------------------------------------
Gross profit 46,679 0 0 0 0 0 0 46,679
Administrative
expenses (38,536) 899 1,004 36 0 (14) (36,611)
-----------------------------------------------------------------------------------------
Profit from
operations 8,143 899 1,004 36 0 (14) 0 10,068
Finance costs (796) (1,029) (6) (1,831)
-----------------------------------------------------------------------------------------
Profit before
tax 7,347 (130) 1,004 36 0 (14) (6) 8,237
Tax (186) 39 (42) (11) (796) 4 (992)
-----------------------------------------------------------------------------------------
Profit for the
period 7,161 (91) 962 25 (796) (10) (6) 7,245
=========================================================================================
Profit attributable
to minority interest 82 82
Profit attributable
to equity
shareholders 7,079 (91) 962 25 (796) (10) (6) 7,163
-----------------------------------------------------------------------------------------
7,161 (91) 962 25 (796) (10) (6) 7,245
=========================================================================================
Consolidated Statement of Recognised Income and Expense for the year ended 30 June 2005
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 12 IAS 17 IAS 23 IAS 21 Restated
IFRS format Employee Intangible Share Income Leases Borrowing Exchange under IFRS
Benefits Assets Based Taxes Costs Rate
Payments Changes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Actuarial
gains/ (losses) (7,892) (7,892)
Net exchange
adjustments 171 (171) 0
Tax on items
taken directly 2,367 2,367
to equity
-----------------------------------------------------------------------------------------------
Net gains/ (losses)
not recognised in
the income
statement 171 (5,525) 0 0 0 0 0 (171) (5,525)
Profit for the
period attributable
to equity
shareholders 7,079 (91) 962 25 (796) (10) (6) 0 7,163
-----------------------------------------------------------------------------------------------
Total recognised
income and expense
for the year 7,250 (5,616) 962 25 (796) (10) (6) (171) 1,638
===============================================================================================
Consolidated Balance Sheet as at 1 July 2004
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 12 IAS 10 IAS 17 IAS 37 Restated
IFRS format Employee Intangible Share Based Income Dividends Leases Provisions under IFRS
Benefits Assets Payments Taxes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 16,161 (10) 16,151
Other
intangible assets 756 756
Property, plant
and equipment 50,944 (756) 50,188
Deferred tax
asset 9,924 9,924
-----------------------------------------------------------------------------------------------------
67,105 0 (10) 0 9,924 0 0 0 77,019
-----------------------------------------------------------------------------------------------------
Current assets
Inventories 6,285 6,285
Trade and other
receivables 34,057 (1,240) 32,817
Current tax
assets 2,468 2,468
Cash and cash
equivalents 11,119 11 11,130
-----------------------------------------------------------------------------------------------------
53,929 (1,240) 0 11 0 0 0 0 52,700
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total assets 121,034 (1,240) (10) 11 9,924 0 0 0 129,719
-----------------------------------------------------------------------------------------------------
Current liabilities
Trade and
other payables (33,040) (234) (81) 43 (33,312)
Tax liabilities (3,480) (3,480)
Bank overdrafts
and loans (16,588) (16,588)
Proposed final
dividend (3,139) 3,139 0
Provisions (43) (43)
-----------------------------------------------------------------------------------------------------
(56,247) (234) 0 0 0 3,139 (81) 0 (53,423)
-----------------------------------------------------------------------------------------------------
Net current assets/
(liabilities) (2,318) (1,474) 0 11 0 3,139 (81) 0 (723)
-----------------------------------------------------------------------------------------------------
Non-current liabilities
Bank loans (4,788) (4,788)
Retirement benefit
obligation (27,296) (27,296)
Deferred tax
liabilities (3,561) 8,631 (9,924) 24 (4,830)
Long term
provisions (282) (282)
-----------------------------------------------------------------------------------------------------
(8,631) (18,665) 0 0 (9,924) 0 24 0 (37,196)
-----------------------------------------------------------------------------------------------------
Total
liabilities (64,878) (18,899) 0 0 (9,924) 3,139 (57) 0 (90,619)
-----------------------------------------------------------------------------------------------------
NET ASSETS 56,156 (20,139) (10) 11 0 3,139 (57) 0 39,100
====================================================================================================
EQUITY
Share capital 12,474 12,474
Share premium
account 12,076 12,076
Capital redemption
reserve 40 40
Merger reserve 967 967
Other 11 11
Retained earnings 30,106 (20,139) (10) 0 3,139 (57) 13,039
-----------------------------------------------------------------------------------------------------
Equity attributable
to shareholders
of Ricardo plc 55,663 (20,139) (10) 11 0 3,139 (57) 0 38,607
Minority interest
in Equity 493 493
-----------------------------------------------------------------------------------------------------
Total equity 56,156 (20,139) (10) 11 0 3,139 (57) 0 39,100
====================================================================================================
Consolidated Balance Sheet as at 30 June 2005
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 12 IAS 10 IAS 17 IAS 37 IAS 21 Restated
IFRS format Employee Intangible Share-based Income Dividends Leases Provisions Exchange under IFRS
Benefits Assets Payments Taxes Rate
Changes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 14,643 994 15,637
Other intangible
assets 1,126 1,126
Property, plant
and equipment 47,872 (1,126) 46,746
Deferred tax
asset 11,268 11,268
-----------------------------------------------------------------------------------------------------
62,515 0 994 0 11,268 0 0 0 0 74,777
-----------------------------------------------------------------------------------------------------
Current assets
Inventories 6,918 6,918
Trade and other
receivables 43,138 43,138
SSAP24 debtor 1,848 (1,848) 0
Current tax
assets 1,603 1,603
Cash and cash
equivalents 8,807 8 8,815
-----------------------------------------------------------------------------------------------------
62,314 (1,848) 0 8 0 0 0 0 0 60,474
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total assets 124,829 (1,848) 994 8 11,268 0 0 0 0 135,251
-----------------------------------------------------------------------------------------------------
Current liabilities
Bank overdrafts
and loans (1,536) (1,536)
Trade and
other payables (35,513) (234) 14 (95) 356 (35,472)
Tax liabilities (4,866) (4,866)
Short-term
provisions (35) (35)
Proposed final
dividend (3,151) 3,151 0
Provisions (356) (356)
-----------------------------------------------------------------------------------------------------
(45,066) (234) 0 14 0 3,151 (95) (35) 0 (42,265)
-----------------------------------------------------------------------------------------------------
Net current
assets 17,248 (2,082) 0 22 0 3,151 (95) (35) 0 18,209
-----------------------------------------------------------------------------------------------------
Non-current liabilities
Bank loans (18,531) (18,531)
Deferred
consideration (124) (124)
Retirement
benefit
obligation (34,710) (34,710)
Deferred tax
liabilities (1,780) 11,037 (42) (11) (12,064) 28 (51) (2,883)
Long term
provisions (35) 35 0
----------------------------------------------------------------------------------------------------------
(20,470) (23,673) (42) (11) (12,064) 0 28 35 (51) (56,248)
----------------------------------------------------------------------------------------------------------
Total
liabilities (65,536) (23,907) (42) 3 (12,064) 3,151 (67) 0 (51) (98,513)
----------------------------------------------------------------------------------------------------------
NET ASSETS 59,293 (25,755) 952 11 (796) 3,151 (67) 0 (51) 36,738
==========================================================================================================
EQUITY
Share capital 12,504 12,504
Share premium
account 12,201 12,201
Capital
redemption
reserve 40 40
LTIP reserve 143 (22) 121
Merger reserve 967 967
Translation
reserve 120 120
Other 8 8
Retained
earnings 32,944 (25,755) 952 25 (796) 3,151 (67) (171) 10,283
----------------------------------------------------------------------------------------------------------
Equity
attributable to
shareholders
of Ricardo plc 58,799 (25,755) 952 11 (796) 3,151 (67) 0 (51) 36,244
Minority
interest in
Equity 494 494
----------------------------------------------------------------------------------------------------------
Total equity 59,293 (25,755) 952 11 (796) 3,151 (67) 0 (51) 36,738
==========================================================================================================
APPENDIX II: Reconciliations for the six months ended 31 December 2004
Consolidated Income Statement for the six months ended 31 December 2004
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 17 IAS 23 Restated
IFRS format Employee Intangible Share Based Leases Borrowing under IFRS
Benefits Assets Payments Costs
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Continuing
operations
Revenue 72,584 72,584
Cost of sales (50,520) (50,520)
---------------------------------------------------------------------------------
Gross profit 22,064 0 0 0 0 0 22,064
Administrative
expenses (19,160) 408 502 187 (7) (18,070)
---------------------------------------------------------------------------------
Profit from
operations 2,904 408 502 187 (7) 0 3,994
Finance costs (447) (514) (3) (964)
---------------------------------------------------------------------------------
Profit before tax 2,457 (106) 502 187 (7) (3) 3,030
Tax (183) 32 (21) (56) 2 (226)
---------------------------------------------------------------------------------
Profit for the
period 2,274 (74) 481 131 (5) (3) 2,804
=================================================================================
Profit attributable
to minority interest 25 25
Profit attributable
to equity
shareholders 2,249 (74) 481 131 (5) (3) 2,779
---------------------------------------------------------------------------------
2,274 (74) 481 131 (5) (3) 2,804
=================================================================================
Consolidated Statement of Recognised Income and Expense for the six months ended 31 December 2004
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 17 IAS 23 IAS 21 Restated
IFRS format Employee Intangible Share Based Leases Borrowing Exchange under IFRS
Benefits Assets Payments Costs Rate Changes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Actuarial gains/
(losses) (4,977) (4,977)
Net exchange
adjustments (683) 683 0
Tax on items
taken directly 1,493 1,493
to equity
--------------------------------------------------------------------------------------------
Net gains/ (losses)
not recognised
in the income
statement (683) (3,484) 0 0 0 0 683 (3,484)
Profit for the
period attributable
to equity
shareholders 2,249 (74) 481 131 (5) (3) 0 2,779
--------------------------------------------------------------------------------------------
Total recognised
income and expense
for the year 1,566 (3,558) 481 131 (5) (3) 683 (705)
============================================================================================
Consolidated Balance Sheet at 31 December 2004
UK GAAP in IAS 19 IAS 38 IFRS 2 IAS 10 IAS 17 IAS 37 IAS 21 Restated
IFRS format Employee Intangible Share-based Dividends Leases Provisions Exchange under IFRS
Benefits Assets Payments Rate
Changes
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current assets
Goodwill 16,365 492 16,857
Other intangible
assets 699 699
Property, plant
and equipment 48,995 (699) 48,296
Deferred tax
asset 9,623 205 9,828
------------------------------------------------------------------------------------------------
65,360 9,623 492 0 0 0 0 205 75,680
------------------------------------------------------------------------------------------------
Current assets
Inventories 7,786 7,786
Trade and other
receivables 39,031 39,031
SSAP24 debtor 1,544 (1,544) 0
Current tax
assets 2,060 2,060
Cash and cash
equivalents 6,352 11 6,363
------------------------------------------------------------------------------------------------
56,773 (1,544) 0 11 0 0 0 0 55,240
------------------------------------------------------------------------------------------------
Total assets 122,133 8,079 492 11 0 0 0 205 130,920
------------------------------------------------------------------------------------------------
Current liabilities
Bank overdrafts and
loans (19,235) (19,235)
Trade and
other payables (34,478) (234) 31 (88) 221 (34,548)
Tax liabilities (3,777) (3,777)
Proposed final
dividend (1,354) 1,354 0
Provisions (221) (221)
------------------------------------------------------------------------------------------------
(58,844) (234) 0 31 1,354 (88) 0 0 (57,781)
------------------------------------------------------------------------------------------------
Net current
assets (2,071) (1,778) 0 42 1,354 (88) 0 0 (2,541)
------------------------------------------------------------------------------------------------
Non-current liabilities
Bank loans (2,903) (2,903)
Retirement benefit
obligation (32,075) (32,075)
Deferred tax
liabilities (3,180) 533 (21) (56) 26 (2,698)
Long term
provisions (660) (660)
------------------------------------------------------------------------------------------------
(6,743) (31,542) (21) (56) 0 26 0 0 (38,336)
Total
liabilities (65,587) (31,776) (21) (25) 1,354 (62) 0 0 (96,117)
------------------------------------------------------------------------------------------------
NET ASSETS 56,546 (23,697) 471 (14) 1,354 (62) 0 205 34,803
================================================================================================
EQUITY
Share capital 12,477 12,477
Share premium
account 12,085 12,085
Capital redemption
reserve 40 40
LTIP reserve 165 (156) 9
Merger reserve 967 967
Translation
reserve (478) (478)
Other 11 11
Retained earnings 30,315 (23,697) 471 131 1,354 (62) 683 9,195
------------------------------------------------------------------------------------------------
Equity
attributable to
shareholders
of Ricardo plc 56,049 (23,697) 471 (14) 1,354 (62) 0 205 34,306
Minority interest
in Equity 497 497
------------------------------------------------------------------------------------------------
Total equity 56,546 (23,697) 471 (14) 1,354 (62) 0 205 34,803
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