Interim Results

Smart(J.)&Co(Contractors) PLC 24 April 2006 J SMART & CO. (CONTRACTORS) PLC INTERIM REPORT 6 MONTHS TO 31 JANUARY 2006 CHAIRMAN'S REVIEW INTERIM REPORT Unaudited Group profits for the six months to 31st January 2006 amounted to Â£3,026,000 compared with profits of Â£2,446,000 for the corresponding period last year. Turnover increased by 23%. The improvements in turnover and profit figures are due in the main to increased contracting activity. The Board anticipates that turnover for the full year will again be more than last year. Private house sales are down again and apart from phase three of our joint venture development with EDI at Livingston referred to in the last annual report, no industrial or commercial developments were commenced in the half year under review. We are now required to adopt International Financial Reporting Standards which oblige us to take account of, inter alia, unrealised profits in revalued property, the deficit in pensions obligations and deferred tax. Consequently, the restated Consolidated Income Statement (formerly Profit and Loss Account) for the year ended 31st July 2005 shows a substantially increased profit and the Consolidated Balance Sheet shows a substantial reduction. The notes on page 7 refer. INTERIM DIVIDEND The Board announces an interim dividend of 3.00p per share (2005, 2.90p) to be paid on 10th July 2006 to shareholders on the register at the close of business on 16th June 2006. After waivers by members holding approximately 51% of the shares the interim dividend will cost the Company Â£148,000. FUTURE PROSPECTS The amount of work in hand in contracting is less than at this time last year and at the end of last year. Private house sales for the full year should be similar to last year. We will commence an internal modernisation and refurbishment of our large office property at Links Place, Leith before the end of this financial year. We also anticipate starting three commercial and industrial new build developments this calendar year. I expect profit for the second half of the year to be not less than the profit for the first half subject to the effect of property revaluation and unforeseen or exceptional circumstances. 24th April 2006 J.M. SMART Chairman CONSOLIDATED INCOME STATEMENT Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes Â£000 Â£000 Â£000 Revenue 12,843 10,403 22,180 Own work capitalised 49 18 20 --------------- --------------- --------------- 12,892 10,421 22,200 Cost of sales (10,771) (8,636) (11,670) --------------- --------------- --------------- Gross Profit 2,121 1,785 10,530 Other operating income 3,103 2,992 6,065 Net operating expenses (2,569) (2,541) (11,403) --------------- --------------- --------------- Operating Profit before net revaluation gains on investment properties 2,655 2,236 5,192 Net gain on valuation of investment properties - - 10,036 --------------- --------------- --------------- Operating Profit 2,655 2,236 15,228 Share of profits in Joint Ventures 206 197 848 Income from investments 27 18 49 Decrease in amount written off investments 21 41 40 Finance income 182 37 131 Finance costs (65) (83) (305) --------------- --------------- --------------- Profit on ordinary activities before tax 3,026 2,446 15,991 Tax on profit on ordinary activities 5 (908) (734) (4,277) --------------- --------------- --------------- Profit attributable to equity shareholders 2,118 1,712 11,714 =============== =============== =============== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes Â£000 Â£000 Â£000 Actuarial loss recognised on defined benefit pension schemes - - (1,035) Deferred taxation on actuarial loss - - 310 --------------- --------------- --------------- Net deficit recognised directly in equity - - (725) Profit for the period 2,118 1,712 11,714 --------------- --------------- --------------- Total recognised income and expense for the period 2,118 1,712 10,989 =============== =============== =============== Attributable to equity shareholders 2,118 1,712 10,989 =============== =============== =============== STATEMENT OF CHANGES IN EQUITY Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes Â£000 Â£000 Â£000 Total recognised income and expense for the period 2,118 1,712 10,989 Dividends 6 (468) (450) (593) --------------- --------------- --------------- 1,650 1,262 10,396 Opening shareholders' funds 74,597 64,201 64,201 --------------- --------------- --------------- Closing shareholders' funds 76,247 65,463 74,597 =============== =============== =============== CONSOLIDATED BALANCE SHEET Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.0 5ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Â£000 Â£000 Â£000 Non-current assets Property, plant and equipment 1,564 1,492 1,428 Investment properties 73,825 65,996 75,985 Investments in Joint Ventures 3,317 2,626 3,172 Other receivables 2,056 1,656 1,656 --------------- --------------- --------------- 80,762 71,770 82,241 --------------- --------------- --------------- Current assets Inventories 4,758 3,673 4,924 Other investments 1,039 1,098 1,038 Trade and other receivables 3,401 2,905 2,766 Cash and bank 5,039 674 2,014 --------------- --------------- --------------- 14,237 8,350 10,742 --------------- --------------- --------------- Total Assets 94,999 80,120 92,983 =============== =============== =============== Non-current liabilities Retirement benefit obligations 7,028 6,049 7,028 Deferred tax liabilities 6,768 4,257 6,768 --------------- --------------- --------------- 13,796 10,306 13,796 --------------- --------------- --------------- Current liabilities Trade and other payables 3,965 3,617 3,917 Current tax 991 734 673 --------------- --------------- --------------- 4,956 4,351 4,590 --------------- --------------- --------------- Total Liabilities 18,752 14,657 18,386 =============== =============== =============== Net Assets 76,247 65,463 74,597 =============== =============== =============== Equity Called up share capital 1,008 1,008 1,008 Retained earnings 75,239 64,455 73,589 --------------- --------------- --------------- Total Equity 76,247 65,463 74,597 =============== =============== =============== CONSOLIDATED CASH FLOW STATEMENT Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes Â£000 Â£000 Â£000 Cash flows from operating activities 8 2,040 1,850 4,147 Tax paid on profits (590) (577) (1,299) --------------- --------------- --------------- Net cash flow from operating activities 1,450 1,273 2,848 --------------- --------------- --------------- Cash flows from investing activities Purchase of property, plant and equipment (348) (171) (385) Purchase of investment properties (21) (243) (308) Sale of property, plant and equipment 19 39 69 Sale of investment properties 2,443 218 386 Expenditure on own work capitalised (49) (18) (20) Interest received - 8 5 Interest paid (1) (32) (38) --------------- --------------- --------------- Net cash used in investing activities 2,043 (199) (291) --------------- --------------- --------------- Cash flows from financing activities Dividends paid (468) (450) (593) --------------- --------------- --------------- Net cash used in financing activities (468) (450) (593) --------------- --------------- --------------- Increase in cash, cash equivalents and bank 3,025 624 1,964 --------------- --------------- --------------- Cash, cash equivalents and bank at beginning of period 2,014 50 50 --------------- --------------- --------------- Cash, cash equivalents and bank at end of period 5,039 674 2,014 =============== =============== =============== NOTES TO INTERIM FINANCIAL STATEMENTS 1. Basis of preparation These interim financial statements do not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The figures for the year to 31 July 2005 have been derived from the published statutory accounts as amended by the IFRS adjustments as set out in note 9. The statutory accounts for 2005, which were prepared under UK GAAP and upon which the auditors issued an unqualified audit report, have been delivered to the Registrar of Companies. These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting and are covered by International Financial Reporting Standard (IFRS) 1, First-time Adoption of IFRS, because the period of these financial statements is within the group's first IFRS financial statements for the year ended 31 July 2006. 2. Accounting policies The accounting policies set out below have been consistently applied to all periods presented in these interim financial statements. Consolidated financial statements of the group until 31 July 2005 have been prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP). UK GAAP differs in certain respects from IFRS. When preparing the consolidated interim financial statements for 2006, management has amended certain accounting and valuation methods applied in the UK GAAP financial statements to comply with IFRS. There have been no other changes to accounting policies from those stated in the group's 2005 annual consolidated financial statements. The comparative figures in respect of the interim period ended 31 January 2005 and the year ended 31 July 2005 have been restated to reflect these adjustments. Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS on the group's equity and its net income are given in note 9. The group has recognised actuarial gains and losses in full for the year in which they occur in the Consolidated Statement of Recognised Income and Expense in accordance with the proposed amendment to IAS 19. The group has assumed that the European Commission will endorse the amendment to IAS 19 Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures. For the interim accounts the assets and liabilities of the pension scheme are estimated to be unchanged from the values included at the previous year end. In accordance with long standing practice, the group's investment properties are revalued annually on 31 July each year. No revaluation adjustment is made in the interim financial statements. 3. Adoption of new and revised International Financial Reporting Standards EU law (IAS Regulation EC 1606/2002) requires that the group's annual consolidated financial statements for the year to 31 July 2006 be prepared in accordance with IFRS adopted for use in the EU. This financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority. In preparing this financial information management has used its best knowledge of the expected standards and interpretations, facts and circumstances, and accounting policies that will be applied when the group prepares its first set of financial statements in accordance with IFRSs as adopted for use in the EU as at 31 July 2006. However, additional standards and interpretations or amendments to existing standards and interpretations that will be applicable, on a mandatory or optional basis, at 31 July 2006 are not known with certainty at the time of preparing these interim financial statements. Accordingly the restated financial information for the year to 31 July 2005 presented herein, which has not been audited, may differ from the financial information presented as comparative figures with the 2006 final audited financial statements. 4. Segmental information The group's primary basis of segmentation is by activities. All of the group's activities are undertaken within the UK. Total Revenue Inter segment External Profit attributable to equity shareholders Revenue Revenue Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 31 January 2006 Construction activities 12,892 49 12,843 484 - - Investment activities 3,103 - 3,103 2,171 - - Joint - - - 206 - - Ventures --------------- --------------- --------------- --------------- --------------- --------------- 15,995 49 15,946 2,861 - - --------------- --------------- --------------- --------------- --------------- --------------- 31 January 2005 Construction activities 10,421 18 10,403 - 76 - Investment activities 2,992 - 2,992 - 2,160 - Joint - - - - 197 - Ventures --------------- --------------- --------------- --------------- --------------- --------------- 13,413 18 13,395 - 2,433 - --------------- --------------- --------------- --------------- --------------- --------------- 31 July 2005 Construction activities 22,200 20 22,180 - - 870 Investment activities 6,065 - 6,065 - - 14,358 Joint - - - - - 848 Ventures --------------- --------------- --------------- --------------- --------------- --------------- 28,265 20 28,245 - - 16,076 --------------- --------------- --------------- --------------- --------------- --------------- Result 2,861 2,433 16,076 Finance income 230 96 220 Finance cost (65) (83) (305) --------------- --------------- --------------- Profit on Ordinary Activities before tax 3,026 2,446 15,991 Tax on Profit on Ordinary (908) (734) (4,277) Activities --------------- --------------- --------------- Profit attributable to equity shareholders 2,118 1,712 11,714 =============== =============== =============== 5. Taxation The tax charge for the 6 months to 31 January 2006 is based on the corporation tax rate at 30% (2005 - 30%). 6. Dividends Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 Â£000 Â£000 Â£000 Ordinary dividends 2005 Final dividend declared of 9.50p per share 468 - - 2005 Interim dividend declared of 2.90p per share - - 143 2004 Final dividend of 9.15p per share - 450 450 --------------- --------------- --------------- 468 450 593 =============== =============== =============== Certain shareholders holding approximately 51% of the shares have waived their rights to the interim and final dividends paid for the years to 31 July 2004 and 31 July 2005. The interim dividend of 3.00p per share for the year to 31 July 2006 will be paid on 10 July 2006 to shareholders on the register at 16 June 2006. After waivers by members holding approximately 51% of the shares the interim dividend will cost the company Â£148,000. 7. Earnings per share Profit Basic Earnings attributable to equity shareholders Per share Â£000 6 months to 31 January 2006 2,118 21.01p =============== =============== 6 months to 31 January 2005 1,712 16.98p =============== =============== Year to 31 July 2005 11,714 116.19p =============== =============== Basic earnings per share are calculated by dividing the profit attributable to equity shareholders by the number of ordinary shares in issue during the period. There is no difference between basic and diluted earnings per share. 8. Reconciliation of operating profit to cash flows from operating activities Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 Â£000 Â£000 Â£000 Profit before tax 3,026 2,446 15,991 Share of profits from Joint Ventures (206) (197) (848) Depreciation 200 179 434 Unrealised revaluation gains on investment properties - - (10,036) Gain on sale of property, plant and equipment (6) (16) (23) Gain on sale of investment properties (213) (77) (131) (Gain)/Loss on sale of investments (54) 4 (22) Amounts written back to investments (21) (41) (40) Change in retirement benefits - - (56) Interest received - (8) (5) Interest received by Joint Ventures (3) (1) (3) Interest paid 1 32 38 Interest paid by Joint Ventures 65 51 99 Proceeds of sale of investments 194 28 114 Purchase of investments (120) (250) (250) Change in inventories 166 892 (359) Change in receivables - current (635) (829) (690) Change in receivables - non current (400) (176) (176) Change in payables 46 (187) 110 --------------- --------------- --------------- Net cash generated from operations 2,040 1,850 4,147 =============== =============== =============== 9. Reconciliation of UK GAAP to IFRS Reconciliation of Income Statement - 6 months to 31 January 2005 UK GAAP Effect of IFRS transition to IFRS Notes Â£000 Â£000 Â£000 Revenue 10,403 - 10,403 Own work capitalised 18 - 18 --------------- --------------- --------------- 10,421 - 10,421 Cost of sales (8,636) - (8,636) --------------- --------------- --------------- Gross Profit 1,785 - 1,785 Other operating income 2,992 - 2,992 Net operating expenses 9(c) (2,541) - (2,541) --------------- --------------- --------------- Operating Profit before net revaluation gains on investment properties 2,236 - 2,236 Net gain on valuation of 9(e) - - - investment properties --------------- --------------- --------------- Operating Profit 2,236 - 2,236 Share of profits in Joint Ventures 9(e) 197 - 197 Income from investments 18 - 18 Decrease in amount written off investments 41 - 41 Finance income 37 - 37 Finance costs 9(c) (83) - (83) --------------- --------------- --------------- Profit on ordinary activities before tax 2,446 - 2,446 Tax on profit on ordinary activities 9(b)(c) (734) - (734) --------------- --------------- --------------- Profit attributable to equity shareholders 1,712 - 1,712 =============== =============== =============== Reconciliation of Income Statement - Year to 31 July 2005 UK GAAP Effect of IFRS transition to IFRS Notes Â£000 Â£000 Â£000 Revenue 22,180 - 22,180 Own work capitalised 20 - 20 --------------- --------------- --------------- 22,200 - 22,200 Cost of sales (11,670) - (11,670) --------------- --------------- --------------- Gross Profit 10,530 - 10,530 Other operating income 6,065 - 6,065 Net operating expenses 9(c) (11,627) 224 (11,403) --------------- --------------- --------------- Operating Profit before net revaluation gains on investment properties 4,968 224 5,192 Net gain on valuation of investment properties 9(e) - 10,036 10,036 --------------- --------------- --------------- Operating Profit 4,968 10,260 15,228 Share of profits in Joint Ventures 9(e) 407 441 848 Income from investments 49 - 49 Decrease in amount written off investments 40 - 40 Finance income 131 - 131 Finance costs 9(c) (137) (168) (305) --------------- --------------- --------------- Profit on ordinary activities before tax 5,458 10,533 15,991 Tax on profit on ordinary activities 9(b)(c) (1,449) (2,828) (4,277) --------------- --------------- --------------- Profit attributable to equity shareholders 4,009 7,705 11,714 =============== =============== =============== Reconciliation of equity at 31 January 2005 UK GAAP Effect of IFRS transition to IFRS Notes Â£000 Â£000 Â£000 Non-current assets Intangible assets 1 (1) - Property, plant and equipment 1,492 - 1,492 Investment properties 65,996 - 65,996 Investments in Joint Ventures 2,626 - 2,626 Other receivables 9(f) - 1,656 1,656 --------------- --------------- --------------- 70,115 1,655 71,770 --------------- --------------- --------------- Current assets Inventories 3,673 - 3,673 Other investments 1,098 - 1,098 Trade and other receivables 9(f) 4,560 (1,655) 2,905 Cash and bank 674 - 674 --------------- --------------- --------------- 10,005 (1,655) 8,350 --------------- --------------- --------------- Total Assets 80,120 - 80,120 =============== =============== =============== Non-current liabilities Retirement benefit obligations 9(c) - 6,049 6,049 Deferred tax liabilities 9(b)(c) 148 4,109 4,257 --------------- --------------- --------------- 148 10,158 10,306 --------------- --------------- --------------- Current liabilities Trade and other payables 9(a) 3,760 (143) 3,617 Current tax 734 - 734 --------------- --------------- --------------- 4,494 (143) 4,351 --------------- --------------- --------------- Total Liabilities 4,642 10,015 14,657 =============== =============== =============== Net Assets 75,478 (10,015) 65,463 =============== =============== =============== Equity Called up share capital 1,008 - 1,008 Revaluation reserve 9(e) 26,751 (26,751) - Retained earnings 47,719 16,736 64,455 --------------- --------------- --------------- Total Equity 75,478 (10,015) 65,463 =============== =============== =============== Reconciliation of equity at 31 July 2005 UK GAAP Effect of IFRS transition to IFRS Notes Â£000 Â£000 Â£000 Non-current assets Intangible assets 1 (1) - Property, plant and equipment 1,428 - 1,428 Investment properties 75,985 - 75,985 Investments in Joint Ventures 3,172 - 3,172 Other receivables 9(f) - 1,656 1,656 --------------- --------------- --------------- 80,586 1,655 82,241 --------------- --------------- --------------- Current assets Inventories 4,924 - 4,924 Other investments 1,038 - 1,038 Trade and other receivables 9(f) 4,421 (1,655) 2,766 Cash and bank 2,014 - 2,014 --------------- --------------- --------------- 12,397 (1,655) 10,742 --------------- --------------- --------------- Total Assets 92,983 - 92,983 =============== =============== =============== Non-current liabilities Retirement benefit obligations 9(c) - 7,028 7,028 Deferred tax liabilities 9(b)(c) 141 6,627 6,768 --------------- --------------- --------------- 141 13,655 13,796 --------------- --------------- --------------- Current liabilities Trade and other payables 9(a) 4,385 (468) 3,917 Current tax 673 - 673 --------------- --------------- --------------- 5,058 (468) 4,590 --------------- --------------- --------------- Total Liabilities 5,199 13,187 18,386 =============== =============== =============== Net Assets 87,784 (13,187) 74,597 =============== =============== =============== Equity Called up share capital 1,008 - 1,008 Revaluation reserve 9(e) 37,157 (37,157) - Retained earnings 49,619 23,970 73,589 --------------- --------------- --------------- Total Equity 87,784 (13,187) 74,597 =============== =============== =============== Reconciliation of equity at 1 August 2004 UK GAAP Effect of IFRS transition to IFRS Notes Â£000 Â£000 Â£000 Non-current assets Intangible assets 1 (1) - Property, plant and equipment 1,522 - 1,522 Investment properties 65,877 - 65,877 Investments in Joint Ventures 2,478 - 2,478 Other receivables 9(f) - 1,480 1,480 --------------- --------------- --------------- 69,878 1,479 71,357 --------------- --------------- --------------- Current assets Inventories 4,565 - 4,565 Other investments 840 - 840 Trade and other receivables 9(f) 3,555 (1,479) 2,076 Cash and bank 50 - 50 --------------- --------------- --------------- 9,010 (1,479) 7,531 --------------- --------------- --------------- Total Assets 78,888 - 78,888 =============== =============== =============== Non-current liabilities Retirement benefit obligations 9(c) - 6,049 6,049 Deferred tax liabilities 9(b)(c) 148 4,109 4,257 --------------- --------------- --------------- 148 10,158 10,306 --------------- --------------- --------------- Current liabilities Trade and other payables 9(a) 4,255 (450) 3,805 Current tax 576 - 576 --------------- --------------- --------------- 4,831 (450) 4,381 --------------- --------------- --------------- Total Liabilities 4,979 9,708 14,687 =============== =============== =============== Net Assets 73,909 (9,708) 64,201 =============== =============== =============== Equity Called up share capital 1,008 - 1,008 Revaluation reserves 9(e) 26,751 (26,751) - Retained earnings 46,150 17,043 63,193 --------------- --------------- --------------- Total Equity 73,909 (9,708) 64,201 =============== =============== =============== Notes to the Reconciliations from UK GAAP to IFRS a) IAS 10 - Events after the Balance Sheet Date Under UK GAAP proposed dividends were accrued into the accounts for the period to which they related. Under IFRS the proposed dividend can only be accounted for when it has been declared and approved at the Annual General Meeting. Thus the proposed dividend at the end of each financial period has been derecognised, which has resulted in a decrease in Trade and other payables and an increase in Retained earnings. Interim dividends are recognised when paid. As at 31 As at 31 As at 1 August January 2005 2004 July 2005 Â£000 Â£000 Â£000 Decrease in Trade and other payables 468 143 450 =============== =============== =============== Increase in Retained earnings 468 143 450 =============== =============== =============== Additionally IFRS requires dividends to be presented differently from UK GAAP. Under IFRS dividends are not considered to be an expense and therefore are not included in the Income Statement, but charged against Retained earnings. b) IAS 12 - Income Tax Under UK GAAP the contingent capital gains tax that would be payable if all investment properties were sold at their valuation on the Balance Sheet date was disclosed as a note to the accounts but not recognised in the Balance Sheet. Under IFRS a provision for the deferred tax liability based on the tax which may arise on the sale of the investment properties is recognised in the Balance Sheet and movements from year to year are recognised in the tax charge in the Income Statement. Under UK GAAP deferred tax is calculated by reference to temporary timing differences arising on the Income Statement. Under IFRS a Balance Sheet approach is adopted by applying the appropriate tax rate to the temporary differences arising between the carrying values of assets and liabilities and their tax base. The effect on the Balance Sheet of applying IAS 12 is:- As at 31 As at 31 As at 1 August January 2005 2004 July 2005 Â£000 Â£000 Â£000 Deferred tax liability arising on revaluation of investment properties (8,649) (5,892) (5,892) Deferred tax liability arising on temporary differences (86) (32) (32) --------------- --------------- --------------- Decrease in Retained earnings (8,735) (5,924) (5,924) To reconcile to IFRS adjustment to deferred tax liability:- Retirement benefits deferred tax asset (Note 9(c)) 2,108 1,815 1,815 --------------- --------------- --------------- (6,627) (4,109) (4,109) =============== =============== =============== The effect on the Income Statement of applying IAS 12 is:- Increase in deferred tax liability arising on revaluation of investment properties (2,757) - Increase in deferred tax liability arising on temporary differences (54) - Increased tax charge on pension scheme service costs (Note 9(c)) (17) - --------------- --------------- (2,828) - =============== =============== c) IAS 19 - Employee Benefits Under UK GAAP the net deficit in the defined benefit pension scheme and the related deferred tax asset were not required to be recognised in the Balance Sheet. Under IFRS the deficit in the scheme and the related deferred tax asset are recognised on the face of the Balance Sheet. IAS 19 allows several alternative options for the accounting for actuarial gains and losses. The group has elected to recognise all actuarial gains and losses in full in the period in which they occur in the Statement of Recognised Income and Expense. This option has been selected as it is consistent with the requirements under UK GAAP treatment under FRS 17, that had previously been disclosed by way of a note in the group's financial statements. The effect on the Balance Sheet of applying IAS 19 is:- As at 31 As at 31 As at 1 August January 2005 2004 July 2005 Â£000 Â£000 Â£000 Retirement benefit obligations recognised (7,028) (6,049) (6,049) Deferred tax asset on retirement benefit deficit (Included within deferred taxation Note 9(b)) 2,108 1,815 1,815 --------------- --------------- --------------- Decrease in Retained earnings (4,920) (4,234) (4,234) =============== =============== =============== The effect on the Income Statement of applying IAS 19 is:- Decrease in pension costs within Net operating expenses 224 - Increase in pension finance costs (168) - Increased tax charge arising on above (17) - =============== =============== d) IAS 31 - Interest in Joint Ventures Under UK GAAP, the group recognised its share of Joint Ventures operating profit before interest and its share of interest with the group figures on the face of the Profit and Loss Account. In the Balance Sheet the group's share of the Joint Ventures' gross assets and liabilities were separately shown. IAS 31 allows the company to make a one-off decision as to whether Joint Ventures are to be accounted for under the equity method or by proportional consolidation. The company has chosen to apply the equity method. e) IAS 40 - Investment Properties Under UK GAAP revaluation surpluses or deficits on investment properties were taken directly to reserves. Under IFRS these surpluses and deficits are recognised in the Income Statement. As a result the revaluation reserve is no longer reported separately as a component of equity in the Balance Sheet. At the date of transition the accumulated revaluation reserve has been reallocated to retained earnings. This treatment does not have any effect on the distributable profits of the group as these will continue to be determined by the application of the Companies Act 1985. As the group only revalues its investment properties annually on 31 July each year no adjustments regarding IAS 40 are required for the periods 31 January 2005 or 31 January 2006. Revaluation of investment properties in Joint Venture companies have been treated in line with the group policy. f) Reclassifications Under IFRS other receivables not recoverable within one year are shown under Non-current assets. This information is provided by RNS The company news service from the London Stock Exchange

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