Taylor Nelson Sofres PLC
21 March 2005
For immediate release 21 March 2005
International Financial Reporting Standards (IFRS)
Taylor Nelson Sofres plc (TNS), a world leader in market information, today
publishes an unaudited income statement and group balance sheet for 2004 under
IFRS, with reconciliation to the 2004 UK GAAP figures.
TNS is holding a conference call for analysts at 14.00 today, chaired by Andy
Boland, Finance Director, to provide details of the financial effect of
reporting under (IFRS). The supporting presentation will be available on the
company's website. There will be no new trading information disclosed.
The group's first reported results under IFRS will be the interim results for
the six months to 30 June 2005.
To request dial in details of the conference call and a copy of the supporting
slide presentation, please contact:
Joel Beckman, Investor Relations Manager +44 (0) 208 967 1384
TNS is a market information group. We are the world's largest custom research
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and analysis, to local and multinational organisations.
We combine our specialist sector knowledge with expertise in the areas of new
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We think differently to help our clients build competitive advantage, making TNS
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Unaudited reconciliation of financial information for 30 June and 31 December
Following a European Union Regulation issued in 2002, TNS is required to report
its financial results in accordance with IFRS from 1 January 2005. The
transition date for TNS is 1 January 2004.
The following information has been prepared on the basis of all IFRS, Standing
Interpretations Committee (SIC) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations issued by the IASB as at March
2004, as endorsed by the European Commission. TNS has reviewed the expected
impact of the transition to IFRS from UK GAAP as currently applied by the
To help users of the financial statements to prepare for this change, TNS has
prepared the information below, based on its interpretation of the standards and
guidance for IFRS as currently enacted. As a large number of countries,
including the UK, are simultaneously adopting the standards for the first time
there is limited established practice on which to draw when forming opinions
regarding IFRS interpretation and application. Therefore, at this stage, the
full financial effect of reporting under IFRS cannot be definitively quantified
due to the possible amendment of interpretative guidance by the IASB and
developing industry practice. TNS has used its best efforts to ensure the
completeness of the financial information presented in this document, however it
could be subject to revision and is unaudited.
IFRS 1 'First Time Adoption of International Financial Reporting Standards'
permits certain exemptions from the full requirements of IFRS in the transition
period to first adoption of IFRS. TNS intends to take the following key
exemptions and the information given below has been prepared on this basis.
• Business combinations - Business combinations prior to the
transition date have not been restated.
• Retirement and other employee benefits - TNS has taken cumulative
actuarial gains and losses of defined benefit or post retirement plans directly
to equity at the transition date.
• Share based payment transactions - TNS has elected to apply
recognition and measurement requirements only to equity instruments granted
after 7 November 2002 that had not vested by 1 January 2005.
• Financial instruments - TNS will continue to report financial
instruments for the 2004 comparative period in accordance with UK GAAP.
• Cumulative translation differences - TNS has reset the cumulative
translation differences for all foreign operations to £nil as at 1 January 2004.
Impact of IFRS on key accounting policies
Basis of consolidation
Under IFRS, TNS will consolidate its joint ventures on a proportionate basis,
instead of using the gross equity method.
In place of amortisation, all goodwill will be subjected to an annual impairment
test. Any impairment so identified will be charged immediately to the income
statement. Negative goodwill must be written off immediately. Under IFRS 3, if
fair value adjustments to goodwill are made in a later financial year (permitted
up to 12 months from date of acquisition) they must be reflected as a
restatement of the prior year accounts.
Under the transitional arrangements, the IAS 39 'Financial Instruments:
Recognition and Measurement' rules on hedge accounting will be applied by TNS
from 1 January 2005. There is therefore no impact on the 2004 IFRS
Tangible and intangible fixed assets
The adoption of IFRS has not resulted in the recognition of additional assets or
a change in their valuation for the group at the transition date. On significant
acquisitions made after 1 January 2004, certain intangible assets are required
to be separately recognised to reflect the fair value of brands, customer lists,
or other intangibles acquired. Previously they would have been included in
goodwill. These intangible assets will be amortised over their estimated useful
lives. Under IFRS, software is required to be disclosed as an intangible fixed
Retirement and other employee benefits
Under UK GAAP, TNS records retirement and other employee benefits in accordance
with SSAP 24 and discloses separately the valuation of those benefits in
accordance with FRS 17. Under IFRS, retirement benefits are valued on a similar
basis to that required by FRS 17. The actuarial gains or losses are recorded by
TNS in the statement of changes in equity. Under the IFRS transitional
arrangements, TNS has recognised the cumulative actuarial loss at 1 January 2004
as a movement on equity.
Share based payments
The fair value of share options granted to employees is estimated for each grant
using the Black-Scholes-Merton model and charged to the income statement over
the minimum life of the options.
The major assumptions underlying the valuation are as follows:
• Volatility is measured over the 5 years preceding 31 March in the
year of grant (32% to 37% for options issued in 2002, 2003 and 2004).
• Dividend rate is calculated by taking the dividend declared for
the preceding year as a percentage of the market price per share at grant date.
• Risk free rate is based on UK 5 year gilt rate at time of grant.
• Period to exercise is estimated using minimum vesting period and
past experience by category of option (between 3 and 7 years).
• Rate of lapses are estimated using past experience by category of
option and option holder (between 0% and 25%) to cover departure of employees,
non-achievement of performance criteria and employee decisions not to exercise.
This IFRS 2 charge replaces the UITF 17 (revised) charge for options issued at
below market value previously recognised.
IFRS requires deferred tax to be provided in full, using the liability method,
on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. A deferred
tax asset is recognised to the extent that it is probable that it can be
utilised against future taxable profits. However, if the deferred tax arises
from initial recognition of an asset or liability in a transaction other than a
business combination, that at the time of the transaction affects neither
accounting nor taxable profit or loss, it is not accounted for. Where goodwill
is deductible against tax a deferred tax liability is required, even if such a
liability would only unwind on the eventual sale or impairment of the business
Under IFRS, losses from an associate in excess of the group's interest in that
associate are no longer recognised where there is no contractual obligation to
fund those losses.
As required under IFRS, dividends will be recognised when paid, not when
declared. TNS will disclose these in the statement of equity and not in the
IFRS does not change the revenue recognition policies previously adopted by TNS.
Unaudited reconciliation of net assets / equity at 1 January 2004
Net assets under UK GAAP 76.7
Impact of changes in accounting for:
Write off of negative goodwill 0.1
Retirement benefits (0.3)
Reversal of net liabilities on investment in associates 0.1
Deferred tax on goodwill and share based payments (4.0)
Write back 2003 final proposed dividend 8.9
Net equity under IFRS 81.5
Unaudited reconciliation of the consolidated income statement for the 6 months
ended 30 June 2004
Published Unaudited Unaudited
UK GAAP IFRS restated
6 months to conversion under
Notes 30 June 2004 adjustments IFRS
Turnover - continuing activities 446.0 - 446.0
Less share of joint ventures 1 (7.8) 7.8 -
Turnover excluding joint ventures 438.2 7.8 446.0
Cost of sales 1 (151.1) (3.0) (154.1)
Gross profit 287.1 4.8 291.9
Administrative expenses 1,2,3,4,5 (259.7) 8.3 (251.4)
Integration costs (5.7) - (5.7)
(265.4) 8.3 (257.1)
Continuing activities 21.7 13.1 34.8
Share of operating profit of joint ventures 1 1.2 (1.2) -
Operating profit before highlighted items 5 40.9 0.4 41.3
Integration costs (5.7) - (5.7)
Goodwill charges 2 (12.3) 12.3 -
Amortisation of additional intangibles identified 3 - (0.2) (0.2)
Exceptional pension credit 4 - 0.4 0.4
Share based payments 5 - (1.0) (1.0)
Operating profit including joint ventures 22.9 11.9 34.8
Share of operating profit of associates 6 0.6 (0.6) -
Profit on ordinary activities before interest and taxation 23.5 11.3 34.8
Net interest payable and similar charges (9.7) - (9.7)
Exceptional finance charges - - -
Share of profit of associates 6,7 - 0.8 0.8
Profit on ordinary activities before taxation 13.8 12.1 25.9
Taxation other than deferred tax on goodwill 3,4,5,6 (7.0) 0.3 (6.7)
Deferred tax on goodwill 8 - (1.6) (1.6)
Taxation on profit on ordinary activities (7.0) (1.3) (8.3)
Profit on ordinary activities after taxation 6.8 10.8 17.6
Minority interests (1.1) - (1.1)
Profit for the period 5.7 10.8 16.5
Basic earnings per share 1.3 2.5 3.8
Diluted earnings per share 1.3 2.4 3.7
Unaudited reconciliation of the consolidated income statement for the year ended
31 December 2004
Published Unaudited Unaudited
UK GAAP IFRS restated
full year conversion under
Notes 2004 adjustments IFRS
Turnover - continuing activities 945.3 - 945.3
Less share of joint ventures 1 (16.7) 16.7 -
Turnover excluding joint ventures 928.6 16.7 945.3
Cost of sales 1 (316.4) (6.1) (322.5)
Gross profit 612.2 10.6 622.8
Administrative expenses 1,2,3,4,5 (540.7) 18.8 (521.9)
Integration costs (9.8) - (9.8)
(550.5) 18.8 (531.7)
Continuing activities 61.7 29.4 91.1
Share of operating profit of joint ventures 1 2.7 (2.7) -
Operating profit before highlighted items 5 102.0 0.8 102.8
Integration costs (9.8) - (9.8)
Goodwill charges 2 (27.8) 24.3 (3.5)
Amortisation of additional intangibles identified on 3 - (0.6) (0.6)
Exceptional pension credit 4 - 4.8 4.8
Share based payments 5 - (2.6) (2.6)
Operating profit including joint ventures 64.4 26.7 91.1
Share of operating profit of associates 6 1.3 (1.3) -
Profit on ordinary activities before interest and 65.7 25.4 91.1
Net interest payable and similar charges 4 (18.7) (0.5) (19.2)
Exceptional finance charges (3.6) - (3.6)
Share of profit of associates 6,7 - 1.0 1.0
Profit on ordinary activities before taxation 43.4 25.9 69.3
Taxation other than deferred tax on goodwill 3,4,5,6 (21.1) 0.7 (20.4)
Deferred tax on goodwill 8 - (3.2) (3.2)
Taxation on profit on ordinary activities (21.1) (2.5) (23.6)
Profit on ordinary activities after taxation 22.3 23.4 45.7
Minority interests (2.1) - (2.1)
Profit for the year 20.2 23.4 43.6
Basic earnings per share 4.6 5.4 10.0
Diluted earnings per share 4.5 5.3 9.8
Notes to the income statement
1 Under proportionate consolidation, the results of joint ventures are
consolidated in the income statement on a line by line basis and, as a result,
there will be no separate disclosure of joint venture turnover and operating
profit (additional cost of sales £3.0m June, £6.1m December, administration
expenses £3.6m June, £7.9m December, replace separate disclosure of operating
profit of £1.2m June, £2.7m December).
2 Goodwill amortisation under UK GAAP is reversed (£12.3m June, £24.3m
December) leaving only any impairments identified under IFRS (£nil June, £3.5m
3 Amortisation of intangible assets recognised on acquisitions in accordance
with IFRS 3 (£0.2m June, £0.6m December) with associated deferred tax (£0.1m
June, £0.2m December).
4 Retirement benefits charge calculated in accordance with IAS 19 results in
an exceptional credit (£0.4m June, £4.8m December) following curtailments in the
Netherlands and US. Related deferred tax is a charge (£0.1m June, £0.5m
5 Share based payment charge for employee options granted since 7 November
2002, less UITF 17 (revised) charge included under UK GAAP (£1.0m less £0.4m
June, £2.6m less £0.8m December) with associated deferred tax (£0.2m June, £0.5m
6 Share of operating profit of associates is reclassified to below
exceptional finance charges and adjusted to include the relevant proportion of
interest (£nil June, £nil December) and tax (£0.1m June, £0.5m December)
previously disclosed under interest and tax.
7 Losses arising from associates with net liabilities are not recognised
under IFRS (£0.3m June, £0.2m December).
8 Deferred tax charge relating to the tax deductible goodwill in the period
(£1.6m June, £3.2m December).
Unaudited reconciliation of the consolidated balance sheet as at 31 December
UK GAAP Unaudited Unaudited
as at IFRS restated
31 December conversion under
Notes 2004 adjustments IFRS
Intangible assets 1,2,3,7 352.0 53.4 405.4
Plant, property and equipment 1,7 83.6 (12.1) 71.5
(Share of gross assets of joint ventures) 1 27.0 (27.0) -
(Share of gross liabilities of joint ventures) 1 (10.2) 10.2 -
Investment in associates 6 1.0 0.3 1.3
Other investments 0.6 - 0.6
Deferred tax assets 3,4,5,8 - 28.9 28.9
454.0 53.7 507.7
Inventories 1 75.0 0.3 75.3
Trade and other receivables 1,8 265.6 (13.0) 252.6
Current asset investments 0.7 - 0.7
Cash and cash equivalents 1 57.4 5.9 63.3
Total current assets 398.7 (6.8) 391.9
TOTAL ASSETS 852.7 46.9 899.6
Short term borrowings (3.2) - (3.2)
Trade and other payables 1,9 (317.4) 1.3 (316.1)
Current tax payable (22.3) - (22.3)
Provisions 10 - (5.5) (5.5)
(342.9) (4.2) (347.1)
Long term borrowings 1 (388.7) (0.3) (389.0)
Deferred tax liabilities 8 - (19.3) (19.3)
Retirement benefit obligations 4 - (13.3) (13.3)
Provisions 1,4,10 (35.8) 18.4 (17.4)
Other payables (2.9) - (2.9)
Total non-current liabilities (427.4) (14.5) (441.9)
TOTAL LIABILITIES (770.3) (18.7) (789.0)
TOTAL NET ASSETS 82.4 28.2 110.6
Issued share capital 22.3 - 22.3
Share premium 123.8 - 123.8
Shares to be issued 4.2 - 4.2
Other reserves 1.5 - 1.5
Retained earnings 2-6,8,9 (78.1) 28.2 (49.9)
Total equity attributable to equity holders of 73.7 28.2 101.9
Minority interests 8.7 - 8.7
TOTAL EQUITY 82.4 28.2 110.6
Notes to the group balance sheet
1 Proportionate consolidation of joint ventures (intangibles £15.1m, plant,
property and equipment £2.5m, inventories £0.3m, receivables £3.3m, cash £5.9m,
creditors £9.3m, long term borrowings £0.3m, provisions £0.7m).
2 Goodwill amortisation under UK GAAP is reversed (£24.3m).
3 Amortisation of intangibles identified on acquisition in 2004 and separated
out of goodwill (£0.6m) and associated deferred tax (£0.2m).
4 Retirement benefit assets and liabilities calculated in accordance with IAS
19 and disclosed separately (net liability £13.3m). The associated deferred tax
is also shown separately.
5 A deferred tax asset (£0.3m) has been set up at transition date in respect
of share based payments. This was increased (£0.5m) during the period.
6 Net liabilities on investments in associates not recognised under IFRS
7 Software reclassified from tangible fixed assets to intangible fixed assets
8 A deferred tax liability (£4.3m) has been set up at transition date in
respect of tax deductible goodwill. A further deferred tax liability (£2.8m net
of £0.4m exchange) has been recognised relating to tax deductible goodwill in
the period. Deferred tax assets and liabilities are disclosed separately.
9 Under IFRS dividends are recognised when paid rather than when declared.
The accrual for the final proposed 2004 dividend is reversed (£10.6m).
10 Provisions falling due in less than 1 year are disclosed separately on the
face of the balance sheet (£5.5m).
This information is provided by RNS
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