Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Universal Salvage (UVS)

  Print      Mail a friend       Annual reports

Tuesday 25 October, 2005

Universal Salvage

IFRS Statement

Universal Salvage PLC
25 October 2005


25 October 2005

                             UNIVERSAL SALVAGE PLC

             INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS') -
            RESTATEMENT OF RESULTS FOR THE 52 WEEKS TO 30 APRIL 2005


Further to our preliminary results announcement on 19 July 2005, the Group
presents the restated financial statements as amended by the transition to IFRS.

This announcement comprises the following:

     •    Restatement of the Group balance sheet as at 2 May 2004 ('the opening
          IFRS balance sheet').
     •    Restatement of the Group balance sheet as at 30 October 2004 and the
          Group profit and loss account for the 26 weeks ended 30 October 2004.
     •    Restatement of the Group balance sheet as at 30 April 2005 and the 
          Group profit and loss account for the 52 weeks ended 30 April 2005.
     •    Appendix detailing updated Group accounting policies under IFRS.


Key financial impacts :

On transition

     •    Increase in net assets of £0.2m
     •    Reduction in gearing of 1.0%

For the period ended 30 October 2004

     •    Increase in net assets of £0.4m
     •    Reduction in gearing of 2.3%
     •    Reduction in operating loss of £0.1m
     •    Reduction in loss before tax of £0.1m
     •    Reduction in basic loss per share of 0.4p.

For the period ended 30 April 2005

     •    Reduction in net assets of £1.4m
     •    Increase in gearing of 3.3%
     •    Reduction in operating loss of £1.9m
     •    Reduction in profit before tax of £2.6m
     •    Reduction in basic earnings per share of 9.3p


Enquiries:

Universal Salvage     Andrew Somerville, Finance Director    T: 01234 762283


Universal Salvage plc

Adoption of IFRS

INTRODUCTION

Universal Salvage plc ('the Group') has previously reported its results under UK
Generally Accepted Accounting Principles ('UK GAAP'). All EU listed companies
are required to report their consolidated financial statements under IFRS for
accounting periods beginning on or after 1 January 2005. The Group's first
annual report under IFRS will be for the 52 weeks to 29 April 2006 with the
first IFRS interim results for the 26 weeks ended 29 October 2005.

This announcement explains the changes that are required to the Group's
financial statements on adoption of IFRS. The announcement is set out in the
following sections:

     •    Basis of preparation
     •    IFRS1 - first time adoption rules
     •    IFRS financial effects
     •    IFRS financial effects summary
          •    1. Fair value - IAS16
          •    2. Intangible assets - IAS38
          •    3. Residual values - IAS16
          •    4. Deferred taxation - IAS12
          •    5. Leases - IAS17
          •    6. Share based payments - IFRS2
          •    7. Financial instruments - IAS39
          •    8. Bad debts - IAS32
          •    9. Holiday pay accruals - IAS19

     •    Group balance sheet transition reconciliation as at 2 May 2004 
          (opening IFRS balance sheet).
     •    Group balance sheet transition reconciliation as at 30 October 2004 
          and Group profit and loss account transition reconciliation for the 
          26 weeks ended 30 October 2004.
     •    Group balance sheet transition reconciliation as at 30 April 2005 and
          Group profit and loss account transition reconciliation for the 52 
          weeks ended 30 April 2005.
     •    Appendix - Group accounting policies.

BASIS OF PREPARATION

The financial information presented in this announcement has been prepared in
accordance with all current IFRS (including International Financial Reporting
Interpretations Committee ('IFRIC') pronouncements) in place for reporting to
the period to 29 April 2006. The IFRS applied are those that have been, or are
expected to be, endorsed by the European Commission by the time the Group
prepares its first set of consolidated financial statements for the period to 29
April 2006. It is possible that those IFRS still awaiting endorsement may be
changed prior to this date and this, together with other pronouncements or
guidance issued, may result in the financial information presented in this
announcement being modified prior to the publication of those financial
statements.

IFRS1 - FIRST TIME ADOPTION RULES

The Group has adopted 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 as at 2 May
2004, the date of transition, as well as at 30 April 2005.

IFRS1 permits certain exemptions to the full retrospective restatement. The
principal exemptions that have been adopted by the Group are as follows:

Share based payments - IFRS2 'Share-based Payment' has only been applied to
awards of share options granted after 7 November 2002.

Restatement of balance sheet and profit and loss account

Reconciliations required by IFRS1 are presented in this document, showing the
differences between UK GAAP and IFRS for the balance sheet on transition at 2
May 2004, at the half-year end on 30 October 2004 and at the year end on 30
April 2005, together with the profit and loss account for the 26 weeks ended 30
October 2004 and the 52 weeks ended 30 April 2005.

Cash flows

The adjustments arising from the conversion to IFRS will have no impact upon the
cash flows of the Group. IAS7 'Cash Flow Statements' extends the UK GAAP
requirement of reporting the movement in cash to that of cash and cash
equivalents which would include certain short term highly liquid investments.
The Group does not have any short-term highly liquid investments.

IFRS FINANCIAL EFFECTS

The effect on the financial statements both on transition to IFRS and during the
52 weeks ended 30 April 2005 ('FY2005') are shown below. A high level summary is
given, followed by a more detailed explanation of each adjustment.

IFRS financial effects summary

                                             -----------------------------------
2 May 2004                                   Net assets                Gearing
                                             -----------------------------------
                                                  £'000                      %
                                             -----------------------------------

UK GAAP                                          15,111                   68.3
--------------------------------------------------------------------------------
Movement                                            235                   (1.0)
--------------------------------------------------------------------------------
IFRS                                             15,346                   67.3
--------------------------------------------------------------------------------


                        ----------------------------------------------------------------------------------
30 October 2004                               Profit / (loss)    Basic earnings /     Diluted  earnings /
                        Net assets   Gearing       before tax    (loss) per share        (loss) per share
                        ----------------------------------------------------------------------------------
                             £'000         %            £'000               pence                   pence
----------------------------------------------------------------------------------------------------------
UK GAAP                     13,135      85.8           (1,976)               (7.1)                   (7.1)
----------------------------------------------------------------------------------------------------------
Movement                       356      (2.3)              98                 0.4                     0.4
----------------------------------------------------------------------------------------------------------
IFRS                        13,491      83.5           (1,878)               (6.7)                   (6.7)
----------------------------------------------------------------------------------------------------------


                        ----------------------------------------------------------------------------------
30 April 2005                                 Profit / (loss)    Basic earnings /     Diluted  earnings /
                        Net assets   Gearing       before tax    (loss) per share        (loss) per share
                        ----------------------------------------------------------------------------------
                             £'000         %            £'000               pence                   pence
----------------------------------------------------------------------------------------------------------
UK GAAP                     16,103      35.9            1,547                 3.5                     3.5
----------------------------------------------------------------------------------------------------------
Movement                    (1,354)      3.3           (2,631)               (9.3)                   (9.3)
----------------------------------------------------------------------------------------------------------
IFRS                        14,749      39.2           (1,084)               (5.8)                   (5.8)
----------------------------------------------------------------------------------------------------------

The predominant cause of the initial increase in net assets on transition is the
restatement of land and buildings from existing use value to fair value. However
this has been offset by the significant deferred tax provision now required
under IFRS. Profit before tax during FY2005 is adversely affected by the reduced
profit on fixed asset disposals arising as a result of fair values being
introduced on transition. Both of these points are explained in greater detail
in the following sections.
     
1.   Fair value - IAS16

--------------------------------------------------------------------------------
Balance sheet             2 May 2004      Movement FY2005        30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)            £'000                £'000                £'000
--------------------------------------------------------------------------------
Tangible fixed assets          3,049               (2,614)                 435
--------------------------------------------------------------------------------
Revaluation reserve            2,993               (2,507)                 486
--------------------------------------------------------------------------------
Distributable reserves            56                 (107)                 (51)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Administrative expenses                                                     63
--------------------------------------------------------------------------------
Profit on fixed asset disposals                                         (2,677)
--------------------------------------------------------------------------------

For land and buildings, existing use value has been restated to fair value. The
effect of this is to increase tangible fixed assets on transition to IFRS by
£3,049k as shown above, subsequently decreasing by £2,614k, largely as a result
of the disposal of our Redbourn site during FY2005. The net movement on tangible
fixed assets as at 30 April 2005 is therefore an increase of £435k.

The £56k credit to distributable reserves is the adjustment required to align
the impairment charged in FY2004 to that required under IFRS. The £62k credit to
administrative expenses during FY2005 is the reduction in depreciation charge as
a result of the transition to fair values (although the value of land and
buildings as a group of assets increased as a result of transition to fair
values, the value of land increased whilst buildings decreased in value).

The £2,677k reduction in profit on fixed asset disposals during FY2005 arises
due to the lower book profit on disposal of certain non-core properties. On
transition to IFRS these properties were increased in value as stated above,
therefore the corresponding book values were higher resulting in a lower profit
on disposal.

2.   Intangible assets - IAS38

--------------------------------------------------------------------------------
Balance sheet             2 May 2004      Movement FY2005        30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)            £'000                £'000                £'000
--------------------------------------------------------------------------------
Tangible fixed assets           (505)                 352                 (153)
--------------------------------------------------------------------------------
Intangible fixed assets          505                 (352)                 153
--------------------------------------------------------------------------------

The Group holds intangible assets in the form of externally purchased computer
software and some internally developed software. These intangible assets are
held at cost and amortised over their useful economic lives, and were previously
disclosed under tangible fixed assets under UK GAAP.

Intangibles with a carrying value on transition to IFRS of £505k are
reclassified under a separate heading in the balance sheet. The corresponding
credit goes to tangible fixed assets, with no change to the carrying value. The
£352k entry in FY2005 reclassifies the amortisation charge on intangibles under
its correct heading in the balance sheet. The above reclassification therefore
has no net financial impact on the financial statements.

3.   Residual values - IAS16

--------------------------------------------------------------------------------
Balance sheet             2 May 2004      Movement FY2005        30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)            £'000                £'000                £'000
--------------------------------------------------------------------------------
Tangible fixed assets             77                   38                  115
--------------------------------------------------------------------------------
Distributable reserves            77                   38                  115
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Cost of sales                                                               70
--------------------------------------------------------------------------------
Profit on fixed asset disposals                                            (32)
--------------------------------------------------------------------------------

As a result of the introduction of residual values, certain tangible fixed
assets that had previously been written down to zero now have residual values
attached to them.

The financial impact of this is to increase tangible fixed assets on transition
by £77k. This policy change has also had the effect of reducing the Group's
depreciation charge in FY2005 by £70k, and reducing the profit on sale of
certain items by £32k.

4.   Deferred taxation - IAS12

--------------------------------------------------------------------------------
Balance sheet                    2 May 2004   Movement FY2005    30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)                   £'000             £'000            £'000
--------------------------------------------------------------------------------
Provisions for liabilities and
charges                               2,684              (965)           1,719
--------------------------------------------------------------------------------
Revaluation reserve                  (2,569)              950           (1,619)
--------------------------------------------------------------------------------
Distributable reserves                 (115)               15             (100)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Tax on profit on ordinary activities                                        15
--------------------------------------------------------------------------------

On transition, deferred tax is required to be provided on temporary timing
differences relating to both revaluation of land and buildings and rolled-over
capital gains subject to corporation tax.

The financial effect due to deferred tax on the revaluation of land and
buildings is £2,569k and the effect due to deferred tax on rolled-over capital
gains is £276k. The impact on distributable reserves has been partially offset
by a deferred tax asset of £161k not previously recognised, relating to
accelerated capital allowances/brought forward losses. The £965k movement in
FY2005 relates to the adjustment required to the deferred tax provision as a
result of the disposal of certain non-core properties during the year.

5.   Leases - IAS17

--------------------------------------------------------------------------------
Balance sheet                    2 May 2004   Movement FY2005    30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)                   £'000             £'000            £'000
--------------------------------------------------------------------------------
Creditors: due within one year            3                 -                3
--------------------------------------------------------------------------------
Creditors: due after one year            48                 -               48
--------------------------------------------------------------------------------
Distributable reserves                  (51)                -              (51)
--------------------------------------------------------------------------------

The £51k overall increase in creditors has arisen due to the creation of a
finance lease for the building situated on our leasehold site in Westbury. This
site was previously classified as an operating lease under UK GAAP but as the
risks and rewards of ownership of the building are transferred substantially to
the Group over the life of the lease, under IFRS this becomes a finance lease.

Operating lease rentals previously charged to administrative expenses under UK
GAAP are now utilised to reduce the finance lease liability in the balance
sheet. The financial effect of this in FY2005 is less than £1k therefore this
has not been reflected in the above table.

6.   Share based payments - IFRS2

--------------------------------------------------------------------------------
Balance sheet                    2 May 2004   Movement FY2005    30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)                   £'000             £'000            £'000
--------------------------------------------------------------------------------
Creditors: due within one year           12                 5               17
--------------------------------------------------------------------------------
Distributable reserves                  (12)               (5)             (17)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Administrative expenses                                                    (69)
--------------------------------------------------------------------------------

Under IFRS2 'Share-based Payment', the cost of granting share options is based
upon the excess of the fair value of an option over the exercise price. This
fair value has been calculated using the Black-Scholes option pricing model and
has resulted in a charge to reserves on transition of £12k and in FY2005 of £5k
(£17k cumulative effect). This represents the National Insurance element of
options granted which, as the Group settles this liability, will ultimately
result in a cash outflow. The equity settled element of options granted has no
effect on net assets or distributable reserves as this is credited directly to
equity.
     
7.   Financial instruments - IAS39

--------------------------------------------------------------------------------
Balance sheet                 2 May 2004    Movement FY2005      30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)                £'000              £'000              £'000
--------------------------------------------------------------------------------
Creditors: due after one year         62                (13)                49
--------------------------------------------------------------------------------
Hedging reserve                      (62)                13                (49)
--------------------------------------------------------------------------------

The adjustment required to creditors represents the fair value, at each balance
sheet date, of the interest rate swap the Group holds with The Royal Bank of
Scotland plc, which equates to a loss of £62k on transition, reducing to £49k as
at 30 April 2005.

The fair value is recalculated at each balance sheet date with any changes being
adjusted in both creditors and reserves.

8.   Bad debts - IAS32

--------------------------------------------------------------------------------
Balance sheet             2 May 2004      Movement FY2005        30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)            £'000                £'000                £'000
--------------------------------------------------------------------------------
Debtors                           16                   30                   46
--------------------------------------------------------------------------------
Distributable reserves            16                   30                   46
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Administrative expenses                                                     30
--------------------------------------------------------------------------------

The £16k increase in debtors on transition to IFRS arises due to the release of
non-specific bad debt provisions. This increases to £46k as at 30 April 2005
following a credit of £30k to administrative expenses in FY2005.

9.   Holiday pay accruals - IAS19

--------------------------------------------------------------------------------
Balance sheet                    2 May 2004   Movement FY2005    30 April 2005
--------------------------------------------------------------------------------
Increase/(decrease)                   £'000             £'000            £'000
--------------------------------------------------------------------------------
Creditors: due within one year           98                16              114
--------------------------------------------------------------------------------
Distributable reserves                  (98)              (16)            (114)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Profit and loss account                                                 FY2005
--------------------------------------------------------------------------------
(Charge)/credit                                                          £'000
--------------------------------------------------------------------------------
Administrative expenses                                                    (16)
--------------------------------------------------------------------------------

Holiday pay was not previously provided for under UK GAAP, but is now required
under IFRS. This resulted in an initial reduction in reserves of £98k,
representing the cumulative value of holiday pay owed, including employers
National Insurance contributions, on transition to IFRS. This increases by £16k
during FY2005 resulting in a current liability at 30 April 2005 of £114k.

GROUP BALANCE SHEET TRANSITION RECONCILIATION AS AT 2 MAY 2004

                                                                    IFRS2
                       IAS16      IAS38    IAS16    IAS12  IAS17   Share       IAS39  IAS32    IAS19    
              UK GAAP   Fair Intangible Residual Deferred leases   based   Financial    Bad  Hol pay      Net       IFRS
           2 May 2004  value     assets   values      tax       payments instruments  debts accruals Movement 2 May 2004
Group           £'000  £'000      £'000    £'000    £'000  £'000   £'000       £'000  £'000    £'000    £'000      £'000
balance
sheet           

Assets
Non-current
assets
Property,
plant and
equipment      26,296   3,049      (505)      77               0                                        2,621     28,917
Intangible
assets              0               505                                                                   505        505
------------------------------------------------------------------------------------------------------------------------
               26,296   3,049         0       77        0      0       0          0       0        0    3,126     29,422
------------------------------------------------------------------------------------------------------------------------
Current
assets
Inventories     2,100                                                                                       0      2,100
Trade and
other
receivables     3,552                                                                    16                16      3,568
Cash and cash
equivalents        12                                                                                       0         12
------------------------------------------------------------------------------------------------------------------------
                5,664       0         0        0        0      0       0          0      16        0       16      5,680
------------------------------------------------------------------------------------------------------------------------

Current
liabilities
Creditors:
due
within one     (6,143)                                        (3)     (12)                       (98)    (113)   (6,256)
year       
------------------------------------------------------------------------------------------------------------------------
                5,664       0         0        0        0      0       0          0      16        0       16      5,680

Net current
(liabilities)
/assets          (479)      0         0        0        0     (3)    (12)         0      16      (98)     (97)     (576)
------------------------------------------------------------------------------------------------------------------------
Total assets
less current
liabilities    25,817   3,049         0       77        0     (3)    (12)         0      16      (98)   3,029    28,846

Non-current
liabilities
Creditors:
due           (10,327)                                       (48)               (62)                     (110)  (10,437)
after one
year
Provisions
for
liabilities      (379)                              (2,684)                                            (2,684)   (3,063)
and charges  
------------------------------------------------------------------------------------------------------------------------
Net assets     15,111   3,049         0       77   (2,684)   (51)    (12)       (62)     16      (98)     235     15,346

Shareholders'
equity
Ordinary
shares          2,826                                                                                       0      2,826
Share premium
account         1,216                                                                                       0      1,216
Capital
redemption
reserve            30                                                                                       0         30
Revaluation
reserve         4,941   2,993                      (2,569)                                                424      5,365
Hedging
reserve                                                                         (62)                      (62)      (62)
Retained
earnings        6,098      56         0       77     (115)   (51)    (12)         0      16      (98)    (127)     5,971
------------------------------------------------------------------------------------------------------------------------
Total equity   15,111   3,049         0       77   (2,684)   (51)    (12)       (62)     16      (98)     235     15,346
------------------------------------------------------------------------------------------------------------------------

GROUP BALANCE SHEET TRANSITION RECONCILIATION AS AT 30 OCTOBER 2004 AND
GROUP PROFIT AND LOSS ACCOUNT TRANSITION RECONCILIATION FOR THE 26 WEEKS ENDED
30 OCTOBER 2004
                                               

                 Opening                                              IFRS2      
       UK GAAP   balance IAS16      IAS38    IAS16    IAS12           Share       IAS39 IAS32    IAS19             IFRS
        30 Oct     sheet  Fair Intangible Residual Deferred  IAS17    based   Financial   Bad  Hol pay      Net  30 Oct 
         2004 adjustment value     assets   values      tax Leases payments instruments debts accruals Movement    2004
Group   £'000      £'000 £'000      £'000    £'000    £'000  £'000    £'000       £'000 £'000    £'000    £'000   £'000
profit                                                                                                            
and loss
account                                                                                                                 

Revenue23,885                                                                                                 0  23,885
Cost 
of    
sales (19,332)                                  39                                                           39 (19,293)
Gross 
profit  4,553          0     0          0       39       0       0        0           0     0         0      39   4,592
------------------------------------------------------------------------------------------------------------------------
Administrative
expenses
- before
exceptional
items   (5,463)             34                                   0      (25)               10        40      59  (5,404)
- exceptional
items     (516)                                                                                               0    (516)
------------------------------------------------------------------------------------------------------------------------
Operating
loss
- before
exceptional
items    (910)         0    34          0       39       0       0      (25)          0    10        40      98    (812)
- after
exceptional
items  (1,426)         0    34          0       39       0       0      (25)          0    10        40      98  (1,328)
------------------------------------------------------------------------------------------------------------------------
Profit on
fixed asset
disposals    0                                                                                                0       0
Profit/(loss)
before
interest
- before
exceptional
items    (910)         0    34          0       39       0       0      (25)          0    10        40      98    (812)
- after
exceptional
items  (1,426)         0    34          0       39       0       0      (25)          0    10        40      98  (1,328)
Interest
receivable 28                                                                                                 0      28
Interest
payable
- before
exceptional
items    (356)                                                                                                0    (356)
- exceptional
items    (222)                                                                                                0    (222)
------------------------------------------------------------------------------------------------------------------------
Profit/(loss)
before
taxation
- before
exceptional
items  (1,238)         0    34          0       39       0       0      (25)          0    10        40      98  (1,140)
- after
exceptional
items  (1,976)         0    34          0       39       0       0      (25)          0    10        40      98  (1,878)
Tax on
(profit)
/loss       0                                                                                                 0       0
------------------------------------------------------------------------------------------------------------------------
Profit/(loss)
after 
taxation(1,976)        0    34          0       39       0       0      (25)          0    10        40      98  (1,878)
Dividends    0                                                                                                0       0
------------------------------------------------------------------------------------------------------------------------
Retained
profit/
(deficit)(1,976)       0    34          0       39       0       0      (25)          0    10        40      98  (1,878)

Group balance
sheet
Assets
Non-current
assets
Property,
plant and
equipment23,996    2,621    34        139       39                                                          212  26,829
Intangible
assets        0      505             (139)                                                                 (139)    366
------------------------------------------------------------------------------------------------------------------------
         23,996    3,126    34          0       39       0       0        0           0     0         0      73  27,195
------------------------------------------------------------------------------------------------------------------------
Current
assets
Assets 
held
for 
resale    1,413        0                                                                                      0   1,413
Invent-
ories     1,619        0                                                                                      0   1,619
Trade and
other
receiv-
ables     2,921       16                                                                    10               10   2,947
Cash and 
cash
equiv-
alents      733        0                                                                                      0     733
------------------------------------------------------------------------------------------------------------------------
          6,686       16     0          0        0       0       0        0           0    10         0      10   6,712
------------------------------------------------------------------------------------------------------------------------

Current
liabilities
Creditors: 
due within 
one year (9,326)    (113)                                                  0         (2)             40      38  (9,401)
------------------------------------------------------------------------------------------------------------------------
Net current
(liabilities)/
assets   (2,640)     (97)    0          0        0        0      0        (2)         0    10        40      48  (2,689)
------------------------------------------------------------------------------------------------------------------------
Total 
assets
less 
current
lia-
bilities 21,356    3,029    34          0       39        0      0        (2)         0    10        40     121  24,506

Non-current
liabilities
Creditors: 
due after 
one year (8,000)    (110)                                                                                     0  (8,110)

Provisions 
for
liabilities
and charges(221)  (2,684)                                                                                     0  (2,905)
------------------------------------------------------------------------------------------------------------------------
Net 
assets   13,135      235    34          0       39        0      0        (2)         0    10        40     121  13,491

Shareholders'
equity

Ordinary
shares    2,826        0                                                                                      0   2,826

Share premium
account   1,216        0                                                                                      0   1,216

Capital
redemption
reserve      30        0                                                                                      0      30

Revaluation
reserve   4,941      424                                                                                      0   5,365

Hedging
reserve       0      (62)                                                                                     0     (62)

Retained
earnings  4,122     (127)   34          0       39        0      0        (2)         0     10       40     121   4,116

Total 
equity   13,135      235    34          0       39        0      0        (2)         0     10       40     121  13,491



GROUP BALANCE SHEET TRANSITION RECONCILIATION AS AT 30 APRIL 2005 AND
GROUP PROFIT AND LOSS ACCOUNT TRANSITION RECONCILIATION FOR THE 52 WEEKS ENDED
30 APRIL 2005


                                                                                                  Re-
                       IAS16   IAS38   IAS16    IAS12    IAS17  IFRS2   IAS39   IAS32   IAS19  classify
               Opening                                                                           Non-
          UK   balance                                          Share                         operating           IFRS
         GAAP   sheet         Intang-  Resi-     De-            based  Financial         Hol    Excep-    Net      30
       30 April adjust- Fair    ible    dual   ferred   Leases   pay-   instru-  Bad     pay    tional    Move-  April
         2005    ment   value  assets  values   tax             ments    ments  debts  accruals  item     ment    2005
Group 
profit  
and loss
account  £'000  £'000   £'000   £'000   £'000   £'000   £'000   £'000   £'000   £'000   £'000            £'000    £'000

Revenue 49,695                                                                                              0    49,695
Cost of    
sales  (39,653)                            70                                                              70   (39,583)
      
------------------------------------------------------------------------------------------------------------------------
Gross 
profit  10,042      0       0      0       70        0      0       0       0       0       0       0      70    10,112

Admin-
istrative
expenses
- before
exceptional
items  (11,094)            63                                0    (69)             30     (16)              8   (11,086)

- excep-  
tional
items     (969)                                                                                 1,802   1,802       833
------------------------------------------------------------------------------------------------------------------------
Operating
loss

- before
excep-
tional
items   (1,502)     0      63       0      70        0       0    (69)     0       30     (16)      0      78      (974)

- after
excep-
tional
items   (2,021)     0      63       0      70        0       0    (69)     0       30     (16)  1,802   1,880      (141)

Profit on
fixed 
asset
dis-
posals   4,511         (2,677)            (32)                                                 (1,802) (4,511)        0
------------------------------------------------------------------------------------------------------------------------
Profit/
(loss)
before
interest

- before
excep-
tional
items  (1,052)     0       63       0      70       0       0    (69)       0      30     (16)       0      78    (974)

- after
excep-
tional
items   2,490      0   (2,614)      0      38       0       0    (69)       0      30     (16)       0  (2,631)   (141)

Interest
receiv-
able       56                                                                                                0      56

Interest
payable
- before
excep-
tional
items    (602)                                                                                               0    (602) 
                                                                          
                                   
- excep-
tional
items    (397)                                                                                               0    (397) 
------------------------------------------------------------------------------------------------------------------------
Profit/
(loss)
before
taxation
- before
excep-
tional
items  (1,598)      0      63       0      70       0       0    (69)       0      30     (16)        0     78  (1,520)

- after
excep-
tional
items   1,547       0  (2,614)      0      38       0       0     (69)      0      30     (16)        0 (2,631) (1,084)

Tax on
(profit)
/loss    (555)                                     15                                                       15    (540)
------------------------------------------------------------------------------------------------------------------------
Profit
/(loss)
after 
taxation  992       0  (2,614)      0      38      15       0     (69)      0      30     (16)       0  (2,616) (1,624)
Dividends   0                                                                                                0       0  
------------------------------------------------------------------------------------------------------------------------
Retained
profit/
(deficit) 992       0  (2,614)      0      38      15       0     (69)      0      30     (16)       0  (2,616) (1,624)
------------------------------------------------------------------------------------------------------------------------
Group 
balance
sheet

Assets

Non-current
assets
Property,
plant 
and
equip-
ment   22,339   2,621  (2,614)    352      38                                                           (2,224) 22,736

Intan-
gible
assets      0     505            (352)                                                                    (352)    153  
------------------------------------------------------------------------------------------------------------------------
       22,339   3,126  (2,614)      0      38       0       0       0       0       0       0        0  (2,576) 22,889
------------------------------------------------------------------------------------------------------------------------
Current
assets

Assets 
held
for 
resale      0        0                                                                                       0       0  
                                                                      
Invent-
ories   2,785        0                                                                                       0   2,785  
                                  
Trade 
and
other
rece-
ivables 3,551       16                                                             30                       30   3,597

Cash 
and 
cash
equiv-
alents     13        0                                                                                      0       13  
------------------------------------------------------------------------------------------------------------------------
        6,349       16      0       0       0       0       0       0       0      30       0        0     30    6,395
------------------------------------------------------------------------------------------------------------------------
Current
lia-
bilities

Creditors: 
due
within 
one
year   (6,790)    (113)                                     0      (5)                    (16)       0     (21) (6,924)
------------------------------------------------------------------------------------------------------------------------
Net current
(lia-
bilities)/
assets   (441)     (97)     0       0       0       0       0      (5)      0      30     (16)       0       9    (529)
------------------------------------------------------------------------------------------------------------------------
Total 
assets
less 
current
liabi-
lities 21,898    3,029 (2,614)      0      38       0       0      (5)      0      30     (16)       0  (2,567) 22,360

Non-
current
liabi-
lities

Creditors: 
due
after 
one 
year   (5,795)    (110)                                                   13                                13 (5,892)

Provisions 
for
liabi-
lities
and 
charges     0    (2,684)                           965                                                     965  (1,719) 
------------------------------------------------------------------------------------------------------------------------
Net 
assets 16,103      235 (2,614)      0      38      965      0      (5)    13       30     (16)       0 (1,589) 14,749

Share-
holders'
equity
Ordinary
shares  2,826        0                                                                                      0   2,826   
                                                       
                                 
Share 
premium
account 1,216        0                                                                                      0   1,216   
                                                               
Capital
redemption
reserve    30        0                                                                                      0      30   
                                   
Revaluation
reserve 4,291      424  (2,507)                    950                                                 (1,557)  3,158

Hedging
reserve     0      (62)                                                   13                               13     (49)

Retained
earn-
ings    7,740     (127)   (107)            38       15      0      (5)     0       30     (16)       0    (45)  7,568
------------------------------------------------------------------------------------------------------------------------
Total 
equity 16,103      235  (2,614)    0       38      965      0      (5)    13       30     (16)       0 (1,589) 14,749
------------------------------------------------------------------------------------------------------------------------

APPENDIX - GROUP ACCOUNTING POLICIES

ACCOUNTING POLICIES

The Group has adopted International Financial Reporting Standards ('IFRS') with
effect from 2 May 2004. Therefore the following accounting policies have, where
applicable, been amended and extended to comply with IFRS.

BASIS OF PREPARATION
These financial statements have been prepared in accordance with International
Financial Reporting Standards and IFRIC interpretations and with those parts of
the Companies Act 1985 (the 'Act') applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of certain freehold and leasehold land and
buildings and investments. A summary of the more important Group accounting
policies is set out below, together with an explanation of where changes have
been made to the previous policies on adoption of new accounting standards in
the year.

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

BASIS OF CONSOLIDATION
The accounting reference date of all Group companies is 30 April and this year
the financial statements of Universal Salvage plc and its subsidiary
undertakings have been drawn up to 30 April 2005, being the nearest Saturday to
30 April 2005. Therefore the Group financial statements which comprise the
financial statements of Universal Salvage plc and all its subsidiary
undertakings cover the period 2 May 2004 to 30 April 2005.

REVENUE RECOGNITION
Turnover represents amounts receivable for goods and services provided in the
normal course of business, net of trade discounts, VAT and other sales related
taxes.

Vehicle sales at auction are recognised in the financial statements when the
hammer drops, which under the terms and conditions of sale is the point at which
the legally binding contract is formed between the Group and the buyer. Where
vehicles are sold on behalf of third parties, our vehicle handling fee is also
recognised as revenue when the hammer drops following the completion of our
service of disposal on behalf of our client.

Scrap metal income from processing is recognised at the point, following the
vehicle being crushed, the metal cubes have been collected and weighed by third
party fragmentors.

Related service income such as delivery of vehicles and other services,
including vehicle logistic activities for third party clients, is recognised
only when the associated service has been performed.






APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

SEGMENTAL REPORTING
The Group has determined from a review of its business activities that, due to
the differing risks/rewards of its business streams, the primary reporting
format in its financial statements shall be by business segment. The applicable
business segments are:

   • Salvage vehicles
   • Non-salvage fee-based vehicles
   • End of Life Vehicles (ELVs)

The secondary reporting format is geographical, although the Group operates only
within the UK and the risks/rewards between regions are not materially different
to require any regional segmentation.

Costs have been allocated between the reportable segments to the extent that it
is appropriate to do so - directly if applicable; if not, by either number of
vehicles collected, number of vehicles disposed, or acres employed.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost or valuation, net of
depreciation and any provisions for impairment. In the transition IFRS balance
sheet as at 2 May 2004 and subsequently, the Group has adopted a policy of
external revaluation for land and buildings every five years. Interim valuations
will be carried out in intervening years only where there has been a material
change in value. The freehold and leasehold land and buildings were revalued at
2 May 2004 on a fair value basis.

Interest incurred on borrowings to finance specific site developments is
capitalised at its gross amount, before tax, using average interest rates in the
relevant development period, up to the date the site becomes operational.

INTANGIBLES
The Group holds intangible assets in the form of externally purchased computer
software and some internally developed software. These intangible assets are
held at cost and amortised over their useful economic lives. The Group does not
hold any intangible assets with indefinite useful lives and therefore does not
carry out annual impairment reviews unless there are indications that an asset
or group of assets may have become impaired.

INVESTMENTS
Fixed asset investments are shown at cost or valuation less any provision for
impairment.

GRANTS
In accordance with IAS20 (Accounting for Government Grants and Disclosure of
Government Assistance), grants and contributions relating to the development of
operating land have been deducted from the cost of fixed assets.







APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

DEPRECIATION
Depreciation is provided on all tangible fixed assets, other than freehold land,
at rates calculated to write off the cost or valuation, less any residual value,
of each asset over its expected useful life, as follows:

Freehold buildings                     over 10 to 30 years
Leasehold buildings                    over the lease term
Site improvements                      over 5 to 25 years
Plant, machinery and motor vehicles    over 3 to 10 years
Office and computer equipment          over 3 to 5 years

No depreciation is charged on assets under construction.

In arriving at estimates of residual values, the Group considers external market
factors such as product demand and obsolescence, and internal factors such as
expected time frame over which each asset will be utilised and the intensity at
which the assets are expected to be used. Where appropriate the Group retains
the services of independent valuation agents to assist in arriving at estimates
of residual values. The residual value of an asset is the estimated amount that
the Group would currently obtain from disposal of the asset, after deducting the
estimated costs of disposal, if the asset were already of the age and in the
condition expected at the end of its useful life. Residual values are reviewed
at least annually, and more frequently should there be an indication that
residual values have changed significantly since the last annual review.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
The carrying value of property, plant and equipment and intangible assets are
reviewed for impairment in periods where changes in circumstances indicate the
carrying value may not be recoverable. Impairment is deemed to have occurred
when the carrying value exceeds the higher of fair value less costs to sell and
value in use. Where an asset or group of assets has become impaired, the
impairment loss is charged through the profit and loss account. The Group
calculates value in use by taking the post-tax weighted average cost of capital,
and applying this to the expected future cash flows from relevant income
generating units to arrive at net present value.

Where impairment occurs on a revalued asset, the impairment loss is charged
initially to the revaluation reserve to reduce the asset to its depreciated
historic cost, with any excess being charged to the profit and loss account.

INVENTORIES
Inventories are stated at the lower of cost incurred in bringing each vehicle or
component to its present location and its net realisable value, as follows:

Work in progress                     - cost of direct materials and labour
Vehicles and components for resale   - cost of vehicle/component plus direct
                                       labour
                                       costs incurred in relation to collection 
                                       of the vehicle

Provision is made for slow-moving items where appropriate.

PROVISIONS
In accordance with IAS37 (Provisions, Contingent Liabilities and Contingent
Assets), the Group recognises a provision when it has a present obligation
(legal or constructive) as a result of a past event, it is probable that an
outflow of resources will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.

APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

PROVISIONS (CONTINUED)

Contingent liabilities and contingent assets are not recognised but are instead
disclosed, if a flow of economic benefits is possible.

Where necessary, the Group applies the use of discounting to long-term
provisions, using
an appropriate discount rate to arrive at the present value of future expected
cash flows.

TAXATION
The charge for current tax is based on the results for the year as adjusted for
items which are non-assessable or disallowed. It is calculated using taxation
rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of taxable profit. In principle,
deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill, negative goodwill nor from the acquisition of
an asset, which does not affect either taxable or accounting income.

Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled. Deferred tax is
charged or credited in the income statement, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.

LEASING AND HIRE PURCHASE COMMITMENTS
Assets held under finance leases and hire purchase contracts, which are those
where substantially all the risks and rewards of ownership of the asset have
passed to the Group, are capitalised in the balance sheet and are depreciated
over the shorter of their lease terms and their useful lives.

The interest element of the rental obligations is charged to the Group profit
and loss account over the period of the lease and represents a constant
proportion of the balance of capital repayments outstanding.

Rentals paid under operating leases are charged to income on a straight-line
basis over the lease term, even if the payments are not made on such a basis.

PENSIONS
The Group operates defined contribution pension schemes for certain Directors
and employees. Contributions are charged to the Group profit and loss account as
they become payable in accordance with the rules of the schemes. Differences
between contributions payable in the year and contributions actually paid are
shown in either accruals or prepayments in the balance sheet. The assets of the
scheme are held separately from those of the Group in independently administered
funds.





APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

SHARE BASED PAYMENTS
The Group has in place various Save As You Earn ('SAYE') and Executive share
option schemes. The Black-Scholes model is used to fair value each share option,
which in turn is applied to the relevant number of options to arrive at a total
cost. This cost is then charged to the Group profit and loss account over the
vesting period of the option. The variables used in this model, and their
sources are as follows:

Variable            Source
Share price at      Historic closing mid-market share price
grant date
Exercise price      Option scheme
Volatility          Historic closing mid-market share price over period equal to
                    vesting period of the option
Risk free rate      Yield on zero-coupon Government bonds with maturity equal to
                    vesting period of the option
Dividend yield      Historic net dividend yield
Expected life       Historic time period between vesting and exercise
Proportion expected Historic data, plus estimates of future RPI and EPS
to vest

In respect of the Executive share option schemes, the Directors make assumptions
on the likelihood of achieving the performance conditions, by estimating the
variables linked to those conditions. RPI is estimated using forecasts available
from Government sources and earnings per share is estimated using available
budgets and forecasts.

UNIVERSAL SALVAGE PLC 2000 EMPLOYEES' SHARE TRUST - EMPLOYEE SHARE OWNERSHIP
PLAN ('ESOP')

Shares purchased through Employee Share Option Trusts are held at cost and are
taken as a deduction in arriving at shareholders' funds.

The net result of the Employees' Share Trust, including profits and losses on
sale of shares and tax thereon, but excluding any dividend received and
receivable from Universal Salvage plc (which has been waived), is included in
the financial statements. The reserves of the Employees' Share Trust are
accounted for as a separate non-distributable reserve. Costs associated with the
Employees' Share Trust are written off in the Group financial statements within
administrative costs as they are incurred.

CASH AND CASH EQUIVALENTS
The Group holds small amounts of petty cash and, from time to time, short-term
money market deposits which bear interest on maturity. These items are held at
cost.

DERIVATIVE FINANCIAL INSTRUMENTS
The Group accounts for financial instruments in accordance with IAS32 (Financial
Instruments: Disclosure and Presentation) and IAS39 (Financial Instruments:
Recognition and Measurement) with effect from its transition to IFRS, 2 May
2004.

The Group recognises a debt instrument when it becomes party to the contractual
provisions of the instrument, and currently maintains a mixture of fixed and
floating rate instruments to fund its operations. The interest rate structure of
these debts is linked to the Bank of England base rate and London Inter Bank
Offered Rate ('LIBOR'). No premiums or discounts are applicable on redemption.


APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

The Group recognises a debtor when a contractual right to the cash flows exists.
Derecognition of a debtor occurs when the contractual right to the cash flows
ceases to exist, at which point the difference between the carrying amount and
the consideration received is recognised as a profit or loss.

The Group uses derivative financial instruments to reduce exposure to interest
rate movements. The Group does not hold or issue derivative financial
instruments for speculative purposes.

For an interest rate swap to be treated as a hedge, the instrument must be
related to actual assets or liabilities or a probable commitment and must change
the nature of the interest rate by converting a fixed rate to a variable rate or
vice versa. Interest differentials under these swaps are recognised by adjusting
net interest payable over the periods of the contracts.

If an instrument ceases to be accounted for as a hedge, for example because the
underlying hedged position is eliminated, the instrument is marked to market and
any resulting profit or loss recognised at that time.

FINANCIAL RISK MANAGEMENT

FINANCIAL RISK FACTORS
The Group's operations and debt financing expose it to a number of financial
risks that include credit risk, liquidity and interest rates. Wherever possible,
the Group seeks to limit the adverse effects caused by these risks on the
financial performance of the Group.

(a)     Interest rate risk

The Group has used an interest rate swap as a cash flow hedge of future interest
payments, which has the effect of increasing the Group's proportion of fixed
rate debt. This was deemed necessary to protect the Group against adverse
interest rate movements. The interest rate swap was for a five year period,
becoming due for settlement in November 2006.

(b)     Credit risk

The Group has no significant concentrations of credit risk. Predominantly,
cleared funds are required before vehicles disposed of at auction are permitted
to be removed from site or delivered. There are exceptions, but in those
instances appropriate credit checks are carried out on potential customers
before vehicles are released.

(c)     Liquidity risk

The Group maintains long-term committed facilities and short-term borrowings to
ensure the Group has sufficient available funds for capital expenditure
requirements and operations.







APPENDIX - GROUP ACCOUNTING POLICIES (CONTINUED)

FINANCIAL RISK MANAGEMENT (CONTINUED)

FINANCIAL RISK FACTORS

Derivatives are initially accounted and measured at fair value on the date a
derivative contract is entered into and subsequently measured at fair value. The
gain or loss on re-measurement is taken to the income statement except where the
derivative is a designated cash flow hedging instrument. The accounting
treatment of derivatives classified as hedges depend on their designation, which
occurs on the date that the derivative contract is committed to. The Group
designates derivatives as:

   •A hedge of the income/cost of a highly probable forecasted transaction or
    commitment ('cash flow hedge').

In order to qualify for hedge accounting, the Group is required to document in
advance the relationship between the item being hedged and the hedging
instrument. The Group is also required to document and demonstrate an assessment
of the relationship between the hedged item and the hedging instrument, which
shows that the hedge will be highly effective on an ongoing basis. This
effectiveness testing is re-performed at each quarter end to ensure that the
hedge remains highly effective.

Gains or losses on cash flow hedges that are regarded as highly effective are
recognised in equity. Where the forecast transaction results in a financial
asset or liability only gains or losses previously recognised in equity are
reclassified to profit or loss in the same period as the asset or liability
affects profit or loss. Where the forecasted transaction or commitment results
in a non-financial asset or a liability, any gains or losses previously deferred
in equity are included in the cost of the related asset or liability. If the
forecasted transaction or commitment results in future income or expenditure,
gains or losses deferred in equity are transferred to the income statement in
the same period as the underlying income or expenditure. The ineffective
portions of the gain or loss on the hedging instrument are recognised in profit
or loss.

For the portion of hedges deemed ineffective or transactions that do not qualify
for hedge accounting under IAS39, any change in assets or liabilities is
recognised immediately in the income statement. Where a hedge no longer meets
the effectiveness criteria, any gains or losses deferred in equity are only
transferred to the income statement when the committed or forecasted transaction
is recognised in the income statement. However, where the Group applied cash
flow hedge accounting for a forecasted or committed transaction that is no
longer expected to occur, then the cumulative gain or loss that has been
recorded in equity is transferred to the income statement. When a hedging
instrument expires or is sold, any cumulative gain or loss existing in equity at
that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement.

FAIR VALUE ESTIMATION

The fair value of the interest rate swap is based on the present value of
estimated future cash flows at the balance sheet date.

The fair value of short-term deposits, loans and overdrafts with a maturity of
less than one year are assumed to approximate to their book values. In the case
of bank loans and other loans due in more than one year the fair values of
financial liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate available to
the Group for similar financial instruments.



ENDS



                      This information is provided by RNS
            The company news service from the London Stock Exchange