We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Name | Symbol | Market | Type |
---|---|---|---|
Chemetall 9%Pf | LSE:CHM | London | Preference Share |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 100.00 | 0 | 01:00:00 |
RNS Number:4244R Chemetall PLC 19 September 2005 Chemetall PLC Interim Financial Report 30June 2005 --------------------------- Chemetall PLC Interim financial report 2005 Contents Commentary 1 Consolidated income statement 3 Consolidated statement of recognised income and expense 4 Consolidated balance sheet 5 Consolidated cash flow statement 7 Notes to the interim financial report 8 Appendix 1 - Adoption of IFRS 15 Appendix 2 - Accounting Policies 23 Chemetall PLC Commentary Chemetall PLC sales to third parties grew by more than 9% (on a comparative basis) over the prior year during the first 6 months of 2005. Key growth in proprietary surface treatment chemical sales was achieved within the aerospace sector especially, airframe sealant and chemicals for aero engine manufacture being the most significant contributors. Sales of specialist industrial pipecoating chemicals have enjoyed a double digit increase over prior year. Automotive and automotive component sectors have remained static, whilst sales to the British Cold Forming (Wire and Tube) markets continue to erode in line with the Industry trend. The Middle East markets for which Chemetall PLC is responsible continue to grow steadily. Results and dividends During the first six months, the Group generated a profit on ordinary activities before taxation of #0.9 million (six months ended 30 June 2004: #0.9 million) with a turnover of #8.7 million (six months ended 30 June 2004: #7.1 million). The sales for the six month period to 30 June 2005 includes the aircraft sealant business purchased in November 2004 The Group's loan assets, including any exchange movements and interest accrued thereon, totalled #39.1 million at 30 June 2005 (30 June 2004: #79.2 million). Preference dividends continue to be paid on the normal due dates. Cash flow and financing The net cash inflow from operating activities at 30 June 2005 was #41.6 million (30 June 2004: #0.4 million). During the period, the #39.7 million loan was repaid by Chemetall GmbH and this money has been invested in a third party bank. At the period end the Group had net cash balances of #42.8 million, #0.54 million of which was necessary to pay the preference dividend in July. Board During the half year, Alec Daley resigned as Chairman and was replaced by Kurt Wenzel (Chemetall GmbH Group Managing Director for the Europe, Middle East and Africa region - EMEA). Bill Jessup resigned as non-executive Finance and Company Secretary. Rob Rydings is appointed as Company Secretary and Matthias Wilhelm Stoermer the Chemetall Group CFO, will act as financial director. Messrs Daly and Jessup have carried our their non-executive duties to the highest professional level during the past 5 years of their tenure. The Group thanks them for their strong input. Employees Chemetall thanks its employees for continuing to help the Company grow in turnover and profitability despite the prevailing manufacturing downturn. Chemetall PLC continues to invest in both internal and external training and development of all employees. The increasingly positive trading results are directly related to the high level of competence and commitment of the staff. Page 1 Chemetall PLC Commentary Outlook The third party sales growth trend is expected to flatten or decline by as much as 5% during the second half of 2005. A number of key customer closures have been announced recently and it is unlikely that the continued new business input will completely offset this downturn. The Company has continued to increase its finished goods prices in line with high increases in raw material prices. An exception is the Automotive Original Equipment Manufacturer sector where price increases are not presently possible. As a consequence of automotive industry policy, overall margins will shift slightly downwards during the second half of 2005. The Company has already put its risk and contingency planning into place. 65 Denbigh Road Bletchley Milton Keynes MK1 1PB By order of the Board, MJ Watson - Director RS Rydings - Company Secretary 15 September 2005 Page 2 Chemetall PLC Consolidated income statement Six months ended 30 June 2005 Six months Year ended 31 ended 30 June December 2004(i) #000 Note 2005 2004 #000 #000 Unaudited Unaudited Unaudited Revenue 8,718 7,116 13,885 Cost of sales (5,640) (4,416) (7,710) Gross profit 3,078 2,700 6,175 Other operating income - - 108 Distribution costs (2,076) (1,941) (5,397) Administrative expenses (1,122) (769) (1,712) Loss from operations (120) (10) (826) Financial income 1,575 1,467 2,958 Finance costs (589) (542) (1,090) Profit before tax 866 915 1,042 Tax 3 (447) (220) (430) Profit for the period 419 695 612 (i)Although not required by IAS 34, the comparative figures for the preceding year end have been included as this is best practice in the UK Page 3 Chemetall PLC Consolidated statement of recognised income and expense Six months ended 30 June 2005 Six months Year ended 31 ended 30 June December 2004(ii) #000 2005 2004 #000 #000 Unaudited Unaudited Unaudited Exchange differences on translation of foreign operations (1,775) (2,033) 47 Actuarial losses on defined benefit pension schemes (1,174) (364) (2,350) Tax on items taken directly to equity 374 120 711 Net loss recognised directly in equity (2,575) (2,277) (1,592) Profit for the period 419 695 612 Total recognised income and expense for the period (2,156) (1,582) (980) The consolidated statement of recognised income and expense reflects the amendment to IAS 19 "Employee Benefits". The amendment has yet to be endorsed by the Accounting Regulatory Committee of the European Commission for use in the European Union. This is expected in the next few months (ii)Although not required by IAS 34, the comparative figures for the preceding year end have been included as this is best practice in the UK. Page 4 Chemetall PLC Consolidated balance sheet 30 June 2005 Note 30 June 30 June 31 December 2005 2004(iii) 2004(iv) #000 #000 #000 Unaudited Unaudited Unaudited Non-current assets Goodwill 2,475 2,475 2,475 Other intangible assets 459 378 565 Property, plant and equipment 1,207 1,364 1,297 Deferred tax assets 4,309 3,348 3,936 8,450 7,565 8,273 Current assets Inventories 1,110 992 1,124 Trade and other receivables 43,529 82,585 85,112 Income tax receivable 17 - - Cash and cash equivalents 42,826 991 300 87,482 84,568 86,536 Total assets 95,932 92,133 94,809 Current liabilities Trade and other payables (5,960) (3,952) (4,063) Tax liabilities (347) (100) (152) (6,307) (4,052) (4,215) Net current assets 81,175 80,516 82,321 (iii)Although not required by IAS 34, the comparative amounts for the six months ended 30 June 2004 have been included to comply with the Listing Rules requirement 12.52 (d) to include comparative figures for the corresponding period in the preceding financial year. (iv)IAS 34 (20(a)) requires the balance sheet to include comparatives as of the end of the preceding financial year. Page 5 Chemetall PLC Consolidated balance sheet (continued) 30 June 2005 Note 30 June 2005 30 June 2004(v) 31 December # # 2004(vi) # Unaudited Unaudited Unaudited Non-current liabilities Interest bearing loans and borrowings (12,000) (12,000) (12,000) Retirement benefit obligation 5 (10,152) (6,883) (8,904) Long-term provisions (1,469) (1,640) (1,529) (23,621) (20,523) (22,433) Net assets 66,004 67,558 68,161 Equity Share capital 6,889 6,889 6,889 Share premium account 29,757 29,757 29,757 Translation in reserve (1,775) (2,033) 47 Retained earnings 31,133 32,945 31,468 Total equity 66,004 67,558 68,161 (v)Although not required by IAS 34, the comparative amounts for the six months ended 30 June 2004 have been included to comply with the Listing Rules requirement 12.52 (d) to include comparative figures for the corresponding period in the preceding financial year. (vi) IAS 34 (20(a)) requires the balance sheet to include comparatives as of the end of the preceding financial year Page 6 Chemetall PLC Consolidated cash flow statement Six months ended 30 June 2005 Six months Year ended 31 ended 30 June December Note 2005 2004 2004(vii) #000 #000 #000 Unaudited Unaudited Unaudited Net cash from operating activities 4 41,588 359 (160) Investing activities Purchases of property, plant and equipment (48) (79) (164) Net cash used in investing activities (48) (79) (164) Financing activities Interest paid (589) (542) (1,082) Interest received 1,575 1,050 1,503 Net cash from financing activities 986 508 421 Net increase in cash and cash equivalents 42,526 788 97 Cash and cash equivalents at beginning of period 300 203 203 Cash and cash equivalents at end of period 42,826 991 300 (vii)Although not required by IAS 34, the comparative figures for the preceding year end have been included as this is best practice in the UK Page 7. Chemetall PLC Notes to the interim financial report Six months ended 30 June 2005 1. Basis of preparation The attached interim financial statements are the first interim financial statements following adoption of International Financial Reporting Standards (IFRS). As the Group has not previously published a full set of financial statements under IFRS, the content of these statements has been expanded to include summarised reconciliation of net assets and equity from previously reported amounts under UK GAAP for year ended 31 December 2003 and 31 December 2004, together with detailed explanations of the main UK GAAP - IFRS differences - see Appendix 1. EU law (IAS regulation EC 1606/2002) requires that the next annual consolidated financial statements of the company, for the year ending 31 December 2005 be prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for use in the EU ("adopted IFRSs"). This interim financial information has been prepared on the basis of the recognition and measurement requirements of IFRSs in issue that either are endorsed by the EU and effective (or available for early adoption) at 31 December 2005 or are expected to be endorsed and effective (or available for early adoption) at 31 December 2005 the company's first annual reporting date at which it is required to use adopted IFRSs. Based on these adopted and unadopted IFRSs, the directors have made assumptions about the accounting policies expected to be applied, which are as set out in Appendix 2, when the first annual IFRS financial statements are prepared for the year ending 31 December 2005. In particular, the directors have assumed that the following IFRS issued by the International Accounting Standards Board will be adopted by the EU in sufficient time that they will be available for use in the annual IFRS financial statements for the year ending 31 December 2005: * IAS 19 ' Employment Benefits' - amendment to allow actuarial gains and losses to be recognised directly in the statement of recognised income and expenses. In addition, the adopted IFRSs that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 December 2005 are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ending 31 December 2005. 2. Section 240 Statement The information for the year ended 31 December 2004 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified. Page 8 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 3. Tax Six months ended 30 June 2005 2004 # # UK corporation tax 447 220 447 220 Corporation tax for the interim period is charged at 52% (2004: 24%), due to the comparatively large amount of interest receivable included in the results, representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year. 4. Notes to the cash flow statement Six months ended 30 June 2005 2004 # # Profit before taxation 866 915 Adjustments for: Depreciation of property, plant and equipment 139 158 Amortisation of intangible assets 106 53 Decrease in provisions (60) (32) Interest income (1,575) (1,467) Interest expense 589 542 Operating cash flows before movements in working capital 65 169 Decrease in inventories 14 90 Decrease in receivables 39,807 - Increase in payables 1,971 387 Cash generated by operations 41,857 646 Income taxes paid (269) (287) Net cash from operating activities 41,588 359 Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank. 5. Retirement benefit schemes Defined benefit schemes The group operates two defined benefit schemes which provide for liabilities through trustees operated funds. During the year, the deficit in the scheme increased by #1,248,000. An IAS 19 charge of #404,000 was made in the income statement for the period. Page 9 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 6. Related party transactions Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the group and other related parties are disclosed below. Trading transactions During the year, group companies entered into the following transactions with related parties who are not members of the group: Sale of goods Purchase of Amounts owed by Amounts owed to goods related parties related parties Six months ended 2005 2004 2005 2004 2005 2004 2005 2004 30 June #000 #000 #000 #000 #000 #000 #000 #000 Fellow subsidiary undertakings 396 360 1,413 432 629 376 2,235 1,128 Sales and purchases of goods to related parties were made at the parent group's usual list prices. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts owed by related parties. During the period, other services such as licences, IT services and insurance were purchased from Chemetall GmbH in the amount of #121,000 (30 June 2004: #170,000). Non-trading transactions The group has lent money to the following fellow subsidiaries undertakings. The outstanding loan balances and the interest charged on these loan balances are presented in the table below: Loans to Interest charged to Six month ended 2005 2004 2005 2004 #000 #000 #000 #000 Fellow subsidiary underatkings 39,134 79,536 587 677 Page 10 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 7. Explanation of transition to IFRSs The reconciliations of equity at 1 January 2004 (date of transition to IFRS) and at 31 December 2004 (date of last UK GAAP financial statements) and the reconciliation of profit for 2004, as required by IFRS 1, including the significant accounting policies, have been included as appendix 1 to this interim report. The full restated IFRS accounting policies can be found in Appendix 2. The reconciliation of equity at 30 June 2004 and the reconciliation of profit for the six months ended 30 June 2004 have been included below to enable a comparison of the 2005 interim figures with those published in the corresponding period of the previous financial year. Reconciliation of equity at 30 June 2004 UK GAAP Effect of IFRSs transition to IFRSs #000 #000 #000 Property, plant and equipment 1,364 - 1,364 Goodwill 2,400 75 2,475 Intangible assets 378 - 378 Deferred tax assets 1,289 2,059 3,348 Total non-current assets 5,431 2,134 7,565 Trade and other receivables 82,585 - 82,585 Inventories 992 - 992 Cash and cash equivalents 991 - 991 Total current assets 84,568 - 84,568 Total assets 89,999 2,134 92,133 Interest-bearing loans - (12,000) (12,000) Trade and other payables (3,952) - (3,952) Employee benefits (19) (6,864) (6,883) Provisions (708) (932) (1,640) Current tax liability (100) - (100) Total liabilities (4,779) (19,796) (24,575) Total assets less total liabilities 85,220 (17,662) 67,558 Issued capital 18,889 (12,000) 6,889 Share premium 29,757 - 29,757 Retained earnings 38,607 (5,662) 32,945 Reserves (2,033) - (2,033) Total equity 85,220 (17,662) 67,558 Page11 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 7. Explanation of transition to IFRSs (continued) Reconciliation of profit for the six months ended 30 June 2004 UK GAAP Effect of IFRSs transition to IFRSs Revenue 7,116 - 7,116 Cost of sales (4,416) - (4,416) Gross profit 2,700 - 2,700 Distribution costs (1941) - (1,941) Administrative expenses (840) 71 (769) Finance income 1,467 - 1,467 Finance costs - (542) (542) Profit before tax 1,386 (471) 915 Tax expense (220) - (220) Net profit 1,166 (471) 695 Dividends (542) 542 - Retained profit 624 71 695 Notes to the reconciliation of equity and profit for the six months ended 30 June 2004 The following adjustments were made to the previously UK GAAP reported as at 30 June 2005: Pensions and other post-retirement benefits UK GAAP: Pension costs were accounted for under SSAP 24 'Accounting for pension costs' whereby the costs of providing pensions were charged to the profit and loss account based on a percentage of employees pay, with any variations in regular costs, interest and changes to actuarial gains and losses amortised over the expected average remaining service lives of current employees. Any differences between the amounts charged to the profit and loss account and cash payments made to the pension schemes were recognised in the balance sheet. IFRS (as required by IAS 19 revised, but closely in line with the disclosures already made in the notes to the accounts under FRS 17): Current and past service costs of the Group's pension schemes, the expected return on the scheme's assets and any interest costs relating to the present value of the scheme's liabilities are charged to the income statement, with any actuarial gains and losses being recognised through the statement of recognised income and expense (SORIE). Any surplus in the fair value of the pension scheme assets over the present value of the liabilities is recorded as an asset in the balance sheet, and any deficit as a liability. The change in the accounting treatment of the Group's pension arrangements will have no impact on their funding. The EU has not yet endorsed the revisions to IAS 19 which allows actuarial gains or losses to be recognised through the SORIE. However, this is expected to occur before the year end. Page 12 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 Accounting impact at 30 June 2004: * Income statement: A decrease to reported pre tax profits of #36,000. * Balance sheet: A decrease to shareholders's funds of #4,805,000 after deferred tax, being the elimination of the net pension accrual under SSAP 24 and the creation of a pension liability of #6,864,000 and the recognition of related deferred tax asset of #2,059,000. Amortisation of purchased goodwill UK GAAP: Goodwill was amortised over a period of 20 years and was subject to testing for impairment when circumstances indicated that the carrying value may not be recoverable. IFRS (as required by IFRS 3 and also by concession under IFRS1 ): Goodwill is not amortised but is tested annually for impairment. This applies to all goodwill arising on acquisitions after 1 January 2004. IFRS 1 First time adoption of IFRS, permits goodwill on acquisitions made before this date to be brought on to the balance sheet at 1 January 2004 at its carrying value under UK GAAP. Accounting impact at 30 June 2004: * Income statement: Profit before tax increased by #75,000 in 2004, being the amount amortised in the six months period ended 30 June 2004 under UK GAAP. * Balance sheet: An increase to shareholders' funds of #75,000 as purchased goodwill remains at its 1 January 2004 carrying value. Accounting for vacant leasehold properties UK GAAP: A provision is maintained in respect of vacant leasehold properties to take account of the net present value of the residual lease commitments over the long term planning period of five years or, if earlier, the period until which the Directors expect the properties to be sub-let. In determining the net present value, cash flows have been discounted using an appropriate nominal, risk free, pre-tax rate of return (UK gilt for a 5 year period). IFRS: Under IFRS the directors have taken a more prudent approach and provided for the net present value of the residual lease commitments over the remaining term of the lease contract, a period usually longer than 5 years. Accounting impact at 30 June 2004: * Income statement: An increase in the reported profit before tax of #32,000. * Balance sheet: Net assets and equity decrease of #932,000. Preference shares UK GAAP: Preference shares were treated as capital and associated servicing charges were treated as dividends. IFRS (as required by IAS 32): Preference shares with an obligation to transfer economic benefit are treated as financial liabilities (debt) and not as capital. The costs of servicing preference shares are disclosed as interest. Accounting impact at 30 June 2004: * Income statement: A decrease to reported profit before tax of #542,000. At a retained profit level, there is no change. * Balance sheet: Net assets and equity decrease by #12,000,000 and net debt increases by the same amount. Page 13 Chemetall PLC Notes to the interim financial report (continued) Six months ended 30 June 2005 Deferred tax UK GAAP: Deferred tax was provided on timing differences between accounting and tax profits. No provision for the tax effect on the potential disposal of revalued properties was accounted for. IFRS (as required by IAS 12): Deferred tax is provided on all temporary differences between accounting and tax book values, including the requirement to account for the tax effect of any future property disposals. In addition there have been deferred tax adjustments to account for the tax effect of other IFRS changes, including product development, pensions and share-based payments. Accounting impact at 30 June 2004: * Income statement: No impact. * Balance sheet: Net assets and equity increase by #2,059,000 which is mainly attributable to the creation of a deferred tax asset on the IAS 19 pension liability. Other adjustments Smaller adjustments have also been made to reflect IFRS reclassifications. These include reclassification of income tax payable and deferred tax from creditors and debtors, respectively in order to be separately shown on the face of balance sheet. Explanation of material adjustments to the cash flow statement for the six months ended 30 June 2004 There are no material adjustments to the cash flow statement for the six months period ended 30 June 2004. All adjustments made are for presentation only. Page 14 Appendix 1 Chemetall PLC Adoption of IFRS A summarised analysis of the main aspects of IFRS that impact on the financial statements of Chemetall PLC is set out on pages 15 to 19. In addition a set of restated 2004 financial statements, excluding detailed notes, are set out on pages 20 to 23 of this appendix. Restatement of the Group's accounting policies can be found in Appendix 2 set out on pages 23 to 26. The restatement of the group's 2004 results are unaudited. Key points *Shareholders' funds at 31 December 2004 decreased to #68,161,000 from #87,095,000 as previously reported. This has arisen substantially from the new requirements for accounting for pensions under IAS 19 'Employee benefits' and the reclassification of preference shares from equity to liabilities. *Volatility in the level of distributable profit increases, mainly from the changes in accounting for pensions. *No effect of the Group's trading cash flows. *No effect on the Group's management of its business. Principal areas that affect the financial statements of the Group 1. Pensions and other post-retirement benefits UK GAAP: Pension costs were accounted for under SSAP 24 'Accounting for pension costs', whereby the costs of providing pensions were charged to the profit and loss account based on a percentage of employees pay, with any variations in regular costs, interest and changes to actuarial gains and losses amortised over the expected average remaining service lives of current employees. Any differences between the amounts charged to the profit and loss account and cash payments made to the pension schemes were recognised in the balance sheet. IFRS (as required by IAS 19 revised, but closely in line with the disclosures already made in the notes to the accounts under FRS 17): Current and past service costs of the Group's pension schemes, the expected return on the scheme's assets and any interest costs relating to the present value of the scheme's liabilities are charged to the income statement, with any actuarial gains and losses being recognised through the statement of recognised income and expense (SORIE). Any surplus in the fair value of the pension scheme assets over the present value of the liabilities is recorded as an asset in the balance sheet, and any deficit as a liability. The change in the accounting treatment of the Group's pension arrangements will have no impact on their funding. The EU has not yet endorsed the revisions to IAS 19 which allows actuarial gains or losses to be recognised through the SORIE. However, this is expected to occur before the year end. Page 15 Appendix 1 Accounting impact in 2004: * Income statement: A decrease to reported pre tax profits of #21,000. * Balance sheet: A decrease to shareholders's funds of #6,184,000 after deferred tax, being the elimination of the net pension accrual under SSAP 24 of #69,000 and the creation of a net pension liability, after deferred tax, of #6,253,000. 2. Amortisation of purchased goodwill UK GAAP: Goodwill was amortised over a period of 20 years and was subject to testing for impairment when circumstances indicated that the carrying value may not be recoverable. IFRS (as required by IFRS 3 and also by concession under IFRS1 ):Goodwill is not amortised but is tested annually for impairment. This applies to all goodwill arising on acquisitions after 1 January 2004. IFRS 1 'First time adoption' of IFRS, permits goodwill on acquisitions made before this date to be brought on to the balance sheet at 1 January 2004 at its carrying value under UK GAAP. Accounting impact in 2004: * Income statement: Profit before tax increased by #150,000 in 2004, being the amount amortised in 2004 under UK GAAP. * Balance sheet: An increase to shareholders' funds of #150,000 as purchased goodwill remains at its 1 January 2004 carrying value. 3. Accounting for vacant leasehold properties UK GAAP: A provision is maintained in respect of vacant leasehold properties to take account of the net present value of the residual lease commitments over the long term planning period of five years or, if earlier, the period until which the Directors expect the properties to be sub-let. In determining the net present value, cash flows have been discounted using an appropriate nominal, risk free, pre-tax rate of return (UK gilt for a 5 year period). IFRS: Under IFRS the directors have taken a more prudent approach and provided for the net present value of the residual lease commitments over the remaining term of the lease contract, a period usually longer than 5 years. Accounting impact in 2004: * Income statement: An increase in the reported profit before tax of #64,000. * Balance sheet: Net assets and equity decrease by #900,000. Page 16 Appendix 1 4. Preference shares UK GAAP: Preference shares were treated as capital and associated servicing charges were treated as dividends. IFRS (as required by IAS 32): Preference shares with an obligation to transfer economic benefit are treated as financial liabilities (debt) and not as capital. The costs of servicing preference shares are disclosed as interest. Accounting impact in 2004: * Income statement: A decrease to reported profit before tax of #1,080,000. At a retained profit level, there is no change. * Balance sheet: Net assets and equity decrease by #12,000,000 and net debt increases by the same amount. 5. Deferred tax UK GAAP: Deferred tax was provided on timing differences between accounting and tax profits. No provision for the tax effect on the potential disposal of revalued properties was accounted for. IFRS (as required by IAS 12): Deferred tax is provided on all temporary differences between accounting and tax book values, including the requirement to account for the tax effect of any future property disposals. In addition there have been deferred tax adjustments to account for the tax effect of other IFRS changes, including product development, pensions and share-based payments. Accounting impact in 2004: * Income statement: No impact. * Balance sheet: Net assets and equity increase by #2,651,000 which is mainly attributable to the creation of a deferred tax asset on the IAS 19 pension liability. 6. Other adjustments Smaller adjustments have also been made to reflect IFRS reclassifications. Page 17 Appendix 1 Summarised reconciliations from UK GAAP to IFRS 1. 2004 income statement #000 Retained profit under UK GAAP 419 Pensions (21) Vacant property provision 64 Goodwill - amortisation 150 -------------- Profit after tax under IFRS 612 ============== 2. 2004 net assets #000 Net assets under UK GAAP 87,095 Pensions and post-retirement benefits (net of deferred tax) (6,184) Goodwill - amortisation 150 Vacant property provisions (900) Preference shares (12,000) -------------- Net assets under IFRS 68,161 ============== Page 18 Appendix 1 3. 2003 net assets (at 1 January 2004) #000 Net assets under UK GAAP 86,629 Pensions and post-retirement benefits (net of deferred tax) (4,525) Vacant property provisions (964) Preference shares (12,000) -------------- Net assets under IFRS 69,140 ============== Basis of preparation The financial information has been prepared in accordance with the IFRS standards expected to be adopted by the EU at 31 December 2005. These standards are still subject to change. The accounting policies applied are set out in Appendix 2. Transitional arrangements The rules for first time adoption of IFRS are set out in IFRS 1. In general a company is required to determine its IFRS accounting policies and apply these retrospectively to determine its opening balance sheet under IFRS. IFRS 1 allows a number of exceptions to this general requirement. The accounting for goodwill, share-based payments and property at market value has already been noted above. In addition, the Group has adopted the exemption that IAS 32 and IAS 39, both relating to financial instruments, need not be applied to the comparative periods. Under IAS 21 The effects of changes in foreign exchange rates, cumulative translation differences arising on consolidation of subsidiaries should be held in a separate reserve, rather than included in the profit and loss reserve; the Group has applied the exemption not to adopt this retrospectively and the reserve has been deemed to be #nil on 1 January 2004. Presentation of financial statements The Group's financial statements have been presented in accordance with IAS 1 Presentation of financial statements. Except for the reclassification of preference dividends as interest, there is no impact on reported profit before tax as a consequence of IAS 1. Where IAS 1 does not provide definitive guidance on presentation, for example in relation to aspects of the income statement, the Group has adopted a format consistent with UK GAAP requirements. This assists with comparing results with prior years. The format of the balance sheet has been amended to include items required by IAS 1 to be presented on the face of the balance sheet, including the requirement to analyse all assets and liabilities, including provisions, between current and non-current, and present deferred tax assets separately from deferred tax liabilities, rather than as a single net amount. Page 19 Appendix 1 Consolidated income statement for the year ended 31 December 2004 2004 #000 Revenue 13,885 Cost of sales (7,710) ------------------ Gross profit 6,175 Distribution expenses (5,397) Administrative expenses (1,712) Other operating income 108 -------------------- Operating loss before financing income (826) Financial expense (1,090) Financial income 2,958 ---------------------- Net financing income 1,868 Profit before tax 1,042 Income tax charge (430) ---------------------- Profit for the period 612 ================ Page 20 Appendix 1 Consolidated balance sheet 2004 #000 Non-current assets Intangible assets 3,040 Property, plant and equipment 1,297 Deferred tax asset 3,936 ----------------- 8,273 Current assets Inventories 1,124 Trade and other receivables 85,112 Cash and cash equivalents 300 ------------------ 86,536 Current liabilities Trade and other payables (4,063) Income tax payable (152) ------------------ (4,215) Net current assets 82,321 ---------------- Non-current liabilities Interest bearing loans and borrowings (12,000) Employee benefits (8,904) Provisions (1,529) ---------------- (22,433) ---------------- Net assets 68,161 ================ Equity Issued capital 6,889 Share premium 29,757 Retained earnings 31,468 Reserves 47 ---------------- Shareholders' funds 68,161 ================ Page 21 Appendix 1 Consolidated statement of cash flows 2004 #000 Profit before taxation 1,042 Depreciation 426 Provisions (64) Movement in inventories (42) Movement in trade and other receivables 579 Movements in trade and other payables 377 Interest income (2,958) Interest expense 1,090 ---------------- 450 Income tax paid (610) Net cash inflow from operating activities (160) Cash form financing activities Interest paid (1,082) Interest received 1,503 ---------------- 421 Cash from investing activities Acquisition of property plant and equipments (164) ----------------- Increase in cash and cash equivalents 97 ================ Page 22 Appendix 2 Chemetall PLC Accounting policies This appendix provides a summary of Chemetall's accounting policies under IFRS. All accounting policies not detailed below remain consistent with their application under UK GAAP. Basis of accounting The restated financial information for the transition to IFRS at 1 January 2004, the six months ended 30 June 2004 and the year ended 31 December 2004 has been prepared in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and expected to be endorsed by the EU and effective at 31 December 2005. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and assumptions are based on historical experience and other factors considered reasonable at the time, but actual results may differ from these estimates. Revisions to these estimates are made in the period in which they are recognised. Basis of consolidation The consolidated financial statements include the financial statements of the company and its subsidiary undertakings. The acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal. A subsidiary is a company in controlled directly or indirectly by the Group. Control is the power to govern the financial and operating policies of the company so as to obtain benefits from its activities. Intra-group balances arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. In the company's financial statements, investments in subsidiary undertakings are stated at cost less provision for impairment. Business combinations and goodwill Goodwill represents the excess of the fair value of the purchase consideration for the interests in subsidiary and joint venture undertakings over the fair value to the Group of the net assets and any contingent liabilities acquired. Goodwill arising on acquisitions is capitalised and subject to impairment review, both annually and when there are indications that the carrying value may not be recoverable. Prior to 1 January 1998 goodwill was written off to reserves in the year of acquisition. Goodwill arising since 1 January 1998 until 31 December 2003 was amortised over its estimated useful life. In addition, annual impairment tests were performed. Page 23 Appendix 2 Under IFRS such amortisation ceased on 31 December 2003. From 1 January 2004, it will be subject to impairment reviews as above. Research and development Research and development and related product development costs are charged to the income statement in the year in which they are incurred unless they are specifically chargeable to and recoverable from customers under agreed contract terms or the expenditure meets the criteria for capitalisation. Where the expenditure meets the criteria for capitalisation set out in IAS 38 'Intangible assets', development costs are capitalised and amortised over their useful economic lives, to a maximum of five years. Such intangible assets are assessed for impairment annually and any impairment is charged to the income statement. Post-retirement benefits The Group accounts for pensions and post-retirement benefits under IAS 19 Employee benefits. For defined benefit plans, obligations are measured at present value, while plan assets are recorded at fair value. The operating and financing costs of such plans are recognised in the income statement. Current service costs are spread systematically over the lives of employees and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised in the period in which they arise in the statement of recognised income and expense. Foreign currencies Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate ruling at the balance sheet date and the gains or losses on translation are included in the profit and loss account. The accounts of overseas subsidiaries are translated into sterling in the consolidated accounts on the following basis: Income statement items are translated at average rate of exchange for the financial year. Assets and liabilities are translated at the rate of exchange ruling on the balance sheet date. Exchange difference arising on retranslation of the opening net assets together with any difference arising between average exchange rate and the closing rate in the income statement are taken to reserves via the statement of recognised income and expenses. Inventories Inventory and work in progress is valued at the lower of cost, including appropriate overheads, and net realisable value. Provisions are made against excess and obsolete inventories. Intangible assets - patents and concessions Patents are amortised in line with the stated life of the patents, between 1 and 20 years. Page 24 Appendix 2 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairments in value. Depreciation is provided to write off cost less the estimated residual value of property, plant and equipment by equal instalments over their estimated useful economic lives as follows: Short leasehold property - life of the lease Plant, machinery and equipment - 10-33% per annum Fixtures and fittings - 20% per annum The directors regularly consider the carrying value of property, plant and equipment for impairment. Any reduction in value arising from the impairment of the property, plant and equipment is charged to the income statement for the year. Financial instruments IAS 39 Financial Instruments: Recognition and Measurement requires the classification of financial instruments into different types for which the accounting requirement is different. Financial instruments are initially measured at fair value. Their subsequent measurement depends on their classification: Loans and receivables and other liabilities are held at amortised cost. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Share capital Preference share capital are classified as a liability as dividend payments are not discretionary. Dividends on the preference shares are disclosed as interest charges and are accounted on an accrual basis. Other dividends are recognised as a liability only in the period in which they are declared. Interest Interest receivable is recognised in the income statement using the effective interest method as defined in IAS 39 Financial instruments: recognition and measurement. Page 25 Appendix 2 Taxation Provision for taxation is made at the current rate and for deferred taxation at the tax rate expected to apply on all temporary differences between the treatment of certain items for taxation and for accounting purposes. Leases Assets held under finance leases are capitalised and included in property, plant and equipment at fair value. Depreciation is provided in accordance with the Group's depreciation policy. The capital elements of obligations under finance leases are recorded as liabilities. The interest elements of the rental obligation are allocated to accounting periods over the lease term to give a constant periodic rate of interest on the outstanding liability. Rentals payable under operating leases are charged to the income statement on an accruals basis. Provisions A provision is created and recognised as a liability when the Group has a present obligation (legal or constructive) as a result of a past event and it is expected that a transfer of economic benefits will be required to settle that obligation and a reliable estimate of he amount of the transfer can be made. Vacant leasehold properties A provision is maintained in respect of vacant leasehold properties to take account of the net present value of the residual lease commitments over the remaining term of the lease. In determining the net present value, cash flows have been discounted using an appropriate nominal, risk free, pre-tax rate of return. Revenue Revenue comprises the amounts receivable for the supply during the year of specialty chemicals and ancillary equipment to customers excluding value added tax and overseas sales tax. Sales are recognised when the significant risk and rewards of ownership of goods are transferred to the customer. IFRS transitional arrangements When preparing the Group's IFRS balance sheet at 1 January 2004, the date of transition, the following optional exemptions, provided by IFRS 1 First-time adoption of International Financial Reporting Standards from full retrospective application of IFRS accounting policies, have been adopted: Business combinations - the provisions of IFRS 3 have been applied from 1 January 2004. The net carrying value of goodwill at 31 December 2003 under the previous accounting policies has been deemed to be the cost at 1 January 2004; Page 26 Appendix 2 Foreign exchange transactions - IAS 21 requires that cumulative translation differences arising on consolidation of subsidiaries should be held in a separate reserve. This reserve has been deemed to be nil at 1 January 2004 and the IAS 21 requirement has been applied prospectively from 1 January 2004. Page 27 This information is provided by RNS The company news service from the London Stock Exchange END IR GUUUWBUPAGUB
1 Year Chemetall 9%Pf Chart |
1 Month Chemetall 9%Pf Chart |
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions