RNS Number:8554S
Braemar Seascope Group PLC
19 October 2005
BRAEMAR SEASCOPE GROUP PLC
Adoption of International Financial Reporting Standards
19 October 2005
Braemar Seascope Group PLC ("the Group") is preparing for the adoption of
International Financial Reporting Standards (IFRS) as its primary accounting
basis for the year ended 28 February 2006. As part of this transition, Braemar
Seascope is presenting unaudited financial information prepared in accordance
with IFRS for the year ended 28 February 2005 and six months ended 31 August
2004. This regulatory news release explains how formerly published financial
statements prepared under UK GAAP are reported under IFRS and provides the
appropriate reconciliations from UK GAAP to IFRS.
The Group's interim results for the six months ending 31 August 2005 will be
published on 25 October 2005. The interim results including all relevant
comparatives will be prepared in accordance with applicable IFRS.
IFRS does not affect the underlying business performance of the Group and has no
impact on cash generated from operations. The principal changes to Braemar
Seascope Group PLC's financial information under UK GAAP arising from the
adoption of IFRS are as a result of:
*The requirement not to amortise goodwill
*The recognition of other intangible assets arising on acquisition
*The inclusion of a fair value cost associated with employee share options
*A change in accounting for foreign exchange
KEY POINTS
*Reported pre tax profit for the year to 28 February 2005 increases by
#1.0m to #8.1m
*Reported earnings per share for the year to 28 February 2005 increases
from 23.67 pence to 29.50 pence
*Reported net assets at 28 February 2005 increases to #28.0m from #25.0m
*No impact on cash flows
For further information please contact:
James Kidwell, Group Finance Director (+44) (0) 207 535 2881
This announcement together with other information regarding Braemar Seascope
Group PLC can be found at: www.braemarseascope.com
1. INTRODUCTION
In accordance with European Regulations for listed entities, Braemar Seascope
Group PLC is required to adopt International Financial Reporting Standards
('IFRS') for its consolidated accounts for accounting periods commencing 1 March
2005. The Group's first published interim statements under IFRS will be the
results for the six months to 31 August 2005. These will be published on 25
October 2005.
In advance of the publication of future results on an IFRS basis, we set out
below an unaudited restatement of financial statements which were previously
reported under UK Generally Accepted Accounting Principles ('UK GAAP'), together
with a summary and explanations of the major changes. These adjustments are
explained in detail in later sections of this document. The information, which
is unaudited, has been prepared by management using its best knowledge,
judgement and interpretation of the expected standards and accounting policies
that will be adopted when the Group prepares its first complete set of IFRS
accounts as at 28 February 2006. It should be noted that only a complete set of
accounts comprising an income statement, a balance sheet, a cash flow statement,
a statement of recognised income and expense together with comparative financial
information and explanatory notes can provide a fair presentation of the Group's
financial position and operating performance. This financial information does
not constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985 (as amended).
The major accounting changes which are required by the introduction of IFRS are:
*Goodwill will no longer be amortised through the income statement and is
instead included at cost less impairment charges and is subject to an annual
impairment review. The amortisation for the year ended 28 February 2005
under UK GAAP is reversed as part of the IFRS restatement.
*On acquisition the excess of consideration over net assets acquired is
required to be allocated over a larger, more defined list of intangible
assets, with the unallocated balance representing goodwill. Intangible
assets, other than goodwill, are amortised through the income statement over
their expected useful economic life.
*The fair value of share-based payments is recorded as an expense in the
income statement, spread over the vesting period. Under UK GAAP there was no
charge to profit because executive share options were issued at market value
and Save As You Earn options were exempt any charge.
*The fair value of outstanding derivative forward currency contracts is
required to be included in the balance sheet and the movement in the period
included either in the income statement (where hedge accounting has not been
applied or to the extent that it has become ineffective) or in equity (where
hedge accounting has been applied and remains effective).
*Under UK GAAP trade debtors were valued at the contracted rate of
exchange (rather than at the closing rate of exchange) to the extent that
they were covered by a forward foreign exchange contract. Under IFRS all
assets and liabilities are translated at the closing spot rate of exchange.
*Under UK GAAP the share of a joint venture's tax charge was reflected as
part of the Group's tax charge. Under IFRS the share of the joint venture's
post tax result is reflected as part of the Group's profit before tax.
There are also significant changes in the presentation of the financial
statements including the presentation of the results of equity accounted joint
ventures.
2. BASIS OF PREPARATION
The unaudited financial information in the statements set out below has been
prepared in accordance with the International Accounting Standards ('IAS') and
International Financial Reporting Standards ('IFRS') expected to apply to the
Group at 28 February 2006. Certain standards are still subject to change. The
European Union has not yet adopted all of the IFRS (including amendments to IAS
19 'Employee Benefits' and IAS 39 'Financial Instruments: Recognition and
Measurement') consequently on adoption of these standards there may be further
changes to the figures provided in this document. Further IFRS may be
introduced between now and the finalisation of the 2006 Report and Accounts. As
a result there may be further changes when the Group prepares its first full
year IFRS financial statements. The Group's significant accounting policies
under IAS and IFRS are set out in section 9 of this document. The Group has
taken advantage of certain exemptions permitted under IFRS 1 - First-time
adoption of IFRS - and these are set out in section 11 of this document.
3. OVERALL IMPACT OF CHANGES
The table below summarise the impact of IFRS. Further details are given in
sections 4,5 and 6.
Year ended 28 February 2005
-----------------------
IFRS UK GAAP
(unaudited)
#000 #000
Revenue 45,203 45,057
Operating profit 7,790 6,566
Profit before tax 8,130 7,120
Profit after tax 5,432 4,358
Earnings per share (pence) 29.50 23.67
Net assets 27,985 25,012
4. KEY INCOME STATEMENT AND BALANCE SHEET ADJUSTMENTS
This section describes the accounting and financial reporting changes which
affect the Group's consolidated income statement and balance sheet in transition
from UK GAAP to IFRS. The financial impact of each change is set out is sections
5 and 6 respectively.
(a) Goodwill and business combinations
Under UK GAAP goodwill was capitalised and amortised over 20 years. The Group
has taken the exemption under IFRS 1 for Business Combinations. As a result the
net book value of goodwill under UK GAAP has been used as the deemed cost at the
date of transition. Under IFRS 3 goodwill is no longer amortised but is subject
to an annual impairment review. The impact on the Group's financial statements
of this policy is that all goodwill previously amortised in the year ended 28
February 2005 has been written back to the balance sheet and income statement.
(b) Share-based payments
IFRS 2 - Share-Based Payments - requires that the Group calculate the fair value
at the date of grant of awards of share options made to directors and employees.
The fair value is then amortised in the income statement over the vesting period
of the options with a corresponding credit to equity. In applying the provisions
of IFRS 2 - Share based payments, the group has adopted the exemption to apply
this standard only to awards granted after 7 November 2002 and vesting after 28
February 2004. No charge is recognised in respect of awards granted prior to
that date. Deferred taxation is provided in respect of the charge.
(c ) Foreign exchange
Under IAS 21 - the effects of changes in foreign exchange rates - trade debtors
are translated at the prevailing rate of exchange at the balance sheet date.
Under SSAP 20 trade debtors were permitted to be translated at the contract rate
to the extent that they were covered by forward foreign exchange contracts. The
adjustment to revalue the trade debtor under IFRS is reflected in income within
the income statement.
Under IFRS, a foreign currency translation reserve in respect of the conversion
of foreign currency denominated investments is required to be separately
measured and included in foreign currency translation differences in the equity
and reserves section of the balance sheet. Therefore there is an adjustment to
reclassify these translation differences out of the profit and loss reserve.
(d) Reclassifications
- Income Statement
Under UK GAAP, the profit on sale of investments is shown as an exceptional item
below operating profit whereas under IFRS this is reflected as an other gain
within operating profit.
Under UK GAAP, the Group's share of profits of associates and joint ventures for
the year to 28 February 2005 is shown before tax of #107,000 which is included
in the taxation charge. Under IFRS, the Group's share of profits is reported
after tax with no amount in the taxation charge.
- Balance sheet
Under UK GAAP certain assets, which are expected to be recovered after more than
one year, and other non-current assets were shown as part of current assets and
shown separately as to their long term nature in a note to the accounts. Under
IFRS these are reflected within non-current assets.
(e) Financial Instruments
Under UK GAAP the mark-to-market value of outstanding derivative contracts was
not recognised in the balance sheet. Under IAS 39 - Financial Instruments:
recognition and measurement - the mark-to-market value of derivative contracts
is recognised in the balance sheet as an asset or liability. Where it can be
demonstrated that a derivative is an effective hedge the value is recognised
within a hedging reserve or, if ineffective, within the income statement.
Deferred tax is provided in respect of the gain or loss.
(f) Taxation
UK GAAP required deferred taxation to be recognised on timing differences
whereas IFRS requires that deferred taxation is provided on all temporary
differences including the revaluation of non-monetary assets and on un-remitted
overseas earnings to the extent that a tax charge is foreseeable. Under UK GAAP,
deferred tax assets and liabilities were shown on a net basis. IFRS requires
separate disclosure of deferred tax assets and liabilities. Deferred tax assets
are reclassified as long-term assets to the extent they are recoverable after
more than one year.
(g) Dividend recognition
Under IAS10 - Events After the Balance Sheet Date - dividends are not recognised
until they are approved. The final and interim dividends approved after the end
of the relevant accounting period have therefore been reversed, resulting in an
increase in net assets at the end of each accounting period. Dividends will no
longer be shown as appropriations on the face of the income statement but
instead will be shown within the analysis of movements on reserves.
(h) Other intangible assets.
From 1 March 2004, business acquisitions have been accounted for in accordance
with IFRS 3 - Business Combinations - which requires the acquirer to allocate
the purchase price across the identifiable assets and liabilities. As a result
an intangible asset has been recognised on the acquisition of Braemar Seascope
Pty Limited (formerly Seawise Australia Pty Limited). Under IAS 38 - Intangible
Assets - the Group is required to capitalise the fair value of the forward order
book and to amortise it over its estimated useful life. In respect of the
purchase Braemar Seascope Pty Limited the Group has capitalised the forward
order book at a value of #215,000 with a resulting reduction in the value of
goodwill. The expected life of the forward order book is up to two years.
5. RESTATED INCOME STATEMENT
Braemar Seascope Group PLC
Consolidated income statement
Year to 6 months to
28-Feb-05 31-Aug-04
#000 #000
Revenue 45,203 17,439
---------- ---------
Operating costs (37,535) (14,297)
Other gains 123 -
---------- ---------
(37,412) (14,297)
---------- ---------
Operating profit 7,790 3,142
Finance income 28 5
Finance costs (53) (50)
Share of profit from joint ventures 365 171
---------- ---------
Profit before tax 8,130 3,268
Taxation (2,699) (1,063)
---------- ---------
Profit for the period attributable to shareholders 5,432 2,205
---------- ---------
Earnings per share
Basic - pence 29.50 11.89
Diluted - pence 28.59 11.78
Braemar Seascope Group PLC
Consolidated income statement
Six months to 31 August 2004 Year to 28 February
-------------------- 2005 --- --------
---------------
UK Effect of IFRS UK Effect of IFRS
GAAP transition GAAP transition
to IFRS to IFRS
#000 #000 #000 #000 #000 #000
Revenue 17,526 (087) 17,439 45,057 146 45,203
------- -------- ------- ------- -------- --------
Operating
costs (14,806) 509 (14,297) (38,491) 956 (37,535)
Other gains - - - - 123 123
------- -------- ------- ------- -------- --------
(14,806) 509 (14,297) (38,491) 1,079 (37,412)
------- -------- ------- ------- -------- --------
Operating
profit 2,720 422 3,142 6,566 1,225 7,791
Profit on sale
of investments - - - 123 (123) -
Finance income 5 - 5 28 - 28
Finance (50) - (50) (53) - (53)
costs
Share of
profit from
joint ventures 223 (52) 171 456 (91) 365
------- -------- ------- ------- -------- --------
Profit before
tax 2,898 370 3,268 7,120 1,011 8,131
Taxation (1,141) 78 (1,063) (2,762) 63 (2,699)
------- -------- ------- ------- -------- --------
Profit for the
period 1,757 448 2,205 4,358 1,074 5,432
------- -------- ------- ------- -------- --------
Earnings per
share
Basic - 9.47 2.42 11.89 23.67 5.83 29.50
pence
Diluted -
pence 9.39 2.39 11.78 22.94 5.65 28.59
IFRS Income statement adjustments
for the six months ended 31 August 2004
Goodwill Share Foreign Reclass- Total
Amortisation Options Exchange ification IFRS
(a) (b) (c) (d) Adjustments
#000 #000 #000 #000 #000
Revenue - - (87) - (87)
--------- ------- -------- -------- ---------
Operating costs 548 (39) - - 509
--------- ------- -------- -------- ---------
548 (39) - - 509
--------- ------- -------- -------- ---------
Operating profit 548 (39) (87) - 422
Finance income - - - - -
Finance costs - - - - -
Share of profit from
joint ventures - - - (52) (52)
--------- ------- -------- -------- ---------
Profit before tax 548 (39) (87) (52) 370
Taxation - - 26 52 78
--------- ------- -------- -------- ---------
Profit for the period 548 (39) (61) - 448
--------- ------- -------- -------- ---------
IFRS Income statement adjustments
for the year ended 28 February 2005
Goodwill Share Foreign Reclass- Total
Amortisation Options Exchange ification IFRS
(a) (b) (c) (d) Adjustments
#000 #000 #000 #000 #000
Revenue - - 146 - 146
--------- ------- -------- -------- ---------
Operating costs 1,034 (78) - - 956
Other gains - - - 123 123
--------- ------- -------- -------- ---------
1,034 (78) - 123 1,079
--------- ------- -------- -------- ---------
Operating profit 1,034 (78) 146 123 1,224
Profit on sale of
investments - - - (123) (123)
Finance income - - - - -
Finance costs - - - - -
Share of profit from
joint ventures 16 - - (107) (91)
--------- ------- -------- -------- ---------
Profit before tax 1,050 (78) 146 (107) 1,010
Taxation - - (44) 107 63
--------- ------- -------- -------- ---------
Profit for the period 1,050 (78) 102 - 1,074
--------- ------- -------- -------- ---------
6. RESTATED BALANCE SHEET
Braemar Seascope Group PLC
Consolidated Balance Sheet
As at 28 February 2005 As at
-----------------
28-Feb-05 31-Aug-04
ASSETS #000 #000
Non-current assets
Property,
plant and
equipment 4,960 4,911
Goodwill 21,587 18,537
Other
intangible
assets 215 -
Investments 1,555 1,625
Deferred tax
assets 262 250
Other
receivables 95 107
--------- ----------
28,674 25,430
Current assets
Trade and
other
receivables 11,688 9,729
Financial instruments - -
Restricted
cash 4,434 8,329
Cash and cash
equivalents 9,606 4,894
--------- ----------
25,728 22,952
--------- ----------
Total assets 54,402 48,382
--------- ----------
LIABILITIES
Current liabilities
Trade and
other payables 17,170 11,633
Current tax
payable 1,556 1,161
Short term
borrowings 3,067 3,830
Finance leases 39 -
Client monies
held as escrow
agent 4,434 8,329
--------- ----------
26,266 24,953
Provisions 151 121
--------- ----------
Total
liabilities 26,417 25,074
--------- ----------
Total assets
less total
liabilities 27,985 23,308
--------- ----------
EQUITY
Share capital 1,945 1,862
Capital
redemption
reserve 396 396
Share premium 7,505 7,506
Shares to be
issued (637) (65)
Merger reserve 21,346 18,302
Hedging reserve - -
Translation
reserve (8) -
Other reserves 100 61
Retained
earnings (2,661) (4,754)
--------- ----------
Total equity 27,985 23,308
--------- ----------
Braemar Seascope Group PLC
Consolidated Balance Sheets
At 31 August 2004 At 28 February 2005
------------- --- ------ ------------- --- ------
UK Effect of IFRS UK Effect of IFRS
GAAP transition GAAP transition
to IFRS to IFRS
ASSETS #000 #000 #000 #000 #000 #000
Non-current
assets
Property,
plant and
equipment 4,911 - 4,911 4,960 - 4,960
Goodwill 17,997 540 18,537 20,768 819 21,587
Other
intangible
assets - - - - 215 215
Investments 1,617 8 1,625 1,539 16 1,555
Deferred tax
assets - 250 250 - 262 262
Other
receivables - 107 107 - 95 95
------- -------- ------- ------- -------- -------
24,525 905 25,430 27,267 1,407 28,674
Current assets
Trade and
other
receivables 9,961 (232) 9,729 11,688 - 11,688
Deferred tax
assets 180 (180) - 262 (262) -
Other
non-current
assets 107 (107) - 95 (95) -
Restricted
cash 8,329 - 8,329 4,434 - 4,434
Cash and cash
equivalents 4,894 - 4,894 9,606 - 9,606
------- -------- ------- ------- -------- -------
23,471 (519) 22,952 26,085 (357) 25,728
------- -------- ------- ------- -------- -------
Total assets 47,996 386 48,382 53,352 1,050 54,402
------- -------- ------- ------- -------- -------
LIABILITIES
Current
liabilities
Trade and
other payables 12,746 (1,113) 11,633 19,093 (1,923) 17,170
Current tax
payable 1,161 - 1,161 1,556 - 1,556
Short term
borrowings 3,830 - 3,830 3,067 - 3,067
Finance leases - 39 - 39
Client monies
held as escrow
agent 8,329 - 8,329 4,434 - 4,434
------- -------- ------- ------- -------- -------
26,066 (1,113) 24,953 28,189 (1,923) 26,266
Provisions 121 - 121 151 - 151
Total
liabilities 26,187 (1,113) 25,074 28,340 (1,923) 26,417
------- -------- ------- ------- -------- -------
Total assets
less total
liabilities 21,809 1,499 23,308 25,012 2,973 27,985
------- -------- ------- ------- -------- -------
EQUITY
Share capital 1,862 - 1,862 1,945 - 1,945
Capital
redemption
reserve 396 - 396 396 - 396
Share premium 7,506 - 7,506 7,505 - 7,505
Shares to be
issued (65) - (65) (637) - (637)
Merger reserve 18,302 - 18,302 21,346 - 21,346
Translation
reserve - - - - (8) (8)
Other reserves - 61 61 - 100 100
Retained
earnings (6,192) 1,438 (4,754) (5,543) 2,882 (2,661)
------- -------- ------- ------- -------- -------
Total equity 21,809 1,499 23,308 25,012 2,973 27,985
------- -------- ------- ------- -------- -------
IFRS adjustments to 28 February 2005
balance sheet
Goodwill Share Foreign Reclass- Dividend Other Total
Amortisation Options Exchange ification accrual Intangibles IFRS
Notes (a) (b ) (c) (d) (g) (h) Adjustments
ASSETS #000 #000 #000 #000 #000 #000 #000
Non-current
assets
Property, -
plant and
equipment
Goodwill 1,034 (215) 819
Other
intangible
assets 215 215
Investments 16 16
Deferred tax
assets 262 262
Other
receivables 95 95
--------- ------- -------- ------- -------- -------- ---------
1,050 - - 357 - - 1,407
Current
assets
Trade and -
other
receivables
Deferred tax
assets (262) (262)
Other
non-current
assets (95) (95)
Restricted -
cash
Cash and cash -
equivalents --------- ------- -------- ------- -------- -------- ---------
- - - (357) - - (357)
--------- ------- -------- ------- -------- -------- ---------
Total assets 1,050 - - - - - 1,050
--------- ------- -------- ------- -------- -------- ---------
LIABILITIES
Current
liabilities
Trade and
other payables (1,923) (1,923)
Current tax -
payable
Short term -
borrowings
Finance -
leases
Client monies -
held as escrow --------- ------- -------- ------- -------- -------- ---------
agent
- - - - (1,923) - (1,923)
Provisions -
--------- ------- -------- ------- -------- -------- ---------
Total
liabilities - - - - (1,923) - (1,923)
--------- ------- -------- ------- -------- -------- ---------
Total assets
less total
liabilities 1,050 - - - 1,923 - 2,973
--------- ------- -------- ------- -------- -------- ---------
EQUITY
Share -
capital
Capital -
redemption
reserve
Share -
premium
Shares to be -
issued
Merger -
reserve
Translation
reserve (8) (8)
Other reserves 100 100
Retained
earnings 1,050 (100) 8 1,923 2,881
--------- ------- -------- ------- -------- -------- ---------
Total equity 1,050 - - - 1,923 - 2,973
IFRS adjustments to 31 August 2004 balance sheet
Goodwill Share Foreign Reclass- Dividend Total
Amortisation Options Exchange ification accrual IFRS
Notes (a) (b ) (c) (d) (g) Adjustments
ASSETS #000 #000 #000 #000 #000 #000
Non-current
assets
Property, -
plant and
equipment
Goodwill 540 540
Other -
intangible
assets
Investments 8 8
Deferred tax
assets 70 180 250
Other
receivables 107 107
548 - 70 287 - 905
Current
assets
Trade and
other
receivables (232) (232)
Deferred tax
assets (180) (180)
Other
non-current
assets (107) (107)
Restricted -
cash
Cash and cash -
equivalents
- - (232) - - (519)
Total assets 548 - (163) - - 385
LIABILITIES
Current
liabilities
Trade and
other payables (1,113) (1,113)
Current tax -
payable
Short term -
borrowings
Finance -
leases
Client monies -
held as escrow
agent
- - - - (1,113) (1,113)
Provisions -
Total
liabilities - - - - (1,113) (1,113)
Total assets
less total
liabilities 548 - (163) - 1,113 1,498
EQUITY
Share -
capital
Capital -
redemption
reserve
Share -
premium
Shares to be -
issued
Merger -
reserve
Translation -
reserve
Other reserves 61 61
Retained
earnings 548 (61) (163) 1,113 1,438
Total equity 548 - (163) - 1,113 1,498
7. RESTATED CASH FLOW STATEMENT
Braemar Seascope Group PLC
Consolidated Cash Flow Statement
Year to Half year to
28-Feb-05 31-Aug-04
#000 #000
Cash flows from operating activities
Cash generated from operations 11,044 1,622
Interest received 26 3
Interest paid (52) (20)
Tax paid (2,448) (884)
--------- ---------
Net cash generated from operating activities 8,570 721
--------- ---------
Cash flows from investing activities
Dividends from joint ventures - -
Acquisition of subsidiary, net of cash acquired (1,026) -
Purchase of property, plant and equipment (175) (102)
Proceeds from sale of property, plant and equipment 11 -
Purchase of investments (21) (26)
Proceeds from sale of investment 386 -
Other long term assets 8 (4)
--------- ---------
Net cash used in investing activities (817) (132)
--------- ---------
Cash flows from financing activities
Proceeds from issue of ordinary shares 1 1
Dividends paid (2,597) (1,484)
Purchase of own shares (572) -
Payment of principal under finance leases (2) -
Other (2) -
--------- ---------
Net cash used in financing activities (3,172) (1,483)
--------- ---------
--------- ---------
Increase/(decrease) in cash and cash equivalents 4,581 (894)
--------- ---------
Cash and cash equivalents at beginning of the period 1,958 1,958
Foreign exchange differences - -
--------- ---------
Cash and cash equivalents at end of the period 6,539 1,064
--------- ---------
Balance sheet analysis of cash and cash equivalents
Cash and cash equivalents 9,606 4,894
Short term borrowings (3,067) (3,830)
--------- ---------
6,539 1,064
--------- ---------
Braemar Seascope Group PLC
Consolidated Cash flow
Year ended 28 6 months ended
February 2005 31 August 2004
----------------- ------------------
UK Effect of IFRS UK Effect of IFRS
GAAP transition GAAP transition
to IFRS to IFRS
#000 #000 #000 #000 #000 #000
Cash flows from
operating
activities
Cash generated
from
operations 11,052 (8) 11,044 1,618 4 1,622
Interest
received 26 - 26 3 - 3
Interest paid (52) - (52) (20) - (20)
Tax paid (2,448) - (2,448) (884) - (884)
------- -------- ------- -------- -------- -------
Net cash from
operating
activities 8,578 (8) 8,570 717 4 721
------- -------- ------- -------- -------- -------
Cash flows from
investing
activities
Acquisition of
subsidiary,
net of cash
acquired (1,026) - (1,026) - - -
Purchase of
fixed assets (175) - (175) (102) - (102)
Proceeds from
sale of fixed
assets 11 - 11 - - -
Purchase of
investments (21) - (21) (26) - (26)
Proceeds from
sale of
investment 386 - 386 - - -
Other long
term assets - 8 8 - (4) (4)
------- -------- ------- -------- -------- -------
Net cash used
in investing
activities (825) 8 (817) (128) (4) (132)
------- -------- ------- -------- -------- -------
Cash flows from
financing
activities
Proceeds from
issue of
ordinary
shares 1 - 1 1 - 1
Dividends paid (2,597) - (2,597) (1,484) - (1,484)
Purchase of
own shares (572) - (572) - - -
Payment of
principal
under finance
leases (2) - (2) - - -
Other (2) - (2) - - -
------- -------- ------- -------- -------- -------
Net cash used
in financing
activities (3,172) - (3,172) (1,483) - (1,483)
------- -------- ------- -------- -------- -------
Net increase
in cash and
bank
overdrafts 4,581 - 4,581 (894) 0 (894)
Cash and cash
equivalents at
beginning of
the period 1,958 - 1,958 1,958 - 1,958
Exchange gains/ - - - - - -
losses ------- -------- ------- -------- -------- -------
Cash and cash
equivalents at
end of the
period 6,539 - 6,539 1,064 0 1,064
------- -------- ------- -------- -------- -------
Notes:
(a) Under UK GAAP the movement in other long-term debtors was shown as part of
working capital within operating cash flows whereas under IFRS it is shown
within investing cash flows.
8. SEGMENTAL INFORMATION
Segmental
Information
Six months to 31 August 2004 Year to 28 February 2005
-------------------- ---------------------
Revenue UK Effect of IFRS UK Effect of IFRS
GAAP transition GAAP transition
to IFRS to IFRS
#000 #000 #000 #000 #000 #000
Shipbroking 13,364 (87) 13,277 32,274 146 32,420
Ship agency,
forwarding &
logistics 2,100 - 2,100 8,461 - 8,461
Technical
shipping
support 2,062 - 2,062 4,322 - 4,322
-------- -------- -------- -------- -------- --------
17,526 (87) 17,439 45,057 146 45,203
-------- -------- -------- -------- -------- --------
Operating
profit
Shipbroking 3,421 (126) 3,295 8,673 190 8,863
Ship agency,
forwarding &
logistics (226) - (226) (282) (931) (1,213)
Technical
shipping
support 73 - 73 140 - 140
Goodwill
amortisation (548) 548 - (1,078) 1,078 -
Exceptional
impairment (887) 887 -
-------- -------- -------- -------- -------- --------
2,720 422 3,142 6,566 1,224 7,790
-------- -------- -------- -------- -------- --------
Net assets
As at As at As at As at As at As at
31-Aug-04 31-Aug-04 31-Aug-04 28-Feb-05 28-Feb-05 28-Feb-05
#000 #000 #000 #000 #000 #000
Shipbroking 19,068 1,458 20,526 22,881 2,957 25,838
Ship agency,
forwarding &
logistics 1,171 24 1,195 376 - 376
Technical
shipping
support 988 8 996 996 - 996
Share of
joint 582 8 590 759 16 775
ventures
-------- -------- -------- -------- -------- --------
21,809 1,498 23,307 25,012 2,973 27,985
-------- -------- -------- -------- -------- --------
Segment adjustments
Revenue
- The adjustments are in respect of foreign exchange adjustments - see 4 (c)
above.
Operating Profit
- The Shipbroking adjustments are in respect of foreign exchange, the cost of
share options and reclassifications into operating profit - see 4 (b) and (d)
above.
- The Ship agency, forwarding & logistics adjustment is in respect of a goodwill
impairment charge.
- Goodwill amortisation charged under UK GAAP has been reversed.
Net assets
- The shipbroking adjustments in the year to 28 Feb 2005 are in respect of
goodwill amortisation (#1,034,000), the cost of share options (#70,000),
financial instruments (#1,076,000) and dividends (#1,923,000).
9. RECONCILIATION OF NET ASSETS/EQUITY AT 1 MARCH 2004
#000
Net assets at 1 March 2004 under UK GAAP 21,164
Reversal of proposed final dividend 1,491
Foreign exchange translation of debtors (102)
Net assets at 1 March 2004 under IFRS 22,553
10. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting and consolidation
The financial statements will be prepared in accordance with IFRS for the first
time for accounting periods commencing from 1 March 2005. They will be prepared
on the historical cost basis, except for the derivative financial instruments
which are measured at fair value. The principal accounting policies expected to
be adopted in the preparation of the 2005/6 Group accounts under IFRS are set
out below.
The consolidated accounts incorporate the accounts of Braemar Seascope Group PLC
and all its subsidiary undertakings made up to 28 February each year.
The results of companies acquired or disposed of during the year are included in
the group from the effective date of acquisition or up to the effective date of
disposal, as appropriate.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Revenue recognition
Revenue consists of commission arising from tanker and dry cargo charter
broking, sale and purchase broking, offshore broking, financial consultancy
arrangement fees and fees for the supply of technical and agency services. The
policies for accounting for revenue are as follows:
Shipbroking - income is recognised when the company has a contractual
entitlement to commission, normally the point at which there is completion of
contractual terms between the principals of a transaction.
Technical services - fee income is recognised as invoiced for work performed and
/or in accordance with the agreement.
Agency, forwarding and logistics - agency income is recognised at the point when
the ship sails from the port. Forwarding and logistics income is recognised on a
shipment basis. Where the Group acts as a principal rather than as agent, the
turnover and costs are shown gross.
Goodwill
On the acquisition of a business, fair values are attributed to the net assets
(including any identifiable intangible assets) acquired. Goodwill arises where
the fair value of the consideration given exceeds the fair value of the net
assets acquired. Goodwill is recognised as an asset and is reviewed for
impairment at least annually. Impairments are recognised immediately in the
income statement. Goodwill is allocated to cash generating units for the purpose
of impairment testing. On the disposal of a business, goodwill relating to that
business remaining on the balance sheet is included in the determination of the
profit or loss on disposal. Goodwill written off to reserves prior to 1998 has
not been reinstated and will not be included in determining any subsequent
profit or loss on disposal. As permitted by IFRS1 goodwill on acquisitions
arising prior to 1 March 2004 has been retained at prior amounts and will be
tested annually for impairment.
Other intangible assets
Intangible assets acquired as part of a business combination are stated in the
balance sheet at their fair value at the date of acquisition less accumulated
amortisation. The amortisation of the carrying value of the forward order book
is charged to the income statement concurrent with the subsequent recognition of
the income. The carrying values of intangible assets are reviewed for impairment
when there is an indication that they may be impaired.
Leasing
A finance lease is a lease that transfers substantially all the risks and
rewards of ownership of an asset. Assets acquired under finance leases are
recorded in the balance sheet as property, plant and equipment at their fair
value and depreciated over the shorter of their estimated useful lives and their
lease terms. Obligations under such agreements are included in liabilities net
of the finance charge allocated to future periods. All other leases are
operating leases, and the rental of these is charged to the income statement as
incurred over the life of the lease. Operating lease income is recognised in the
income statement as it is earned.
Foreign currencies
The functional currency of the Group is pounds Sterling. Transactions in
currencies other than pounds Sterling are recorded at the rates of exchange
prevailing on the date of the transaction. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities denominated in
foreign currency are recognised in the income statement.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward contracts (see below for details of the Group's accounting
policies in respect of such derivative financial instruments).
Assets and liabilities of overseas subsidiaries and associates are translated
into pounds Sterling at the exchange rates ruling at the balance sheet date.
Trading results are translated at the average rates for the period. Exchange
differences arising on the consolidation of the net assets of overseas
subsidiaries are dealt with through the foreign currency translation reserve,
whilst those arising from trading transactions are dealt with in the income
statement. On disposal of a business, the cumulative exchange differences
previously recognised in the foreign currency translation reserve relating to
that business are transferred to the income statement as part of the gain or
loss on disposal.
Deferred taxation
Full provision is made for deferred taxation on all taxable temporary
differences. Deferred tax assets and liabilities are recognised separately on
the balance sheet. Deferred tax assets are recognised only to the extent that
they are expected to be recoverable. Deferred taxation is recognised in the
income statement unless it relates to taxable transactions taken directly to
equity, in which case the deferred tax is also recognised in equity. The
deferred tax is released to the income statement at the same time as the taxable
transaction is recognised in the income statement. Deferred taxation on
un-remitted overseas earnings is provided for to the extent a tax charge is
foreseeable.
Property, plant and equipment
Property, plant and equipment are shown at historical cost less accumulated
depreciation and any impairment value.
Depreciation is provided at rates calculated to write off the cost, less
estimated residual value of each asset, on a straight line basis over its
expected useful life as follows (except for long leasehold interests which are
written off against the remaining period of the lease):
Motor Vehicles - three years
Computers - four years
Fixtures and equipment - four years
Investments
Investments in associates and joint ventures are accounted for under the equity
method of accounting. Investments are carried in the balance sheet at cost plus
post acquisition changes in the Group's share in the net assets of associates
and joint ventures, less any impairment in value. The income statement reflects
the Group's share of the results of the operations of associates and joint
ventures.
Derivative financial instruments and hedging - adopted from 1 March 2005
Derivatives are initially recognised at fair value and are subsequently
re-measured at their fair value at each balance sheet date. Recognition of the
resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if it is, the nature of the item being hedged. Changes
in the fair value of derivatives that do not qualify for hedge accounting are
recognised immediately in the income statement. The Group designates derivatives
that qualify for hedge accounting as a cash flow hedge where there is a high
probability of the forecast transactions arising. The effective portion of
changes in the fair value of these derivatives are recognised in equity. The
gain or loss relating to the ineffective portion is recognized immediately in
the income statement. Amounts accumulated in equity are dealt with in the income
statement at the same time as the gains or losses on the hedged items. When a
forecast transaction is no longer expected to occur, the cumulative gains or
losses that were reported in equity are immediately transferred to the income
statement.
When a hedging instrument expires or is sold, terminated or exercised, or the
entity revokes designation of the hedge relationship but the hedged forecast
transaction is still expected to occur, the cumulative gain or loss at that
point remains in equity and is recognised in accordance with the above policy
when the transaction occurs. If the hedged transaction is no longer expected to
take place, the cumulative unrealised gain or loss recognised in equity is
recognised immediately in the income statement.
The fair value of forward foreign exchange contracts which are traded in active
markets is based on quoted market prices at the balance sheet date.
Share based payments
The fair value at the date of grant of share based remuneration, principally
share options, is calculated using a binomial pricing model and charged to the
income statement on a straight line basis over the vesting period of the award.
The charge to the income statement takes account of the estimated number of
shares that will vest. All share-based remuneration is equity settled.
In accordance with the IFRS transitional provisions, IFRS2 has been applied to
grants of executive share options issued after 7 November 2002 that had not
vested as of 1 January 2005. No charge is recognised for grants or share options
vested prior to those respective dates.
Commissions payable
Commissions payable to clients are recognised in trade creditors due within one
year on the earlier of the date of invoicing or the date of receipt of cash.
Pension scheme arrangements
The Group operates several defined contribution pension schemes. The assets of
the schemes are held separately from those of the Company in an independently
administered fund. The pension cost charge represents contributions payable by
the Company to the fund.
Segmental analysis
The Group's primary segmental analysis is based on its three business segments:
Shipbroking; Ship agency, forwarding and logistics; and Technical shipping
support. The secondary analysis will be presented according to geographic
markets comprising UK and the Far East (including Australia). This is consistent
with the way the Group manages itself and with the format of the Group's
internal financial reporting.
11. IFRS 1 EXEMPTIONS
Braemar Seascope Group PLC has taken the following exemptions, as permitted by
IFRS 1, in the transition to IFRS:
(a) Business combinations
The accounting for acquisitions that occurred prior to the transition date of 1
March 2004 has not been restated.
(b) Tangible fixed assets
The Group has chosen not to restate property, plant and equipment to fair value
at the date of transition. These are carried at historic cost which has been
taken as the effective cost for IFRS purposes.
(c ) Share based payments
The Group has elected to apply the exemption whereby IFRS 2 only applies to
share options granted after 7 November 2002 but that have not vested by 1
March 2005.
(d) Financial Instruments
The Group has taken advantage of the exemption under IAS 32 & 39 that enables
the Group to only apply these standards from 1 March 2005. Accordingly, any
hedging gains or losses at 1 March 2004 and 28 February 2005 remain off balance
sheet.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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