NOTES TO FINANCIAL STATEMENTS

36. Detailed reconciliations between UK GAAP and IFRS
The following seven reconciliations provide full details of the impact of the IFRS transition on:
- net income for the year to 29 May 2005;
- equity at 30 May 2004 and 29 May 2005;
- reconciliation of the consolidated cash flow statement.

Reconciliation of net income for the year to 29 May 2005

Group	Notes	UK GAAP to 29 May 2005 £000	Effect of transition to IFRS £000	IFRS to 29 May 2005 £000
Revenue		136,647	-	136,647
Cost of sales	1.1	(42,071)	(55)	(42,126)
Gross profit		94,576	(55)	94,521
Operating expenses	1.2	(81,056)	462	(80,594)
Other operating income - royalties receivable		374	-	374
Operating profit		13,894	407	14,301
Finance income		348	-	348
Finance costs	1.3	(734)	(6)	(740)
Profit before taxation		13,508	401	13,909
Income tax expense	1.4	(4,863)	(26)	(4,889)
Profit attributable to equity shareholders		8,645	375	9,020

 

Company	Notes	UK GAAP to 29 May 2005 £000	Effect of transition to IFRS £000	IFRS to 29 May 2005 £000
Operating expenses	1.2	(3,674)	13	(3,661)
Income from shares in group undertakings		3,315	-	3,315
Operating profit		(359)	13	(346)
Finance income		207	-	207
Finance costs	1.3	(372)	(6)	(378)
Profit before taxation		(524)	7	(517)
Income tax expense		975	-	975
Profit attributable to equity shareholders		451	7	458

Notes to the above reconciliations of net income are shown below:

1.1 Cost of sales

	Group	Company
	Year to 29 May 2005 £000	Year to 29 May 2005 £000
IAS 39 'Financial Instruments: Recognition and Measurement' requires movements in the fair value of forward foreign currency contracts relating to forecast transactions that do not qualify for hedge accounting, or include an element of ineffectiveness, to be taken to the income statement.	(55)	-

1.2 Operating expenses

	Group	Company
	Year to 29 May 2005 £000	Year to 29 May 2005 £000
IAS 38 'Intangible Assets' requires the capitalisation of development expenditure that meets certain criteria. These amounts were previously written off as incurred.	294	-
IAS 39 'Financial Instruments: Recognition and Measurement' requires movements in the fair value of forward foreign currency contracts that relate to a recognised asset to be taken to the income statement.	(13)	-
IAS 19 'Employee Benefits' requires an accrual to be made for the holiday pay and the expected cost of providing one off benefits to employees who reach 10 years service (10 Year Veterans).	(95)	7
IFRS 3 'Business Combinations' removes the requirement to amortise goodwill, and requires the write back of amortisation charged since the transition date.	383	-
IFRS 2 'Share-based Payment' requires the recognition of the fair value of share based payments to be reflected in the income statement over the period that the related services are received.	(145)	-
Foreign exchange transaction losses on loans reclassified to interest	6	6
Other adjustments	32	-
	462	13

1.3 Finance costs

	Group	Company
	Year to 29 May 2005 £000	Year to 29 May 2005 £000
Foreign exchange transaction losses on loans reclassified from operating expenses.	(6)	(6)

1.4 Income tax expense

	Group	Company
	Year to 29 May 2005 £000	Year to 29 May 2005 £000
IAS 12 'Income Taxes' requires deferred tax to be recognised on temporary differences between the tax computation and balance sheet. It was previously recognised on timing differences between taxable profits and results as stated in the financial statements.	19	-
The effect on taxation of the other IFRS adjustments to the income statement.	(45)	-
	(26)	-

Reconciliation of equity at 30 May 2004

Group	Notes	UK GAAP as at 30 May 2004 £000	Effect of transition to IFRS £000	IFRS as at 30 May 2004 £000
Non-current assets
Goodwill	2.1	2,463	-	2,463
Other intangible assets	2.2	-	3,184	3,184
Property, plant and equipment	2.3	25,627	(1,610)	24,017
Other receivables		267	-	267
Deferred income tax assets	2.4	1,848	(374)	1,474
		30,205	1,200	31,405
Current assets
Inventories		12,102	-	12,102
Trade and other receivables	2.5	11,497	387	11,884
Financial assets - derivative financial instruments	2.6	-	948	948
Cash and cash equivalents	2.7	8,570	(405)	8,165
		32,169	930	33,099
Total assets		62,374	2,130	64,504
Current liabilities
Financial liabilities - derivative financial instruments	2.6	(161)	(2)	(163)
Trade and other payables	2.8	(23,736)	3,603	(20,133)
Current income tax liabilities		(2,661)	-	(2,661)
Provisions	2.9	-	(95)	(95)
		(26,558)	3,506	(23,052)
Net current assets		5,611	4,436	10,047
Non-current liabilities
Financial liabilities - borrowings		(204)	-	(204)
Other non-current liabilities		(584)	-	(584)
Provisions	2.10	(924)	(359)	(1,283)
		(1,712)	(359)	(2,071)
Net assets		34,104	5,277	39,381
Capital and reserves
Called up share capital		1,542	-	1,542
Share premium		6,301	-	6,301
Other reserves	2.11	(949)	431	(518)
Retained earnings		27,210	4,846	32,056
Total shareholders' equity		34,104	5,277	39,381

 

Company	Notes	UK GAAP as at 30 May 2004 £000	Effect of transition to IFRS £000	IFRS as at 30 May 2004 £000
Non-current assets
Investments in subsidiaries		30,281	-	30,281
Other receivables		3,900	-	3,900
Deferred income tax assets	2.4	-	115	115
		34,181	115	34,296
Current assets
Trade and other receivables	2.5	6,002	(98)	5,904
Cash and cash equivalents		551	-	551
		6,553	(98)	6,455
Total assets		40,734	17	40,751
Current liabilities
Trade and other payables	2.8	(9,833)	4,246	(5,587)
Net current (liabilities)/assets		(3,280)	4,148	868
Non-current liabilities
Provisions	2.10	(392)	(13)	(405)
Net assets		30,509	4,250	34,759
Capital and reserves
Called up share capital		1,542	-	1,542
Share premium		6,301	-	6,301
Other reserves		101	-	101
Retained earnings		22,565	4,250	26,815
Total shareholders' equity		30,509	4,250	34,759

Reconciliation of equity at 29 May 2005

Group	Notes	UK GAAP as at 29 May 2005 £000	Effect of transition to IFRS £000	IFRS as at 39 May 2005 £000
Non-current assets
Goodwill	2.1	2,085	383	2,468
Other intangible assets	2.2	-	4,008	4,008
Property, plant and equipment	2.3	31,049	(2,090)	28,959
Other receivables		674	-	674
Deferred income tax assets	2.4	2,487	(309)	2,178
		36,295	1,992	38,287
Current assets
Inventories		12,838	-	12,838
Trade and other receivables	2.5	9,880	195	10,075
Current tax assets		308	-	308
Financial assets - derivative financial instruments	2.6	-	476	476
Cash and cash equivalents	2.7	8,610	12	8,622
		31,636	683	32,319
Total assets		67,931	2,675	70,606
Current liabilities
Financial liabilities - borrowings		(143)	-	(143)
Financial liabilities - derivative financial instruments	2.6	-	(109)	(109)
Trade and other payables	2.8	(21,399)	3,673	(17,726)
Current income tax liabilities		(2,005)	-	(2,005)
Provisions	2.9	-	(322)	(322)
		(23,547)	3,242	(20,305)
Net current assets		8,089	3,925	12,014
Non-current liabilities
Financial liabilities - borrowings		(5,038)	-	(5,038)
Other non-current liabilities		(640)	-	(640)
Provisions	2.10	(633)	(248)	(881)
		(6,311)	(248)	(6,559)
Net assets		38,073	5,669	43,742
Capital and reserves
Called up share capital		1,553	-	1,553
Share premium		7,592	-	7,592
Other reserves	2.11	(949)	718	(231)
Retained earnings		29,877	4,951	34,828
Total shareholders' equity		38,073	5,669	43,742

 

Company	Notes	UK GAAP as at 30 May 2004 £000	Effect of transition to IFRS £000	IFRS as at 30 May 2004 £000
Non-current assets
Investments in subsidiaries		30,281	-	30,281
Other receivables		3,900	-	3,900
Deferred income tax assets	2.4	-	57	57
		34,181	57	34,238
Current assets
Trade and other receivables	2.5	3,928	100	4,028
Cash and cash equivalents	2.7	2,115	-	2,115
		6,043	100	6,143
Total assets		40,224	157	40,381
Current liabilities
Trade and other payables	2.8	(7,342)	4,326	(3,106)
Provisions	2.9	-	(3)	(3)
		(7,342)	4,323	(3,019)
Net current (liabilities)/assets		(1,299)	4,423	3,124
Non-current liabilities
Financial liabilities - borrowings		(5,000)	-	(5,000)
Other non-current liabilities		(1,503)	-	(1,503)
Provisions	2.10	-	(13)	(13)
		(6,503)	(13)	(6,516)
Net assets		26,379	4,467	30,846
Capital and reserves
Called up share capital		1,553	-	1,553
Share premium		7,592	-	7,592
Other reserves	2.11	101	-	101
Retained earnings		17,133	4,467	21,600
Total shareholders' equity		26,379	4,467	30,846

Notes to the above reconciliations of shareholders' equity are shown below:

2.1 Goodwill

	Group		Company
	As at 29 May 2005 £000	As at 30 May 2004 £000	As at 29 May 2005 £000	As at 30 May 2004 £000
IFRS 3 'Business Combinations' removes the requirement to amortise goodwill and requires the write back of amortisation charged since the transition date.	383	-	-	-

2.2 Other intangible assets

	Group		Company
	As at 29 May 2005 £000	As at 30 May 2004 £000	As at 29 May 2005 £000	As at 30 May 2004 £000
IAS 38 'Intangible Assets' requires computer software to be classified as an intangible asset.	1,994	1,464	-	-
IAS 38 'Intangible Assets' requires the capitalisation of development expenditure that meets certain criteria. These amounts were previously written off as incurred.	2,014	1,720	-	-
	4,008	3,184	-	-

2.3 Property, plant and equipment

	Group		Company
	As at 29 May 2005 £000	As at 30 May 2004 £000	As at 29 May 2005 £000	As at 30 May 2004 £000
IAS 38 'Intangible Assets' requires computer software to be classified as an intangible asset.	(1,994)	(1,464)	-	-
IAS 17 'Leases' requires any benefit or cost relating to lease incentives received or given to be netted off the related lease liability and included within current or non-current assets/liabilities as appropriate.	(96)	(146)	-	-
	(2,090)	(1,610)	-	-

2.4 Deferred income tax assets

	Group		Company
	As at 29 May 2005 £000	As at 30 May 2004 £000	As at 29 May 2005 £000	As at 30 May 2004 £000
IAS 12 'Income Taxes' requires deferred tax to be recognised on temporary differences between the tax computation and the balance sheet. It was previously recognised on timing differences between taxable profits and results as stated in the financial statements.	85	62	-	-
IAS 1 ‘Presentation of Financial Statements’ requires all assets, liabilities and provisions to be split between current and non-current amounts. As a result, part of the year end deferred tax assets have been reclassified.	-	-	42	99
The effect on taxation of other IFRS adjustments.	(394)	(436)	15	16
	(309)	(374)	57	115

2.5 Trade and other receivables

	Group		Company
	As at 29 May 2005 £000	As at 30 May 2004 £000	As at 29 May 2005 £000	As at 30 May 2004 £000
IAS 17 'Leases' requires any benefit relating to lease incentives received to be spread over the entire period of the related lease, netted off the related lease liability and included within current or non-current assets/liabilities as appropriate.	200	200	-	-
IAS1 ’Presentation of Financial Statements’ requires all assets, liabilities and provisions to be split between current and non-current amounts. As a result, part of the year end deferred tax assets have been reclassified.	-	-	(45)	(98)
IFRS 2 ‘Share-based Payment’ requires the recognition of costs and benefits relating to share based payments to be recognised. As a result, there is an increase in receivables in the Company as they are owed monies by subsidiaries who are recognising these costs.	-	-	145	-
IAS 39 'Financial Instruments: Recognition and Measurement' requires all assets and liabilities relating to forward foreign currency contracts to be included within derivative financial instruments.	(5)	187	-	-
	195	387	100	(98)

2.6 Derivative financial instruments

	Group		Company
	As at 29 May 2005 £000	A