RNS Number:7229R
Entertainment Rights PLC
26 September 2005
ENTERTAINMENT RIGHTS Plc
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS')
Entertainment Rights Plc is today presenting its financial statements prepared
in accordance with IFRS for the six months ended 30 June 2004 and the year ended
31 December 2004. Separately today we have announced our interim results under
IFRS and the first full year reporting under IFRS will be for the year ended 31
December 2005.
There is no change in the Group's underlying trading performance under IFRS and,
in particular, there is no impact on the Group's cash flow. There is however a
change in presentation and disclosure, along with a restatement of the results
as explained in the table below.
The restatement results in a decrease of #832k (1.6%) in net assets at 31
December 2004 to #51,994k. On recognition of the interest rate swap at 1 January
2005 (see appendix 3), net assets increase to #52,166k being a #660k (1.2%)
reduction compared to UK GAAP. Net assets decreased by #1,453k (2.8%) to
#50,107k at 30 June 2004.
Figure 1: The impact of the transition to IFRS on key performance measures:
31 December 31 December
30 June 2004 30 June 2004 2004 2004
UK GAAP IFRS UK GAAP IFRS
#000's #000's #000's #000's
Operating profit
(before goodwill
amortisation) 889 788 3,363 3,203
Operating profit
(after
goodwill amortisation) 301 788 2,177 3,203
Profit before tax
(before goodwill
amortisation) 410 309 2,330 2,186
Profit / (loss) before
tax (after goodwill
amortisation) (178) 309 1,144 2,186
Basic earnings / (loss)
per share (after
goodwill amortisation) (0.06p) 0.10p 0.30p 0.61p
Diluted earnings /
(loss) per share
(after goodwill
amortisation) (0.06p) 0.10p 0.30p 0.60p
The changes in accounting policies which have the most significant effects on
the restated results for the year ended 31 December 2004 are:
- Goodwill has been frozen at 1 January 2004 and is now subject to annual
impairment reviews instead of systematic amortisation (IFRS 3)
- Recognition of the negative goodwill arising on acquisition in the income
statement (IFRS 3)
- The recognition of a charge against income for the cost of share options held
by directors and employees (IFRS 2)
RESTATEMENT OF FINANCIAL INFORMATION FOR 2004 UNDER INTERNATIONAL FINANCIAL
REPORTING STANDARDS
THE CHANGE TO IFRS
For all accounting periods up to and including the year ended 31 December 2004,
Entertainment Rights Plc has prepared its consolidated financial statements
under UK generally accepted accounting policies (UK GAAP). For accounting
periods from 1 January 2005, the Group is required to prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
Entertainment Rights Plc's first results on this basis will be its interim
results for the six months ended 30 June 2005 and the Group's first annual
report under IFRS will be for the year ending 31 December 2005. These statements
will include comparative information for 2004.
This summary shows the effect of the change from UK GAAP to IFRS on the Group's
financial statements, including details of significant changes in accounting
policies, restated income statements, balance sheets and cash flow statements
for the six months ended 30 June 2004 and the year ended 31 December 2004 and
reconciliations of profit and equity for those periods.
BASIS OF PREPARATION - IFRS 1
References to IFRS throughout this document refer to the application of
International Financial Reporting standards ("IFRS"), including International
Accounting Standards ("IAS) and interpretations issued by the International
Accounting Standards Board ("IASB") and its committees that have been adopted
for use in the EU ("Adopted IFRS").
IFRS 1, "First time adoption of International Financial Reporting Standards",
sets out the procedures to be followed when a company prepares its financial
statements under IFRS for the first time. As a general rule there is a
requirement to apply the revised accounting policies under IFRS retrospectively
from the date of transition to IFRS. However, some exceptions are permitted
under IFRS 1 to assist companies with the transition to IFRS. The Group has
taken advantage of the following exemptions:
* Business Combinations
The Group has chosen not to restate business combinations prior to the
transition date on an IFRS basis.
* Financial Instruments
The Group has taken the exemption not to restate comparatives for IAS 32
Financial Instruments: Disclosure and Presentation, and IAS 39 Financial
Instruments: Recognition and Measurement.
The Group has an interest rate swap which has been recorded at fair value as at
1 January 2005. Movements in the fair value will be recorded in the income
statement going forward from this date. Comparatives prior to this date will be
presented on the existing UK GAAP basis.
* Share based payments
The Group has adopted the exemption to apply IFRS 2 Share-based payments only to
awards made after 7 November 2002 that had not vested at 1 January 2005.
* Valuation of fixed assets
The Group has not adopted the exemption to restate items of property, plant and
equipment to fair value at the transition date. Such items have been maintained
at cost in order to maintain consistency with current Group policy.
As required by IFRS 1, no adjustments have been made for any changes in
estimates made at the time that the UK GAAP financial statements for the periods
were approved and the changes therefore reflect only changes in accounting
policies necessary to comply with IFRS.
Standards currently in issue and adopted by the EU are subject to interpretation
and issued from time to time by the International Financial Reporting
Interpretations Committee (IFRIC). Further standards may be issued by the IASB
that will be adopted for financial years beginning on or after 1 January 2005.
Additionally, IFRS is currently being applied in the United Kingdom and in a
large number of countries simultaneously for the first time. Furthermore, due to
a number of new and revised Standards included within the body of Standards that
comprise IFRS, there is not yet significant established practice on which to
draw in forming decisions regarding the interpretation and application.
Accordingly, practice is continuing to evolve. Therefore, subject to any changes
to IFRS before publication of the Group's results, the financial information
presented here is expected to form the basis for the comparative figures when
reporting results for 2005.
EFFECT OF CHANGES IN ACCOUNTING POLICIES ON THE FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED 30 JUNE 2004 AND THE YEAR ENDED 31 DECEMBER 2004
Full reconciliations of the results for the six months ended 30 June 2004 and
the year ended 31 December 2004 and the equity at those dates between UK GAAP
and IFRS are set out in Appendix 3. The main changes are explained below.
IFRS 3 - Business Combinations
IFRS 3 requires that goodwill on acquisitions should be capitalised at cost and
tested annually for impairment. Amortisation of goodwill is not permitted.
Entertainment Rights Plc has taken advantage of the option to apply IFRS 3
prospectively from the date of transition to IFRS (1 January 2004), rather than
restate earlier business combinations. Goodwill has therefore been frozen at net
book value at 1 January 2004 and goodwill which was amortised in 2004 under UK
GAAP has been written back. The effect on operating profit of the write back of
goodwill amortisation for the year ended 31 December 2004 is an increase of
#1,186k.
Under IFRS 3, negative goodwill cannot be recognised as an asset on the balance
sheet and should be recognised in the income statement as it arises. The
negative goodwill of #130k arising on the acquisition of Tell-Tale has been
released to the income statement in 2004.
As the amortisation charge in 2004 was in respect of goodwill not eligible for
tax relief, the writing back of the amortisation does not result in any change
to the tax charge.
IFRS 2 - Share Based Payments
The IFRS income statement includes a charge under IFRS 2 for employee share
options granted after 7 November 2002 that had not vested at 1 January 2005. The
fair value of the share option scheme has been calculated using the Bi-nomial
model with the resulting charge spread over the vesting period. The charge for
the year ended 31 December 2004 is #144,000 and the cumulative charge to that
date is #197,000.
Corporation tax relief is given at the time that options are exercised on the
difference between the exercise price and the market value of the shares at that
date. Consequently the share based payment charge gives rise to a temporary
difference, in respect of which a deferred tax asset has been recognised.
IAS 19 - Employee Benefits
IAS 19 requires short term accumulating benefits such as holiday pay entitlement
to be accrued over the period in which the entitlement is earned.
This results in an additional charge to the income statement of #81k at 30 June
2004. This is reversed at 31 December 2004 resulting in no provision at year-end
due to the holiday year coinciding with the financial year.
IAS 32 and 39 - Financial Instruments
The Group has adopted IAS 32 'Financial Instruments: Disclosure and
Presentation' and IAS 39 'Financial instruments: Recognition and Measurement'
effective from 1 January 2005 and therefore there is no impact on the Group's
balance sheet as at 1 January 2004 or 31 December 2004 on transition to IFRS.
The fair value of the interest rate swap at a fixed interest rate of 3.99% on
#9m of loan principal has been recorded on the balance sheet as at 1 January
2005 at #172k. The fair value is deemed to be the amount for which the
instrument could be sold in an arm's length transaction (excluding transaction
costs). Going forward any changes in the fair value of the instrument will be
recognised through the income statement.
IAS 36 - Allocation of Goodwill and Impairment Testing
IAS 36 provides more detailed guidance than UK GAAP on estimate of future cash
flows for the purpose of impairment testing. In addition goodwill cannot be
reviewed on an aggregate basis but must be allocated to the relevant Cash
Generating Unit (CGU). The impairment reviews as at 31 December 2003 and 31
December 2004 were amended in line with this guidance.
This has resulted in the write off of #571k of goodwill attributable to Siriol
Productions Limited and an impairment to Carrington properties of #1,350k
reflected as at 31 December 2003. A further impairment to goodwill of #186k is
included within the 2004 results.
IAS 12 - Income Taxes
Under IAS 12, the difference between the tax base of the share options received
to date (being the amount the Inland Revenue will permit as a deduction in
future periods in respect of these options) and the expense recognised in the
income statement is a deductible temporary difference that results in a deferred
tax asset.
Under IAS 12, deferred tax provision arises for the temporary difference
relating to the intangibles carried at a different value to the tax base value.
At 1 January 2004 #437k has been recognised within goodwill arising on the
acquisition of Woodland Animation limited and will be amortised through the tax
charge in the income statement.
IAS 7 - Cash Flow Statments
The format of the cash flow statement is different under IAS 7 from its UK GAAP
equivalent, FRS 1. Cash flows are now shown under the three broad headings of
Operating, Investing and Financing Activities and some cash flows have been
reclassified as a result.
Reclassifications
A number of reclassifications within the balance sheet and income statement have
been made in order to comply with the requirements of IFRS.
* The bank overdraft has been reclassified to cash and cash equivalents
* Deferred tax assets are now included within non-current assets rather than
current assets
* Deferred tax liabilities now have a separate caption from provisions
* The use of and reference to 'exceptional items' is not permitted under
IFRS. The exceptional items of #112k in 2004 have therefore been
reclassified to administrative expenses within the income statement.
Conclusion
Adoption of IFRS has not had a significant effect on Entertainment Rights Plc's
reported results and has had no effect on its cash flows for the six months
ended 30 June 2004, or for the year ended 31 December 2004. There has also been
no significant effect on shareholders' equity at those dates.
APPENDIX 1 - ACCOUNTING POLICIES UNDER IFRS
Statement of compliance
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 restated financial information for the transition to IFRS at 1 January
2004, the interim period ended 30 June 2004, and the year ended 31 December
2004, has been prepared on the basis of adopted IFRSs effective at 31 December
2005.
Basis of preparation
These financial statements are prepared on the historical cost basis, except
that derivative financial instruments are stated at fair value and non-current
assets held for sale are stated at the lower of carrying value and fair value
less costs to sell.
The preparation of financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The information for the year ended 31 December 2004 does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The UK
GAAP financial information as at 31 December 2004 within this document has been
extracted from the 2004 statutory financial statements which has been filed with
the Registrar of Companies. The auditor's report on those accounts was
unqualified and did not contain a statement made under section 237(2) or (3) of
the Companies Act 1985.
The accounting policies set out below have been applied consistently to all
periods presented.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiary undertakings, from the date of acquisition, all of which are
prepared to 31 December 2004. Subsidiaries are those entities controlled by the
Company. Control exists when the Company has the power, directly or indirectly,
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account. The financial
statements of subsidiaries are included in the consolidated financial statements
from the date control commences until the date that control ceases. Intragroup
balances and any unrealised gains and losses or income and expenditure arising
from intragroup transactions, are eliminated in preparing the consolidated
financial statements.
Turnover
Television Distribution & Production
Income recognised represents the value of licence fees including withholding tax
but excluding Value Added Tax. The Group's policy is to recognise the income and
associated royalty payable when all of the following criteria are met:
* A licence agreement has been signed by both parties;
* The arrangement is fixed and determinable;
* Collection of the arrangement fee is reasonably assured; and
* Delivery to the broadcaster has occurred.
Any licence fees received in advance, which do not meet all of the above
criteria, are included in deferred income until the above criteria are met.
For a series in production at Siriol, revenue is recognised as the episodes are
produced and the Company receives associated funding in line with its
performance.
Consumer Products: Licensing and Video
Revenue from licence and video sales are recognised on the date that the licence
revenue is contracted or declared. Up-front fixed fees are recognised as revenue
on contract signature if the following additional criteria are met:
* The contract is non-cancellable;
* The licensee is able to exploit its rights freely; and
* The Company has no significant remaining obligations to perform under
the contract.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any provision for impairment in value.
Depreciation is provided on all tangible fixed assets with the exception of
freehold land in order to write off their cost on a straight-line basis over
their estimated useful lives. The rates adopted are as follows:
Freehold buildings 50 years
Short leasehold improvements Over period of lease
Office equipment 10% to 25%
Fixtures and fittings 25%
Motor vehicles 25%
Intangible assets
Goodwill
All business combinations are accounted for by applying the purchase method.
Goodwill arising on the acquisition of subsidiary undertakings represents the
excess of the cost of the acquisition over the fair value to the Group of the
net assets and any contingent liabilities acquired. In respect of acquisitions
prior to 1 January 2004, goodwill is included on the basis of its deemed cost
which represents the amount recorded previously under UK GAAP.
In accordance with IFRS 3, goodwill has been frozen at its net book value at 1
January 2004, is allocated to cash-generating units and is not amortised, but
instead is subject to annual impairment reviews. Any impairment losses are
recognised immediately in the income statement.
Negative Goodwill
Negative goodwill is credited to the income statement in the period in which it
arises.
Other intangible assets
Other intangible assets acquired by the Group are stated at cost less
accumulated amortisation except those acquired as part of a business combination
which are shown at fair value at the date of acquisition less accumulated
amortisation.
a) Trademarks and Copyrights
A charge is made to write down the cost of trademarks and copyrights on a
straight- line basis over their useful lives, of up to 20 years. The estimated
useful lives for determining the amortisation charge is reviewed annually and
any further provision for permanent impairment is charged against profit in the
year concerned.
Development costs, incurred by the Group and associated with an acquired right,
title or trademark, are capitalised in accordance with IAS 38. Such costs
capitalised include direct labour and an appropriate proportion of overheads.
In respect of internally generated copyrights and trademarks, only the external
costs of securing the rights are capitalised. All other internal costs are
written off to the profit and loss account when incurred.
b) Investment in Programmes
Investment in programmes, including acquired programme rights and distribution
advances, is stated at amortised cost less provision for impairment.
Investments in programmes that are in development and for which the realisation
of expenditure can be reasonably determined, are classified as programme
development costs under current assets. On first exploitation of the property
the cost of investment is classified as intangible non-current assets.
A charge is made to write down the cost of completed programmes and acquired
programme rights over their useful lives. The amortisation is matched against
revenues recognised, on an income forecast method, giving an average life of
less than 10 years.
An assessment is made at each balance sheet date by the Directors to determine
whether a provision is required to reduce the carrying value of investment in
programmes to net realisable value. Any charge for writing down to net
realisable value during the period is included in the profit and loss account as
part of cost of sales.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when
it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is expensed as incurred.
Impairment
The carrying amounts of the Group's assets, other than deferred tax assets, are
reviewed at each year end to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable amount is
estimated. For intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date. An impairment loss
is recognised whenever the carrying amount of an asset or its cash-generating
unit exceeds its recoverable amount. Impairment losses are recognised in the
income statement.
Derivative and other financial instruments
The Group's financial instruments comprise debtors, creditors, finance lease
obligations and bank borrowings
Financing costs, arising on obtaining debt instruments, are deferred and
amortised over the life of the instrument.
During 2003, the Group entered into an interest rate swap to hedge its interest
rate exposure on its term loan facility. The Group does not hold or issue
derivative instruments for trading or speculative purposes.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated
into Sterling at the rate of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into Sterling and recorded at
the rate ruling at the date of the transactions. All exchange differences
arising from the above are included in the income statement.
Taxation
The tax charge for the periods presented comprises current and deferred tax.
Taxation is recognised in the income statement to the except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the period and
any adjustment to tax payable in respect of prior periods.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amount for financial reporting
purposes and those for taxation purposes. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities. A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be available against which
the asset can be utilised.
Leases
Assets acquired under finance leases (including hire purchase agreements), where
substantially all of the benefits and risks of ownership have been transferred
to the Group, are capitalised in the balance sheet within property, plant and
equipment and depreciated over their expected useful lives. Outstanding finance
lease obligations, which comprise principal plus accrued interest, are included
within borrowings.
The cost of interest under the terms of the finance leases is charged to the
income statement over the period of the leases to produce a constant rate of
charge on the balance of capital repayment outstanding.
All other leases are operating leases and rentals paid under operating leases
are charged to the income statement on a straight-line basis over the period of
the lease.
Government grants
Capital based government grants are included within accruals and deferred income
in the balance sheet and credited to the income statement over the estimated
useful lives of the assets to which they relate.
Pension costs
The Group operates a defined contribution personal pension scheme for all
employees. This covers all full-time employees that can elect to participate in
the plan, providing they have served with the Group for at least three months.
The assets of the scheme are held separately from those of the Group in an
independently administered fund. Obligations for contributions are charged to
the income statement as incurred.
Share Based Compensation
Options granted under the Group's share option schemes are equity settled. The
fair value of such options has been calculated at grant date using a Binomial
model, based on publicly available market data, and is charged to the income
statement over the vesting period of the schemes. The value of the charge is
adjusted to reflect the expected and actual levels of options vesting.
APPENDIX 2 - UNAUDITED CONSOLIDATED INCOME STATEMENTS, BALANCE SHEETS AND CASH
FLOW STATEMENTS UNDER IFRS
UNAUDITED CONSOLIDATED INCOME STATEMENTS
6 months ended Year ended
30 June 2004 31 December 2004
#000's #000's
Turnover 9,074 25,467
Cost of sales (5,423) (15,500)
----------- -------------
Gross profit 3,651 9,967
Administrative expenses (2,863) (6,764)
EBITDA 2,230 7,666
Depreciation and amortisation (1,442) (4,391)
Negative goodwill - 130
Goodwill Impairment - (186)
Loss on disposal of fixed assets - (16)
Operating profit 788 3,203
Financial income 59 157
Financial expense (538) (1,174)
----------- -------------
Net financing costs (479) (1,017)
Profit before tax 309 2,186
----------- -------------
Taxation for the period 17 16
----------- -------------
Profit for the period 326 2,202
----------- -------------
Basic earnings per share 0.10p 0.61p
----------- -------------
Diluted earnings per share 0.10p 0.60p
----------- -------------
UNAUDITED CONSOLIDATED BALANCE SHEETS
As at As at
30 June 2004 31 December 2004
#000's #000's
ASSETS
Non-current assets
Goodwill 19,712 19,526
Investment in Programmes 21,758 25,793
Trademarks and Copyrights 20,525 21,369
Property, plant and equipment 1,030 903
Deferred tax assets 630 322
-------------- ----------------
Total non-current assets 63,655 67,913
-------------- ----------------
Current assets
Programme development costs 1,056 1,642
Trade and other receivables 9,421 15,440
Cash and cash equivalents 3,464 243
Other taxation receivable 332 -
-------------- ----------------
Total current assets 14,273 17,325
-------------- ----------------
TOTAL ASSETS 77,928 85,238
-------------- ----------------
LIABILITIES
Current liabilities
Interest bearing loans and
borrowings (1,925) (2,093)
Trade and other payables (2,463) (2,564)
Accruals and deferred income (7,868) (9,355)
Income tax payable (69) -
Obligations under finance
leases (77) (12)
-------------- ----------------
Total current liabilities (12,402) (14,024)
-------------- ----------------
Net current assets 1,871 3,301
Non-current liabilities
Interest bearing loans and
borrowings (13,511) (17,539)
Deferred tax liabilities (1,821) (1,378)
Provisions (75) (289)
Obligations under finance
leases (12) (14)
-------------- ----------------
Total non-current liabilities (15,419) (19,220)
-------------- ----------------
Total liabilities (27,821) (33,244)
-------------- ----------------
Net assets 50,107 51,994
EQUITY
Issued share capital 20,637 20,637
Share premium 33,176 33,176
Merger reserve 16,470 16,470
Retained earnings (20,176) (18,289)
-------------- ----------------
Equity attributable to shareholders'
of the parent 50,107 51,994
-------------- ----------------
TOTAL EQUITY AND LIABILITIES 77,928 85,238
-------------- ----------------
UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS
Year ended
6 months ended 31 December
30 June 2004 2004
Cash flows from operating activities #000's #000's
Operating profit 788 3,203
Adjustments for:
Depreciation and amortisation:
- tangible fixed assets 141 374
- intangible fixed assets 1,300 4,017
(Profit) / loss on sale of property, plant and
equipment (2) 16
Share based payment charges 48 144
Goodwill write off - 186
Negative goodwill acquired with subsidiary - (130)
----------- ----------
Operating cashflows before movements in working
capital 2,276 7,810
Increase in programme development costs (259) (839)
Decrease in payables (5,735) (5,002)
Decrease in receivables 7,367 1,276
----------- ----------
Cash generated from operations 3,649 3,245
Income taxes received / (paid) 1 (120)
----------- ----------
Net cash inflow from operating activities 3,650 3,125
----------- ----------
Cash flows from investing activities
Payments to acquire intangible fixed assets (15,395) (18,897)
Payments to acquire tangible fixed assets (62) (156)
Proceeds from sale of tangible fixed assets 2 16
Acquisition of subsidiary undertaking - (858)
Overdraft acquired with subsidiary - (1,789)
----------- ----------
Net cash generated from / (used in) investing
activities (15,455) (21,684)
----------- ----------
Cash flows from financing activities
Term loan draw down falling due within the year 11,111 182
Term loan draw down falling due within more
than one year - 5,258
Capital element of finance lease rental
payments (35) (98)
Repayment of borrowings (11,737) (1,883)
Proceeds from issue of shares 16,921 16,921
Share issuance costs (580) (580)
Interest received 25 104
Interest paid (498) (1,130)
----------- ----------
Net cash generated from / (used in) financing
activities 15,207 18,774
----------- ----------
Net increase in cash and cash equivalents 3,402 215
Cash and cash equivalents at beginning of
period 28 28
Net effect of foreign exchange 34 -
----------- ----------
Cash and cash equivalents at end of period 3,464 243
----------- ----------
APPENDIX 3 - RECONCILIATIONS TO UK GAAP FINANCIAL STATEMENTS
INCOME STATEMENT RECONCILIATIONS
Six months ended 30 June 2004
Adjustments
to comply
UK GAAP with IFRS IFRS
#000's #000's #000's
Turnover 9,074 - 9,074
Cost of sales (5,423) - (5,423)
--------- ---------- ---------
Gross profit 3,651 - 3,651
Administrative expenses (1) (3,350) 487 (2,863)
EBITDAE (2) 2,384 (154) 2,230
Depreciation & amortisation
(excl goodwill) (3) (1,470) 28 (1,442)
Goodwill amortisation (4) (588) 588 -
Exceptional items (5) (25) 25 -
Operating profit 301 487 788
Financial income 59 - 59
Financial expense (538) - (538)
--------- ---------- ---------
Net financing costs (479) - (479)
--------- ---------- ---------
(Loss) / profit before tax (178) 487 309
Taxation for the period (6) 1 16 17
--------- ---------- ---------
(Loss) / profit for the year (177) 503 326
--------- ---------- ---------
Basic earnings per share (0.06p) 0.10p
--------- ---------- ---------
Diluted earnings per share (0.06p) 0.10p
--------- ---------- ---------
Notes to 30 June 2004 Adjustments
#000's
(1) Adjustment to administrative expenses
Write back of goodwill amortisation (IFRS 3) 588
Share options charge (IFRS 2) (48)
Holiday pay accrual (IAS 19) (81)
Reduction in copyright amortisation due to prior period write 28
down --------
487
(2) Adjustment to EBITDA (48)
Share options charge (IFRS 2) (81)
Holiday pay accrual (IAS 19) (25)
--------
Reclassification of exceptional items (154)
(3) Adjustment to depreciation and amortisation
Reduction in copyright amortisation due to prior
period write down 28
(4) Adjustment to goodwill amortisation
Write back of goodwill amortisation (IFRS 3) 588
(5) Adjustment to exceptional items
Reclassification of exceptional items 25
(6) Adjustment to taxation credit
Deferred tax on share options (IAS 12) 1
Deferred tax on Woodland Animations (IAS 12) 15
--------
16
Year ended 31 December 2004
Adjustments to
comply with
UK GAAP IFRS IFRS
#000's #000's #000's
Turnover 25,467 - 25,467
Cost of sales (15,500) - (15,500)
--------- ---------- ---------
Gross profit 9,967 - 9,967
Administrative expenses (1) (7,790) 1,026 (6,764)
EBITDAE (2) 7,922 (256) 7,666
Depreciation and amortisation (excl
goodwill)(3) (4,447) 56 (4,391)
Goodwill amortisation (4) (1,186) 1,130 (56)
Exceptional items (5) (112) 112 -
(Loss) / profit on disposal
of fixed assets (7) - (16) (16)
Operating profit 2,177 1,026 3,203
Loss on disposal of fixed assets (7) (16) 16 -
Financial income 157 - 157
Financial expense (1,174) - (1,174)
--------- ---------- ---------
Net financing costs (1,017) - (1,017)
--------- ---------- ---------
Profit before tax 1,144 1,042 2,186
Taxation for the period (6) (55) 71 16
--------- ---------- ---------
Profit for the year 1,089 1,113 2,202
--------- ---------- ---------
Basic earnings per share 0.30p 0.61p
--------- ---------- ---------
Diluted earnings per share 0.30p 0.60p
--------- ---------- ---------
Notes to 31 December 2004 Adjustments
#000's
(1) Adjustment to administrative expenses
Write back of goodwill amortisation (IFRS 3) 1,186
Share options charge (IFRS 2) (144)
Negative goodwill release to income statement (IFRS 3) 130
Impairment of goodwill (IAS 36) (186)
Reclassification of loss on disposal of fixed assets (16)
Reduction in copyright amortisation due to prior period write down 56
-----
1,026
(2) Adjustment to EBITDAE
Share options charge (IFRS 2) (144)
Reclassification of exceptional items (112)
-----
(256)
(3) Adjustment to depreciation and amortisation
Reduction in copyright amortisation due to prior period write down 56
(4) Adjustment to goodwill amortisation
Write back of goodwill amortisation (IFRS 3) 1,186
Negative goodwill release to income statement (IFRS 3) 130
Impairment of goodwill (IAS 36) (186)
-----
1,130
(5) Adjustment to exceptional items
Reclassification of exceptional items 112
(6) Adjustment to taxation credit
Deferred tax on share options (IAS 12) 39
Deferred tax on Woodland Animations (IAS 12) 32
-----
71
(7) Loss on disposal of fixed assets
Reclassification of loss on disposal of fixed assets 16
EQUITY RECONCILIATIONS
At 1 January 2004
Share Share Merger Retained Total
Capital Premium Reserve Earnings
#000's #000's #000's #000's #000's
Previously reported under UK
GAAP 13,117 24,355 16,470 (18,546) 35,396
Change in accounting policy to
comply with
IFRS 2 (Share options) - - - (54) (54)
Deferred tax on share options
charge (IAS 12) - - - 18 18
Goodwill write off (IFRS 3) - - - (571) (571)
Impairment of goodwill (IFRS 3) - - - (1,350) (1,350)
Impairment of investment in
programmes (IFRS 36) - - - (46) (46)
Deferred tax on Postman Pat
(IAS 12) - - - 49 49
------- ------- ------- -------- ------
Restated under IFRS 13,117 24,355 16,470 (20,500) 33,442
------- ------- ------- -------- ------
EQUITY RECONCILIATIONS
At 30 June 2004
Share Share Merger Retained
Capital Premium Reserve Earnings Total
#000's #000's #000's #000's #000's
Previously reported under UK
GAAP 20,637 33,176 16,470 (18,723) 51,560
Total IFRS changes to balance
sheet at 1 January 2004 - - - (1,954) (1,954)
Change in accounting policy to
comply with
IFRS 2 (Share options) - - - (48) (48)
Deferred tax on share options
charge (IAS 12) - - - (1) (1)
Holiday pay accrual (IAS 19) - - - (81) (81)
Write back goodwill
amortisation charge (IFRS 3) - - - 588 588
Deferred tax on Postman Pat
(IAS 12) - - - 15 15
Reduction in copyright
amortisation due to
write down - - - 28 28
------- -------- ------- ------- -------
Restated under IFRS 20,637 33,176 16,470 (20,176) 50,107
------- -------- ------- ------- -------
EQUITY RECONCILIATIONS
At 31 December 2004
Share Share Merger Retained
Capital Premium Reserve Earnings Total
#000's #000's #000's #000's #000's
Previously reported under UK
GAAP 20,637 33,176 16,470 (17,457) 52,826
Total IFRS changes to balance
sheet at 1 January 2004 - - - (1,954) (1,954)
Change in accounting policy to
comply with IFRS 2 (Share options) - - - (144) (144)
Deferred tax on share options
charge (IAS 12) - - - 48 48
Write back goodwill
amortisation charge
(IFRS 3) - - - 1,186 1,186
Deferred tax on Postman Pat
(IAS 12) - - - 32 32
Reduction in copyright
amortisation due
to write down - - - 56 56
Negative goodwill release to
income statement (IFRS 3) - - - 130 130
Impairment of goodwill - - - (186) (186)
------- --------- ------- ------- -------
Restated under IFRS 20,637 33,176 16,470 (18,289) 51,994
------- --------- ------- ------- -------
EQUITY RECONCILIATIONS
At 1 January 2005 as a result of adopting IAS 32 and IAS 39
As at 31
December 2004 IAS 32 and IAS 39
Restated under Financial
IFRS Instruments As at 1 January 2005
#000's #000's #000's
Non-current assets 67,913 - 67,913
Current assets 17,325 172 17,497
Current liabilities (14,024) - (14,024)
Non-current
liabilities (19,220) - (19,220)
------------- ------------- ---------------
Net assets 51,994 172 52,166
------------- ------------- ---------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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