DODS.L Regulatory News (DODS)

11 May 2007 07:01

Huveaux PLC11 May 2007 11 MAY 2007 HUVEAUX PLC UPDATE ON ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS Huveaux PLC ("Huveaux") is preparing for the adoption of International FinancialReporting Standards as adopted by the European Union ("adopted IFRS") as itsprimary accounting basis for the year ending 31 December 2007. As part of thistransition, Huveaux is today presenting unaudited financial information preparedin accordance with adopted IFRS for the year ended 31 December 2006 and for thesix months ended 30 June 2006. The purpose of this statement is to present theeffects of adopted IFRS on the Group for 2006 full-year and half-yearcomparative periods. The principal changes to the Group's reported financial information under UKGAAP* arising from the adoption of IFRS are as a result of: • the requirement not to amortise goodwill; • the recognition of intangible assets from business combinations and the related amortisation of these intangible assets; and • the recognition of deferred tax assets and liabilities on a different basis. *throughout this statement "UK GAAP" means the accounting standards andframework in issue at 31 December 2006, which were applied to the financialstatements of the Group for the year ended 31 December 2006. For the year ended 31 December 2006 the expected impact of the adoption of IFRSis to decrease profit attributable to equity shareholders by £1.2 million,comprising principally the amortisation of intangible assets of £2.1 million,partially offset by deferred tax adjustments of £0.4 million and the reversal ofgoodwill amortised under UK GAAP of £0.5 million. Net assets for the Group at 31December 2006 have decreased from £51.5 million to £48.0 million. Dan O'Brien, Finance Director of Huveaux, commented: "The unaudited financial information provided today shows how adopted IFRSimpacts Huveaux's recent results in advance of its adoption in the 2007financial year. The most significant changes are that Huveaux will no longeramortise goodwill and that Huveaux has recognised as intangible assets thepublishing rights, the value of customer relationships and brand valuespurchased with all businesses acquired since 1 October 2003." Enquiries:Huveaux PLC John van Kuffeler, Executive ChairmanDan O'Brien, Group Finance DirectorTel: 020 7245 0270 Finsbury James LevitonDon HunterTel: 020 7251 3801 About Huveaux: Huveaux PLC is a public limited company listed on the Alternative InvestmentMarket (ticker HVX.L). The Company was formed in 2001 with the objective of building a substantial,high-quality media group. Huveaux has completed and successfully integrated 13acquisitions over the past six years and employs more than 500 staff in London,Paris, Brussels, Edinburgh and four other UK regional offices. The Group now consists of four Divisions, each of which has strong brands andmarket leading positions: Education Division The leading supplier of study aids and revision guides in the UK, with fullproduct coverage across all subjects and stages of the entire curriculum in UKschools. The Division comprises Lonsdale, Letts Educational and Leckie & Leckie. Healthcare Division One of the leading providers of specialist B2B publications and online educationfor the medical sector in France. The Division comprises Panorama du Medecin, aleading weekly magazine for French doctors, Le Concours Medical and La Revue duPraticien, market-leading Continuing Medical Education magazines, Egora.fr, theleading medical information website, a medical conference business and a numberof other magazines and reference materials. Learning Division A leading provider of resources to learning communities in the UK, includinge-learning solutions for the public and private sector and blended learningsolutions, seminars and events for the political, public affairs and trainingmarkets. The Division comprises Epic, the UK market leader in e-learning, TJmagazine and the highly acclaimed Westminster Explained conferences and seminarsbusiness. Political Division The market leader in political business-to-business publishing in the UK and EU,serving both the political and public affairs communities. The Divisioncomprises Dods Parliamentary Companion, The House Magazine, Epolitix.com andnumerous other political magazines, reference books, monitoring products andrevenue-generating websites as well as events, awards and recruitment services. INTRODUCTION Huveaux is preparing for the adoption of International Financial ReportingStandards as adopted by the European Union ("adopted IFRS") as its primaryaccounting basis in its consolidated accounts, following the adoption ofRegulation No. 1606/2002 by the European Parliament on 19 July 2002. This press release explains how Huveaux's previously reported UK GAAP financialperformance and position are reported under adopted IFRS. It provides, on anadopted IFRS basis, reconciliations from UK GAAP to adopted IFRS for thefollowing unaudited consolidated information: • balance sheets at 1 January 2006, 30 June 2006 and 31 December 2006; and • income statements for the six month period ended 30 June 2006 and the year ended 31 December 2006. These statements are prepared on the basis set out in "Basis of preparation"below. Detailed cash flow statements have not been prepared as the onlyadjustment in each period is a reclassification between the purchase of tangibleand intangible assets. Where accounting policy changes have not been discussedin this document, the accounting policies under UK GAAP should be referred to. Attention is drawn to the fact that, under adopted IFRS, only a complete set ofconsolidated financial statements comprising a balance sheet, income statement,statement of recognised income and expense, cash flow statement, together withcomparative information and explanatory notes, can provide a fair presentationof the Group's financial position, results of operations and cash flows. The preliminary adopted IFRS financial information set out on pages 8 to 13 doesnot constitute the company's statutory accounts for the year ended 31 December2006. Those accounts, which were prepared under UK GAAP, have been reported onby the company's auditors and delivered to the registrar of companies; theirreport was (i) unqualified, (ii) did not include reference to any matters towhich the auditors drew attention by way of emphasis without qualifying theirreport, and (iii) did not contain a statement under section 237(2) or 237(3) ofthe Companies Act 1985. BASIS OF PREPARATION The financial information presented in this document has been prepared on thebasis of the recognition and measurement requirements of adopted IFRSs in issuethat either are endorsed by the EU and effective (or available for earlyadoption) at 31 December 2007 or are expected to be endorsed and effective (oravailable for early adoption) at 31 December 2007, the Group's first annualreporting date at which it is required to use adopted IFRSs. Based on theseadopted and unadopted IFRSs, the directors have made assumptions about theaccounting policies expected to be applied, the significant effects of which areset out below, when the first annual IFRS financial statements are prepared forthe year ending 31 December 2007. In addition, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 December2007 are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements for the Group are prepared for the year ending 31 December 2007. The Group's financial results for the six month period ending 30 June 2007 willbe prepared on the basis of the principles of adopted IFRS, and will bepresented together with details of the accounting policies expected to beapplied for the year ending 31 December 2007. IFRS 1 exemptions IFRS 1, "First-time Adoption of International Financial Reporting Standards"sets out the procedures that the Group must follow when it adopts IFRS for thefirst time as the basis for preparing its consolidated financial statements. Asexplained above, the Group is required to establish what its adopted IFRSaccounting policies are expected to be as at 31 December 2007 and, in general,apply these retrospectively to determine the IFRS opening balance sheet at itsdate of transition, 1 January 2006. This standard provides a number of optional exceptions to this generalprinciple. The most significant of these for the Group relates to businesscombinations that occurred before the opening IFRS balance sheet date (IFRS 3,"Business Combinations"). The Group has elected not to apply IFRS 3retrospectively to business combinations prior to 1 October 2003. The Group has also set its translation reserve at zero at the date oftransition. KEY IMPACT ANALYSIS The analysis below sets out the most significant adjustments arising from thetransition to adopted IFRS for the year ended 31 December 2006. Similaradjustments arise from the transition to adopted IFRS for the six months ended30 June 2006. Adjustments are referred to by letter, referenced to thetransition statements and the accompanying explanation of adjustments on pages 8to 13. 1) Presentation of Financial Statements Details on the key presentational differences under adopted IFRS are presentedin Appendix A. 2) Intangible Assets (a) Goodwill and acquired intangible asset amortisation IFRS 3 "Business Combinations" requires that, when businesses are acquired, anyintangible assets acquired with the business are valued separately andcapitalised as an intangible asset. Any residual difference between theconsideration paid or payable and the net fair value of the identifiable assets,liabilities and contingent liabilities acquired is recognised as goodwill. IFRS3 also requires that goodwill is not amortised but is instead subject to anannual impairment review, whereas intangible assets are amortised over theiruseful lives. As the Group has elected not to apply IFRS 3 retrospectively tobusiness combinations prior to 1 October 2003 under IFRS, the publishing rightsarising from combinations before that date therefore remain at the amount shownwithin publishing rights under UK GAAP at 1 January 2006 of £13.2 million and sothere is no impact from those acquisitions on the 2006 opening balance sheet. The Group has recognised intangible assets on acquisition in relation topublishing rights, customer relationships, order books and sundry other assets.The amount in the Group's balance sheet in respect of all intangible assets(before amortisation and deferred tax adjustments) is £38.0 million at 30 June2006 and £48.0 million at 31 December 2006. Adjustment (a) in the transitionbalance sheets on pages 8 to 13 Under IFRS, these intangible assets are amortised over their useful lives.Management has assessed their useful lives and the effect of amortising theseassets is £2.1 million for the year ended 31 December 2006 and £0.9 million forthe six months ended 30 June 2006. This is offset by the fact that goodwill isno longer amortised, the effect of which on the income statement is to increaseprofit before tax by £0.5 million for the year ended 31 December 2006 and £0.1million for the six months ended 30 June 2006. Goodwill has been reviewed forimpairment at each balance sheet date and no impairments were identified.Adjustment (b) A deferred tax liability has been set up on creation of these intangibles and isreleased over the period over which the assets are amortised. Upon creation ofthis liability, an equal and opposite adjustment is posted to increase goodwillarising on the business in question. This adjustment to goodwill is notamortised. The impact on the income statement of releasing elements of theliability is £0.7 million for the year ended 31 December 2006 and £0.3 millionfor the six months ended 30 June 2006. The deferred tax liability in respect ofintangibles stands at £6.9 million at 30 June 2006 and £9.4 million at 31December 2006. Adjustment (c) IFRS 3 requires that deferred revenue on acquisition of businesses is measuredat the cost of fulfilling the obligation at the acquisition date. This hasresulted in an adjustment to reduce deferred revenue acquired on previousacquisitions by £0.6 million. Adjustment (d1) In addition, upon revisiting the fair value of assets acquired under IFRS 3, anadjustment of £0.3 million was made to increase the fair value of stock acquiredwith the purchase of Fenman. Adjustment (d2) (b) Computer software Under UK GAAP, all capitalised computer software is included within tangiblefixed assets on the balance sheet. Under IAS 16 "Property, Plant and Equipment",only computer software that is integral to a related item of hardware should beincluded as property, plant and equipment. All other computer software should berecorded as an intangible asset. Accordingly, a reclassification of £0.2 millionhas been made between property, plant and equipment and intangible assets at 1January 2006 and 30 June 2006, and £0.4 million at 31 December 2006. Adjustment(e) (c) Plate costs Under UK GAAP the Group accounted for plate costs incurred in the creation ofrevision material within inventories. Under IFRS they have been reclassified asintangible assets. This is not material at 1 January 2006 or 30 June 2006; anadjustment of £0.5 million has been posted in the 31 December 2006 balancesheet. Adjustment (k) 3) Deferred and Current Taxes The scope of IAS 12 "Income Taxes" is wider than the corresponding UK GAAPstandards, and requires deferred tax to be provided on the majority of temporarydifferences, rather than just on timing differences as under UK GAAP. Inparticular this has resulted in deferred tax assets and liabilities being set upin respect of differences between the net book value and the tax base ofintangible assets (see section 2(a) above). IAS 12 also does not allow deferred tax to be discounted which was the Group'spolicy under UK GAAP. The effect of not applying discounting under adopted IFRSis to increase the tax charge by £0.2 million in the year ended 31 December2006. Adjustment (f) The deferred tax asset of £47,000 at 31 December 2006 has been reclassifiedwithin the deferred tax liability rather than offset against the pensionliability. Adjustment (g) IAS 12 also requires deferred tax to be provided in respect of the Group'sliabilities under its post employment benefit arrangements and on other employeebenefits such as share option schemes. There is no material difference betweenthe recognition of deferred tax on these items under UK GAAP and adopted IFRS. Under adopted IFRS the Group has reclassified all deferred tax balances withinliabilities, as both UK and French deferred tax balances are liabilities.Adjustment (h) 4) Discontinued operations and assets held for sale IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" requiresthat any assets held for sale are recognised as current assets in the balancesheet. The effect of this adjustment is a reclassification between fixed assetsand current assets of £0.1 million at 1 January 2006, £0.3 million at 30 June2006 and £0.2 million at 31 December 2006. Adjustment (i) IFRS 5 also requires that assets held for sale are not depreciated once theyhave been reclassified as such. The impact of this is not material in anyperiod. 5) Financial instruments The Group holds interest rate caps on its Sterling and Euro loans. IAS 32"Financial Instruments: Disclosure and Presentation" and IAS 39: "FinancialInstruments: Recognition and Measurement" require that, as the criteria forhedge accounting are not met, these derivatives are fair valued and anymovements in this fair value are recognised in the income statement. The difference between fair value and book value of the cost of these caps at 30June 2006 and 31 December 2006 is not sufficiently material to requireadjustment. The book value of these instruments has been recognised under aseparate heading on the balance sheets. Adjustment (j) 6) Earnings per share ("EPS") Under adopted IFRS, adjusted EPS is not shown on the face of the incomestatement. The calculation of EPS for the Group is prepared in the same wayunder both UK GAAP and IFRS. Appendix A The key presentational differences are as follows: Income statements •Net financing costs are analysed between financing income and financing costs on the face of the income statement. Balance sheet •Provisions are analysed between current and non current liabilities; •Deferred tax is shown separately on the face of the balance sheet and is disclosed as non current; and •The defined benefit pension deficit is shown separately on the face of the balance sheet. Cash flow •The reconciliation of operating profit to operating cash flows is shown at the beginning of the cash flow rather than in a note. HUVEAUX PLC Previously IFRS 3 IAS 38 IAS 12 IFRS 3 IFRS 3CONSOLIDATED BALANCE SHEET stated (a) (b) (c) (d1) (d2)1 JANUARY 2006 UK GAAP £'000 £'000 £'000 £'000 £'000 £'000 Goodwill 3,311 9,798 56 7,763 (587) (250)Intangible assets 47,772 (9,798) (1,965)Property, plant and equipment 1,000_______________________________________________________________________________________________________Non-current assets 52,083 - (1,909) 7,763 (587) (250) Inventories 2,150Trade and other receivables 11,491Derivative financial instruments -Deferred tax asset 1,180Cash and cash equivalents 2,678Assets held for sale -_______________________________________________________________________________________________________Current assets 17,499 - - - - - Income tax payable (254)Provisions for liabilities and charges (1,552)Trade and other payables (13,569)_______________________________________________________________________________________________________Creditors < 1 year (15,375) - - - - -_______________________________________________________________________________________________________Net current assets 2,124 - - - - -_______________________________________________________________________________________________________Total assets less current liabilities 54,207 - (1,909) 7,763 (587) (250) Non current liabilitiesInterest bearing loans and borrowings (9,807)Employee benefits (96)Deferred tax liability - (7,173)Other non-current liabilities (258)_______________________________________________________________________________________________________Net assets 44,046 - (1,909) 590 (587) (250)_______________________________________________________________________________________________________Capital and reservesIssued capital 14,017Share premium 26,795Other reserves 409Retained earnings 2,825 (1,909) 590 (587) (250)_______________________________________________________________________________________________________Equity attributable to equity holders of parent 44,046 - (1,909) 590 (587) (250)_______________________________________________________________________________________________________ Note: The translation reserve has been set to zero at 1 January 2006 in accordance with the provisions of IFRS 1. .../Cont HUVEAUX PLC IAS 16 IAS 12 IAS 12/19 IAS 12 IFRS 5 RestatedCONSOLIDATED BALANCE SHEET (e) (f) (g) (h) (i) under1 JANUARY 2006 adopted IFRS £'000 £'000 £'000 £'000 £'000 £'000 Goodwill (222) 19,869Intangible assets 210 (131) 36,088Property, plant and equipment (210) 790__________________________________________________________________________________________________________Non-current assets - (222) - - (131) 56,747Inventories 2,150Trade and other receivables 11,491Derivative financial instruments -Deferred tax asset 35 41 (1,256) -Cash and cash equivalents 2,678Assets held for sale 131 131__________________________________________________________________________________________________________Current assets - 35 41 (1,256) 131 16,450Income tax payable (254)Provisions for liabilities and charges (1,552)Trade and other payables (13,569)__________________________________________________________________________________________________________Creditors < 1 year - - - - - (15,375)__________________________________________________________________________________________________________Net current assets - 35 41 (1,256) 131 1,075__________________________________________________________________________________________________________Total assets less current liabilities - (187) 41 (1,256) - 57,822Non current liabilitiesInterest bearing loans and borrowings (9,807)Employee benefits (41) (137)Deferred tax liability 1,256 (5,917)Other non-current liabilities (258)__________________________________________________________________________________________________________Net assets - (187) - - - 41,703__________________________________________________________________________________________________________Capital and reservesIssued capital 14,017Share premium 26,795Other reserves 409Retained earnings (187) 482__________________________________________________________________________________________________________Equity attributable to equity holders of parent - (187) - - - 41,703__________________________________________________________________________________________________________ Note: The translation reserve has been set to zero at 1 January 2006 in accordance with the provisions of IFRS 1. HUVEAUX PLC Previously IFRS 3 IAS 38 IAS 12 IFRS 3 IFRS 3CONSOLIDATED BALANCE SHEET stated (a) (b) (c) (d1) (d2)30 JUNE 2006 UK GAAP £'000 £'000 £'000 £'000 £'000 £'000 Goodwill 3,227 9,798 140 7,763 (587) (250)Intangible assets 47,772 (9,798) (2,848)Property, plant and equipment 1,302________________________________________________________________________________Non-current assets 52,301 - (2,708) 7,763 (587) (250) Inventories 1,941Trade and other receivables 10,845Derivative financial -instrumentsDeferred tax asset 1,180Cash and cash equivalents 1,033Assets held for sale -________________________________________________________________________________Current assets 14,999 - - - - - Income tax payable (252)Provisions for liabilities (615)and chargesTrade and other payables (13,559)________________________________________________________________________________Creditors < 1 year (14,426) - - - - -________________________________________________________________________________Net current assets 573 - - - - -________________________________________________________________________________Total assets less current 52,874 - (2,708) 7,763 (587) (250)liabilities Non current liabilitiesInterest bearing loans and (9,328)borrowingsEmployee benefits (96)Deferred tax liability - (6,901)Other non-current liabilities -________________________________________________________________________________Net assets 43,450 - (2,708) 862 (587) (250)________________________________________________________________________________Capital and reservesIssued capital 14,017Share premium 26,795Other reserves 409Retained earnings 2,229 (2,708) 862 (587) (250)________________________________________________________________________________Equity attributable to equity 43,450 - (2,708) 862 (587) (250)holders of parent________________________________________________________________________________ .../Cont HUVEAUX PLC IAS 16 IAS 12 IAS 12/19 IAS 12 IFRS 5 IAS 39 RestatedCONSOLIDATED BALANCE SHEET (e) (f) (g) (h) (i) (j) under30 JUNE 2006 adopted IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Goodwill (222) 19,869Intangible assets 227 (131) 35,222Property, plant and equipment (227) (189) 886______________________________________________________________________________________Non-current assets - (222) - - (320) - 55,977 Inventories 1,941Trade and other receivables 131 (87) 10,889Derivative financial 87 87instrumentsDeferred tax asset 35 41 (1,256) -Cash and cash equivalents 1,033Assets held for sale 189 189______________________________________________________________________________________Current assets - 35 41 (1,256) 320 - 14,139 Income tax payable (252)Provisions for liabilities (615)and chargesTrade and other payables (13,559)______________________________________________________________________________________Creditors < 1 year - - - - - - (14,426)______________________________________________________________________________________Net current assets - 35 41 (1,256) 320 - (287)______________________________________________________________________________________Total assets less current - (187) 41 (1,256) - - 55,690liabilities Non current liabilitiesInterest bearing loans and (9,328)borrowingsEmployee benefits (41) (137)Deferred tax liability 1,256 (5,645)Other non-current liabilities -______________________________________________________________________________________Net assets - (187) - - - - 40,580______________________________________________________________________________________Capital and reservesIssued capital 14,017Share premium 26,795Other reserves 409Retained earnings (187) (641)______________________________________________________________________________________Equity attributable to equity - (187) - - - - 40,580holders of parent______________________________________________________________________________________ HUVEAUX PLCCONSOLIDATED INCOME STATEMENT Previously IAS 38 IAS 12 RestatedSIX MONTHS ENDED 30 JUNE 2006 stated (b) (c) under UK GAAP adopted IFRS £'000 £'000 £'000 £'000 Revenue 20,075 20,075Cost of sales (12,443) (12,443)_______________________________________________________________________________Gross profit 7,632 - - 7,632Administration expenses beforeamortisation and impairment (6,100) (6,100)Amortisation of intangible assets (84) (799) (883)_______________________________________________________________________________Profit from operations 1,448 (799) - 649Financing income 46 46Financing costs (198) (198)_______________________________________________________________________________Profit before taxation 1,296 (799) - 497Income tax expense (434) 272 (162)_______________________________________________________________________________Profit for the period 862 (799) 272 335_______________________________________________________________________________ Basic EPS 0.62p 0.24pDiluted EPS 0.61p 0.24p HUVEAUX PLC Previously IFRS IAS 38 IAS 12 IFRS 3 IFRS 3CONSOLIDATED BALANCE SHEET stated (a) (b) (c) (d1) (d2)31 DECEMBER 2006 UK GAAP £'000 £'000 £'000 £'000 £'000 £'000Goodwill 18,087 (8) 541 10,685 (587) (250)Intangible assets 47,919 8 (4,097)Property, plant and 1,589equipment____________________________________________________________________________Non-current assets 67,595 - (3,556) 10,685 (587) (250) Inventories 3,806Trade and other receivables 15,298Derivative financial -instrumentsDeferred tax asset 1,227Cash and cash equivalents 4,307Assets held for sale -____________________________________________________________________________Current assets 24,638 - - - - - Income tax payable (412)Provisions for liabilities (368)and chargesTrade and other payables (19,871)____________________________________________________________________________Creditors < 1 year (20,651) - - - - -____________________________________________________________________________Net current assets 3,987 - - - - -____________________________________________________________________________Total assets less current 71,582 - (3,556) 10,685 (587) (250)liabilities Non current liabilitiesInterest bearing loans and (19,855)borrowingsEmployee benefits (109)Deferred tax liability - (9,442)Other non-current (96)liabilities____________________________________________________________________________Net assets 51,522 - (3,556) 1,243 (587) (250)____________________________________________________________________________Capital and reservesIssued capital 15,200Share premium 30,816Other reserves 409Retained earnings 5,097 (3,556) 1,243 (587) (250)____________________________________________________________________________Equity attributable to 51,522 - (3,556) 1,243 (587) (250)equity holders of parent____________________________________________________________________________ .../Cont HUVEAUX PLC IAS 16 IAS 12 IAS 12/19IAS 12 IFRS 5 IAS 39 IAS38 RestatedCONSOLIDATED BALANCE SHEET (e) (f) (g) (h) (i) (j) (k) under31 DECEMBER 2006 adopted IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Goodwill (303) 28,165Intangible assets 410 538 44,778Property, plant and equipment (410) (188) 991_________________________________________________________________________________________Non-current assets - (303) - - (188) - 538 73,934 Inventories (538) 3,268Trade and other receivables (140) 15,158Derivative financial 140 140instrumentsDeferred tax asset (80) 47 (1,194) -Cash and cash equivalents 4,307Assets held for sale 188 188_________________________________________________________________________________________Current assets - (80) 47 (1,194) 188 - (538) 23,061 Income tax payable (412)Provisions for liabilities (368)and chargesTrade and other payables (19,871)_________________________________________________________________________________________Creditors < 1 year - - - - - - - (20,651)_________________________________________________________________________________________Net current assets - (80) 47 (1,194) 188 - (538) 2,410_________________________________________________________________________________________Total assets less current - (383) 47 (1,194) - - - 76,344liabilities Non current liabilitiesInterest bearing loans and (19,855)borrowingsEmployee benefits (47) (156)Deferred tax liability 1,194 (8,248)Other non-current liabilities (96)_________________________________________________________________________________________Net assets - (383) - - - - - 47,989_________________________________________________________________________________________Capital and reservesIssued capital 15,200Share premium 30,816Other reserves 409Retained earnings (383) 1,564_________________________________________________________________________________________Equity attributable to equity - (383) - - - - - 47,989holders of parent_________________________________________________________________________________________ HUVEAUX PLCCONSOLIDATED INCOME STATEMENT Previously IAS 38 IAS 12 IAS 12 RestatedYEAR ENDED 31 DECEMBER 2006 stated (b) (c) (f) under UK GAAP adopted IFRS £'000 £'000 £'000 £'000 £'000 Revenue 45,028 45,028Cost of sales (26,408) (26,408)_________________________________________________________________________________________________________Gross profit 18,620 - - - 18,620Administration expenses before amortisation (12,597) (12,597)and impairmentAmortisation of intangible assets (485) (1,647) (2,132)_________________________________________________________________________________________________________Profit from operations 5,538 (1,647) - - 3,891Financing income 161 161Financing costs (872) (872)_________________________________________________________________________________________________________Profit before taxation 4,827 (1,647) - - 3,180Income tax expense (1,354) 653 (191) (892)_________________________________________________________________________________________________________Profit for the period 3,473 (1,647) 653 (191) 2,288_________________________________________________________________________________________________________Basic EPS 2.41p 1.59pDiluted EPS 2.40p 1.58p Commentary on adjustments (a) Under IFRS 3 a fair value is assigned to intangibles (such as publishingrights) acquired in a business combination. The residual difference betweenconsideration and net assets acquired is recognised as goodwill. This adjustmentreclassifies amounts between goodwill and intangible assets. (b) Under IAS 38 goodwill is not amortised and so goodwill previously amortisedunder UK GAAP is reversed. Intangible assets are then amortised over theiruseful lives. (c) A deferred tax liability is set up on the creation of these intangibleassets, with the corresponding entry increasing goodwill. The liability isreleased over the useful life of the intangible asset to match the amortisationcharge. (d) As part of the exercise to value intangible assets the following fair valueswere revised: 1 Deferred revenue in JBB Sante and Parliamentary Communications Limitedat their respective acquisition dates was revalued to the fair value of theobligation to perform subsequent to acquisition; and 2 The fair value of stock acquired with Fenman has been restated underIFRS 3. (e) Under IAS 16 computer software is reclassified as an intangible asset. (f) Under UK GAAP the Group discounted its deferred tax. This treatment is notpermitted under IAS 12. This affects the value of deferred tax acquired inbusiness combinations and consequently also affects the initial calculation ofgoodwill and intangibles. (g) The deferred tax asset recognised on the pension liability is recordedwithin deferred tax rather than set against the liability. (h) The Group is able to offset its deferred tax assets and liabilities. Thisadjustment reclassifies the balance within non-current liabilities. (i) In accordance with IFRS 5 assets held for sale are reclassified withincurrent assets. (j) Derivatives are brought onto the balance sheet at their fair value. This isa reclassification adjustment as differences between fair value and book valuewere not material at the balance sheet dates. (k) The Group has reclassified plate costs on revision materials withinintangible assets under IAS 38. This information is provided by RNS The company news service from the London Stock Exchange