Ms Intl. Regulatory News (MSI)

24 Nov 2005 11:41

MS International PLC24 November 2005 MS INTERNATIONAL plc IFRS MS INTERNATIONAL plc provides the following restatement of financial informationfor the half year ended 30th October 2004, the full year ended 30th April 2005and the opening balance sheet at 1st May 2004 under International FinancialReporting Standards in accordance with investor relations best practice. The Group currently prepares its primary financial statements under UK GenerallyAccepted Accounting Practice (UK GAAP). From 2005 onwards the Group will berequired to prepare its consolidated financial statements in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion. This change applies to all financial reporting for accounting periodsbeginning on or after 1st January 2005 and consequently, the Group's firstpublished IFRS results will be its interim results for the half year ended 29thOctober 2005. The Group's first Annual Report under IFRS will be for the yearending 29th April 2006. The date for transition to IFRS is 1st May 2004, whichis the start of the earliest period of comparative information. The financial information in this statement has been prepared in accordance withthe IFRS, including the interpretative guidance issued by the InternationalAccounting Authority Standards Board (IASB) and the International FinancialReporting Interpretations Committee (IFRIC), expected to be applicable as at31st December 2005. The financial information for the full year ended 30th April2005 and the opening balance sheet at 1st May 2004 has been audited by Ernst &Young LLP. To explain how the Group's reported performance and financial position areaffected by this change, information previously published under UK GAAP has beenre-presented under IFRS and then restated under the Group's IFRS accountingpolicies in the attached appendices as follows: Appendix 1 Accounting policies revised under IFRS Appendix 2 Financial information for the full year ended 30thApril 2005 and the half year ended 30th October 2004, together withreconciliations of profit and equity. Appendix 3 Balance sheet at the transition date of 1st May 2004 Appendix 4 Movement on reserves and reconciliation of movementin shareholders' funds from 1st May 2004 to 30th April 2005. Appendix 5 Audit Report of Ernst & Young LLP to the Group UK numbers have been re-presented under IFRS. The main changes are as follows:- 1. Dividends are not deducted from profit after taxation but arededucted from equity in the period in which the shareholder's right to receivethe payment is established. 2. The balance sheet shows assets and liabilities analysed between noncurrent and current. 3. 'Shareholder's funds' are called equity. As noted below, this financial information has been prepared on the basis of theIFRS expected to be applicable at 31st December 2005 and the interpretation ofthose standards. IFRS are subject to ongoing review and endorsement by the EU orpossible amendment by interpretative guidance issued by the IASB or the IFRICand are therefore still subject to change. This financial information may,therefore, require amendment before inclusion in the IFRS statements for the 12months to 29th April 2006. Basis of Preparation The financial information has been prepared in accordance with the IFRSaccounting policies as set out in appendix 1. The accounting policies assumethat all IFRS, including the interpretation of those standards, issued by theIASB effective for 2005 reporting will be endorsed by the European Commission. The financial information for the full year ended 30th April 2005 and theopening balance sheet at 1 May 2004 has been audited by Ernst & Young LLP.Their audit report to the Group is set out in Appendix 5. The information forthe half year ended 30th October 2004 is unaudited. Subject to EU endorsement ofoutstanding standards and no further changes from the IASB, this information isexpected to form the basis for comparatives when reporting financial results for2006, and for subsequent reporting periods. The rules for first time adoption of IFRS are set out in IFRS 1 "First-timeAdoption of International Financial Reporting Standards". In general a companyis required to determine its IFRS accounting policies and apply theseretrospectively to determine its opening balance sheet under IFRS. The standardallows a number of exceptions to this general principle to assist companies asthey change to reporting under IFRS. A previous GAAP revaluation of land andbuildings has been taken as deemed costs and is the only exception taken. IFRS Restatement Highlights - 2004/2005 Results As previously Adjustment IFRS reported £'000 £'000 £'000Revenue 32,195 - 32,195Profit before taxation 3,343 (54) 3,289Equity 9,115 (3,561) 5,554 The reduction in equity essentially stems from the change in accounting for theGroup's defined benefit pension scheme. Under IFRS, the pension deficit at theperiod end is recognised as a liability in the balance sheet of the Group. Theimpact of the change in accounting for the pension deficit is a reduction inrecognised equity of £3,536,000 as at 1st May 2004, being the amount of thepension fund liability £5,051,000, net of related deferred taxation of£1,515,000. Pensions Cost Under SSAP 24, the pension scheme contributions and variations in pension costs,resulting from actuarial valuations, were spread over the average future workinglifetime of the active members. Under IFRS service costs, interest costs and theexpected return on net assets for the year, which amounts to £415,000 in 2004/2005, are charged to the income statement. The Group's policy is to recogniseactuarial gains and losses immediately in the Statement of Recognised Income andExpense. Deferred Taxation Deferred taxation recoverable has been provided at 30% on the amount of thepension liability. Additionally deferred taxation payable has been provided at30% on the difference between the tax base and the carrying amount of buildings. Equity 30th April 2005 30th October 1st May 2004 2004 £'000 £'000 £'000UK GAAP 13,762 13,324 13,161Less Group pension scheme prepayment (net of deferred (4,647) (4,559) (4,457)taxation)Equity as previously reported 9,115 8,765 8,704IFRS adjustments:Pension liability (5,039) (4,787) (5,051)Deferred taxation on pension liability 1,511 1,436 1,515Deferred taxation on buildings revaluation (309) (309) (309)Taxation - 38 -Dividends 276 88 250IFRS 5,554 5,231 5,109 APPENDICES 1. Accounting policies 2. Financial information for FY 2004/2005 and H1 2004/2005 2.1. Consolidated income statement for FY 2004/2005 and H1 2004/2005. 2.2. Consolidated income statement IFRS adjustments for FY 2004/2005 and H1 2004/2005. 2.3. Statement of recognised income and expense for FY 2004/2005 and H1 2004/2005. 2.4. Consolidated balance sheet at 30th April 2005 and 30th October 2004. 2.5. Consolidated balance sheet IFRS adjustments at 30th April 2005. 2.6. Consolidated balance sheet IFRS adjustments at 30th October 2004. 2.7. Consolidated cash flow statement for FY 2004/2005 and H1 2004/2005 3. Transitional balance sheet 3.1. Consolidated balance sheet at 1st May 2004. 3.2. Consolidated balance sheet IFRS adjustments at 1st May 2004. 4. Movement on reserves and reconciliation of movements in equity from1st May 2004 to 30th April 2005. 5. Auditors' Report Accounting Policies Basis of preparation The consolidated financial statements have been prepared on a historical costbasis, except for freehold properties and pension assets and liabilities, thathave been measured at fair value. The consolidated financial statements arepresented in pounds sterling and all values are rounded to the nearest thousand(£000) except when otherwise indicated. Statement of compliance The consolidated financial statements of MS INTERNATIONAL plc have been preparedin accordance with International Financial Reporting Standards (IFRSs). Basis of consolidation The consolidated financial statement comprises the financial statements of MSINTERNATIONAL plc and its subsidiaries as at the last Saturday nearest to the30th April each year. The financial statements of the subsidiaries are preparedfor the same reporting year as the parent company, using consistent accountingpolicies. All intra-group balances, transactions, income and expenses and profits andlosses resulting from intra-group transactions that are recognised in assets,are eliminated in full. Subsidiaries are fully consolidated from the date of acquisition, being the dateon which the Group obtains control, and continue to be consolidated until thedate that such control ceases. Interest in a joint venture The Group has an interest in a joint venture which is a jointly owned entity andis accounted for using the equity method. Under the equity method, theinvestment in joint venture is carried in the balance sheet at the Group's shareof net assets less any impairment in value. The income statement reflects theGroup's share of the results of operations of the joint venture. Foreign currency translation The consolidated financial statements are presented in pounds sterling which isthe Company's functional and presentation currency. Each entity in the groupdetermines its own functional currency and items included in the financialstatements of each entity are measured using that functional currency.Transactions in foreign currencies are initially recorded in the functionalcurrency rate ruling at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies are retranslated at the functionalcurrency rate of exchange ruling at the balance sheet date. All differences aretaken to profit or loss with the exception of differences on foreign currencyborrowings that provide a hedge against a net investment in a foreign entity.These are taken directly to equity until the disposal of the net investment, atwhich time they are recognised in the consolidated income statement. Tax chargesand credits attributable to exchange differences on those borrowings are alsodealt with in equity. Non-monetary items that are measured in terms ofhistorical cost in a foreign currency are translated using the exchange rates asat the dates of the initial transactions. Non-monetary items measured at fairvalue in a foreign currency are translated using the exchange rates at the datewhen the fair value was determined. The main functional currency of the Group's overseas subsidiaries is the US$.As at the reporting date, the assets and liabilities of these overseassubsidiaries are translated into the presentation currency of the Group at therate of exchange ruling at the balance sheet date and, their income statementsare translated at the weighted average exchange rates for the year. Theexchange differences arising on the retranslation are taken directly to aseparate component of equity. On disposal of a foreign entity, the deferredcumulative amount recognised in equity relating to that particular foreignoperation is recognised in the income statement. Property, plant and equipment Plant and equipment is stated at cost, excluding the costs of day-to-dayservicing, less accumulated depreciation and accumulated impairment in value.Such cost includes the cost of replacing part of such plant and equipment whenthat cost is incurred if the recognition criteria are met. Land and buildingsare measured at valuation in 1989, together with subsequent cost, lessaccumulated depreciation on buildings and impairment charged. Depreciation is calculated on a straight-line basis over the useful life of theassets. The principal annual rates used for this purpose are: Freeholdbuildings 2%, Plant and equipment 12.5%, Motor vehicles 33.3% The carrying values of plant and equipment are reviewed for impairment whenevents or changes in circumstances indicate that the carrying value may not berecoverable. Any revaluation surplus is credited to the asset revaluation reserve included inthe equity section of the balance sheet, except to the extent that it reverses arevaluation decrease of the same asset previously recognised in profit or loss,in which case the increase is recognised in profit or loss. A revaluationdeficit is recognised in profit or loss, except that a deficit directlyoffsetting a previous surplus on the same asset is directly offset against thesurplus in the asset revaluation reserve. An annual transfer from the asset revaluation reserve to retained earnings ismade for the difference between depreciation based on the revalued carryingamount of the assets and depreciation based on the assets original cost.Additionally, accumulated depreciation as at the revaluation date is eliminatedagainst the gross carrying amount of the asset and the net amount is restated tothe revalued amount of the asset. Upon disposal, any revaluation reserverelating to the particular asset being sold is transferred to retained earnings. An item of property, plant and equipment is derecognised upon disposal or whenno future economic benefits are expected from its use or disposal. Any gain orloss arising on derecognition of the asset (calculated as the difference betweenthe net disposal proceeds and the carrying amount of the asset) is included inthe income statement in the year the asset is derecognised. The asset's residual values, useful lives and methods are reviewed, and adjustedif appropriate, at each financial year end. Goodwill Goodwill, all of which relates to acquisitions prior to 1st May, 1999, has beenset off directly against reserves. Intangible assets Intangible assets acquired are capitalised at cost as at the date ofacquisition. Following initial recognition the intangible asset is carried atits cost less any accumulated amortisation and accumulated impairment losses.Software costs are amortised over 3 to 5 years. Intangible assets, excluding, development costs, created within the business arenot capitalised and expenditure is charged against profits in the year in whichthe expenditure is incurred. Recoverable Amount of Non-Current Assets At each reporting date, the Group assesses whether there is any indication thatan asset may be impaired. Where an indicator of impairment exists, the Groupmakes a formal estimate of recoverable amount. Recoverable amount is the higherof an assets or cash generating unit's fair value less costs to sell and itsvalue in use and is determined for an individual asset, unless the asset doesnot generate cash inflows that are largely independent of those from otherassets or groups of assets. Where the carrying amount of an asset exceeds itsrecoverable amount the asset is considered impaired and is written down to itsrecoverable amount. Research and development costs Research costs are expensed as incurred. An intangible asset arising fromdevelopment expenditure on an individual project is recognised only when theGroup can demonstrate the technical feasibility of completing the intangibleasset so that it will be available for use or sale, its intention to completeand its ability to use or sell the asset, how the asset will generate futureeconomic benefits, the availability of resources to complete and the ability tomeasure reliably the expenditure during the development. Following the initialrecognition of the development expenditure, the cost model is applied requiringthe asset to be carried at cost less any accumulated amortisation andaccumulated impairment losses. Any expenditure capitalised is amortised over theperiod of expected future sales from the related project. The carrying value of development costs is reviewed for impairment annually whenthe asset is not yet in use or more frequently when an indication of impairmentarises during the reporting year. Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition isaccounted for as follows: Raw materials - purchase cost on a first-in, first-out basis; Finished goods and work in progress - cost of direct materials and labour and aproportion of manufacturing overheads based on normal operating capacity butexcluding borrowing costs Net realisable value is the estimated selling price in the ordinary course ofbusiness, less estimated costs necessary to make the sale. Progress payments received and receivable are deducted from the value of stocksand work in progress to which they relate. Any excess progress payments areincluded in trade and other payables. Trade and other receivables Trade receivables, which generally have 30 days terms, are recognised andcarried at original invoice amount less an allowance for any uncollectableamounts. Provision is made when there is objective evidence that the Group willnot be able to collect the debts. Bad debts are written off when identified. Own shares Own shares which are reacquired are deducted from equity. No gain or loss isrecognised in the consolidated income statement on the purchase, sale, issue orcancellation of the Group's own equity instruments. Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and inhand. For the purpose of the consolidated cash flow statement, cash and cashequivalents consist of cash and cash equivalents as defined above, net ofoutstanding bank overdrafts and finance leases. Interest-bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of theconsideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings aresubsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in net profit or loss when the liabilities arederecognised or impaired as well as through the amortisation process. Provisions Provisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligationand a reliable estimate can be made of the amount of the obligation. Where theGroup expects some or all of a provision to be reimbursed, for example under aninsurance contract, the reimbursement is recognised as a separate asset but onlywhen the reimbursement is virtually certain. The expense relating to anyprovision is presented in the income statement net of any reimbursement. If theeffect of the time value of money is material, provisions are discounted using acurrent pre-tax rate that reflects, where appropriate, the risks specific to theliability. Where discounting is used, the increase in the provision due to thepassage of time is recognised as a borrowing cost. Pension Scheme The Group operates a defined contribution pension scheme. Contributions arecharged in the income statement as they become payable in accordance with therules of the scheme. Until 6th April, 1997 the scheme provided defined benefits and these liabilitiescontinue in respect of service prior to 6th April, 1997. The regular annualcost relating to the defined benefits liabilities is assessed in accordance withthe advice of a qualified actuary using the projected unit method whichcalculates the cost of fully providing for members' pension entitlementsaccruing over the next twelve months. Actuarial gains and losses are recognisedimmediately through the statement of Recognised Income and Expense. The excess, as estimated by a qualified independent actuary, of the presentvalue of the liabilities over the assets, of the defined benefits pension schemeis included as a non current liability in the balance sheet. Leases Finance leases, which transfer to the Group substantially all the risks andbenefits incidental to ownership of the leased item, are capitalised at theinception of the lease at the fair value of the leased property or, if lower, atthe present value of the minimum lease payments. Lease payments are apportionedbetween the finance charges and reduction of the lease liability so as toachieve a constant rate of interest on the remaining balance of the liability.Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimateduseful life of the asset and the lease term, if there is no reasonable certaintythat the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in the income statement ona straight-line basis over the lease term. Revenue Revenue represents the turnover, net of discounts, derived from servicesprovided to customers and sales of products applicable to the period. Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue can be reliably measured. Thefollowing specific recognition criteria must also be met before revenue isrecognised Revenue, other than for contract sales, is recognised when the significant risksand rewards of ownership of the goods have passed to the buyer and the amount ofrevenue can be measured reliably, this is usually on despatch. Contract sales are recognised on the value of work completed in the year anddetermined where appropriate by reference to the total estimated contract salesvalue. Government grants Government grants are recognised where there is reasonable assurance that thegrant will be received and all attaching conditions will be complied with. Whenthe grant relates to an expense item, it is recognised as income over the periodnecessary to match the grant on a systematic basis to the costs that it isintended to compensate. Where the grant relates to an asset, the fair value iscredited to a deferred income account and is released to the income statementover the expected useful life of the relevant asset by equal annual instalments. Taxes Current tax Current tax assets and liabilities for the current and prior periods aremeasured at the amount expected to be recovered from or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are thosethat are enacted or substantively enacted by the balance sheet date. Deferred tax Deferred income tax is provided using the liability method on temporarydifferences at the balance sheet date between the tax bases of assets andliabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences,except: • where the deferred tax liability arises from the initial recognition ofgoodwill or of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither the accountingprofit nor taxable profit or loss; and • in respect of taxable temporary differences associated with investments insubsidiaries, associates and interests in joint ventures, where the timing ofthe reversal of the temporary differences can be controlled and it is probablethat the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporarydifferences, carry-forward of unused tax credits and unused tax losses, to theextent that it is probable that taxable profit will be available against whichthe deductible temporary differences, and the carry-forward of unused taxcredits and unused tax losses can be utilised except • where the deferred income tax asset relating to the deductible temporarydifference arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of thetransaction, affects neither the accounting profit nor taxable profit or loss;and • in respect of deductible temporary differences associated with investmentsin subsidiaries, associates and interests in joint ventures, deferred tax assetsare recognised only to the extent that it is probable that the temporarydifferences will reverse in the foreseeable future and taxable profit will beavailable against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balancesheet date and reduced to the extent that it is no longer probable thatsufficient taxable profit will be available to allow all or part of the deferredincome tax asset to be utilised. Unrecognised deferred income tax assets arereassessed at each balance sheet date and are recognised to the extent that ithas become probable that future taxable profit will allow the deferred tax assetto be recovered. Deferred income tax assets and liabilities are measured at the tax rates thatare expected to apply to the year when the asset is realised or the liability issettled, based on tax rates (and tax laws) that have been enacted orsubstantively enacted at the balance sheet date. Income tax relating to items recognised directly in equity is recognised inequity and not in the income statement. Deferred tax assets and deferred tax liabilities are offset, if a legallyenforceable right exists to set off current tax assets against current taxliabilities and the deferred taxes relate to the same taxable entity and thesame taxation authority. Appendix 2.1 Consolidated Income Statement for FY2004/2005 and HI 2004/2005 Audited Unaudited 52 weeks ended 26 weeks ended 30th April 2005 30th October 2004 UK GAAP Adj. IFRS UK GAAP Adj. IFRS £'000 £'000 £'000 £'000 £'000 £'000Group revenue 32,195 - 32,195 16,408 - 16,408Profit before interest 2,975 (54) 2,921 1,155 138 1,293Interest receivable 37 - 37 35 - 35Interest payable (38) - (38) (20) - (20)Share of profit of joint venture 369 - 369 236 - 236Profit before taxation 3,343 (54) 3,289 1,406 138 1,544Taxation (1,061) (15) (1,046) (478) (41) (519)Profit attributable to equity holders of the 2,282 (39) 2,243 928 97 1,025parent Earnings per share - basic 12.7p 12.4p 5.0p 5.4pEarnings per share - fully diluted 11.8p 11.5p 4.8p 5.0p Appendix 2.2 Consolidated Income Statement IFRS Adjustments for FY 2004/2005 and H1 2004/2005 Audited Unaudited 52 weeks ended 26 weeks ended 30th April, 2005 30th October 2004 IAS 19 IAS 12 Total IAS 19 IAS 12 Total Employee Income Employee Income benefits tax Benefits tax £'000 £'000 £'000 £'000 £'000 £'000Revenue - - - - - -Costs and overheads (54) - (54) 138 - 138Profit before interest (54) - (54) 138 - 138Interest - - - - - -Share of profit of joint venture - - - - - -Profit before taxation (54) - (54) 138 - 138Taxation - 15 15 - (41) (41)Profit attributable to equity (54) 15 (39) 138 (41) 97 holders of the parent Appendix 2.3 Statement of Recognised Income and Expenses for the FY 2004/2005 and H1 2004/ 2005 Audited Unaudited 52 weeks ended 26 weeks ended 30th April 2005 30th October 2004 UK GAAP Adj. IFRS UK GAAP Adj. IFRS £'000 £'000 £'000 £'000 £'000 £'000Actuarial (losses)/profits on defined benefit pension - (203) (203) - 23 23schemeDeferred taxation on actuarial losses on defined - 61 61 - (7) (7)benefit pension schemeCurrency translation differences on foreign 7 - 7 (8) - (8)investmentsProfit for the period 2,282 (39) 2,243 928 97 1,025Total recognised income and expenses for the period 2,289 (181) 2,108 920 113 1,033 Appendix 2.4 Consolidated Balance Sheet at 30 April 2005 and 30 October 2004 Audited at Unaudited at 30th April 2005 30th October 2004 UK GAAP Adj. IFRS UK GAAP Adj. IFRS £'000 £'000 £'000 £'000 £'000 £'000ASSETSNon current assetsProperty, plant and equipment 8,342 (43) 8,299 8,076 (46) 8,030Intangible assets 280 43 323 280 46 326Investment in joint venture 708 - 708 596 - 596Deferred income tax asset - 514 514 - 505 505 9,330 514 9,844 8,952 505 9,457 Current assetsInventories 5,511 - 5,511 5,190 - 5,190Trade and other receivables 5,030 - 5,030 6,552 - 6,552Pension prepayment 6,638 (6,638) - 6,470 (6,470) -Prepayments 360 - 360 102 - 102Cash and cash equivalent 1,013 - 1,013 1,454 - 1,454 18,552 (6,638) 11,914 19,768 (6,470) 13,298 TOTAL ASSETS 27,882 (6,124) 21,758 28,720 (5,965) 22,755 EQUITY AND LIABILITIES EquityIssued capital 1,886 - 1,886 1,969 - 1,969Capital redemption reserve 855 - 855 772 - 772Revaluation reserve 1,853 (309) 1,544 1,853 (309) 1,544Special reserve 1,629 - 1,629 1,629 - 1,629Foreign exchange reserve 3,967 (4,145) (178) 4,053 (4,238) (185)Own shares (738) - (738) (738) - (738)Retained earnings 4,310 (3754) 556 3,786 (3,546) 240 13,762 (8,208) 5,554 13,324 (8,093) 5,231Non current liabilitiesPension liability - 5,039 5,039 - 4,787 4,787Loans and borrowings 5 - 5 42 - 42Provisions 178 - 178 243 - 243Government grants 52 - 52 60 - 60Deferred income tax liability 2,679 (2,679) - 2,533 (2,533) - 2,914 2,360 5,274 2,878 2,254 5,132Current liabilitiesDividends payable 276 (276) - 88 (88) -Trade and other payables 10,145 - 10,145 11,373 - 11,373Loans and borrowings 249 - 249 422 - 422Provisions 65 - 65 164 - 164Government grants 13 - 13 13 - 13Income tax payable 458 - 458 458 (38) 420 11,206 (276) 10,930 12,518 (126) 12,392 TOTAL EQUITY AND LIABILITIES 27,882 (6,124) 21,758 28,720 (5,965) 22,755 Appendix 2.5 Consolidated Balance Sheet IFRS Adjustments at 30 April 2005 Dividends IAS 12 IAS 19 IAS 21 IAS 38 Total Income tax Employee The effect of Intangible benefits changes in assets foreign exchange rates £'000 £'000 £'000 £'000 £'000 £'000ASSETSNon current assetsProperty, plant and equipment - - - - (43) (43)Intangible assets - - - - 43 43Investment in joint venture - - - - - -Deferred income tax asset - 514 - - - 514 - 514 - - - 514Current assetsInventories - - - - - -Pension prepayment - - (6,638) - - (6,638)Trade and other receivables - - - - - -Prepayments - - - - - -Cash and cash equivalents - - - - - - - - (6,638) - - (6,638) TOTAL ASSETS - 514 (6,638) - - (6,124) EQUITY LIABILITESEquityIssued capital - - - - - -Capital redemption reserve - - - - - -Revaluation reserve - (309) - - - (309)Special reserve - - - - - -Foreign exchange reserve - 1,991 (6,448) 312 - (4,145)Own shares - - - - - -Retained earnings 276 1,511 (5,229) (312) - (3,754) 276 3,193 (11,677) - - (8,208)Non current liabilitiesPension liability - - 5,039 - - 5,039Loans and borrowings - - - - - -Provisions - - - - - -Government grants - - - - - -Deferred income tax liability - (2,679) - - - (2,679) - (2,679) 5,039 - - 2,360Current liabilitiesDividends payable (276) - - - - (276)Trade and other payables - - - - - -Loans and borrowings - - - - - -Governments grants - - - - - -Income tax payable - - - - - -Provisions - - - - - - (276) - - - - (276) TOTAL EQUITY AND IABILITIES - 514 (6,638) - - (6,124) Appendix 2.6 Consolidated Balance Sheet IFRS Adjustments at 30 October 2004 Dividends IAS 12 IAS 19 IAS 21 IAS 38 Total Income tax Employee benefits The effect of Intangible changes in assets foreign exchange rates £'000 £'000 £'000 £'000 £'000 £'000ASSETSNon current assetsProperty, plant and equipment - - - - (46) (46)Intangible assets - - - - 46 46Investment in joint venture - - - - - -Deferred income tax asset - 505 - - - 505 - 505 - - - 505Current assetsInventories - - - - - -Trade and other receivables - - - - - -Pension prepayment - - (6,470) - - (6,470)Prepayments - - - - - -Cash and cash equivalents - - - - - - - - (6,470) - - (6,470) TOTAL ASSETS - 505 (6,470) - - (5,965) EQUITY LIABILITESEquityIssued capital - - - - - -Capital redemption reserve - - - - - -Revaluation reserve - (309) - - - (309)Special reserve - - - - - -Foreign exchange reserve - 1,911 (6,470) 321 - (4,238)Own shares - - - - - -Retained earnings 88 1,436 (4,749) (321) - (3,546) 88 3,038 (11,219) - - (8,093)Non current liabilitiesPension liability - - 4,787 - - 4,787Loans and borrowings - - - - - -Provisions - - - - - -Government grants - - - - - -Deferred income tax liability - (2,533) - - - (2,533) - (2,533) 4,787 - - 2,254Current liabilitiesDividends payable (88) - - - - (88)Trade and other payables - - - - - -Loans and borrowings - - - - - -Governments grants - - - - - -Income tax payable - - (38) - - (38)Provisions - - - - - - (88) - (38) - - (126) TOTAL EQUITY AND LIABILITIES - 505 (6,470) - - (5,895) Appendix 2.7 Consolidated Cash Flow Statement for FY 2004/2005 and H1 2004/2005 Audited Unaudited 52 weeks ended 26 weeks ended 30th April 2005 30th October 2004 UK Adj. IFRS UK Adj. IFRS GAAP GAAP £'000 £'000 £'000 £'000 £'000 £'000Cash flows from operating activitiesCash generated by operations 2,030 - 2,030 361 - 361Interest (paid)/received (2) - (2) 13 - 13Corporation tax paid (763) - (763) (361) - (361)Net Cash Inflow from Operating Activities 1265 - 1,265 13 - 13Investing activitiesDividends received from joint venture 200 - 200 200 - 200Purchase of intangible fixed assets - (46) (46) - (46) (46)Purchase of tangible fixed assets (1,250) 46 (1,204) (489) 46 (443)Sale of tangible fixed assets 22 - 22 - - -Net Cash Used in Investing Activities (1,028) - (1,028) (289) - (289)Financing activitiesPurchase of own shares (1,325) - (1,325) (669) - (669)Dividends paid (338) - (338) (250) - (250)Repayment of bank loan (333) - (333) (167) - (167)Repayment of capital element of finance leases (147) - (147) (103) - (103)Net Cash Flow from Financing Activities (2,143) (2,143) (1,189) - (1,189Movement in cash and cash equivalents (1,906) - (1,906) (1,465) - (1,465)Opening cash and cash equivalents 2,919 - 2,919 2,919 - 2,919Closing cash and cash equivalents 1,013 - 1,013 1,454 - 1,454 Appendix 3.1 Consolidated Balance Sheet at 1st May 2004 Audited As at 1 May 2004 UK GAAP Adj. IFRS £'000 £'000 £'000ASSETSNon current assetsProperty, plant and equipment 7,995 (15) 7,980Intangible assets 280 15 295Investment in joint venture 616 - 616Deferred income tax asset - 584 584 8,891 584 9,475Current assetsInventories 4,143 - 4,143Pension prepayment 6,368 (6,368) -Trade and other receivables 6,156 - 6,156Prepayments 398 - 398Cash and cash equivalents 2,919 - 2,919 19,984 (6,368) 13,616 TOTAL ASSETS 28,875 (5,784) 23,091 EQUITY AND LIABILITIES EquityIssued capital 2,096 - 2,096Capital redemption reserve 645 - 645Revaluation reserve 1,853 (309) 1,544Special reserve 1,629 - 1,629Foreign exchange reserve 3,959 (4,144) (185)Own shares (738) - (738)Retained earnings 3,717 (3,599) 118 13,161 (8,052) 5,109Non current liabilitiesPension liability - 5,051 5,051Loans and borrowings 245 - 245Provisions 195 - 195Government grants 65 - 65Deferred income tax liability 2,533 (2,533) - 3,038 2,518 5,556Current liabilitiesDividends payable 250 (250) -Trade and other payables 11,332 - 11,332Loans and borrowings 479 - 479Provisions 197 - 197Government grants 13 - 13Income tax payable 405 - 405 12,676 (250) 12,426 TOTAL EQUITY AND LIABILITIES 28,875 (5,784) 23,091 Appendix 3.2 Consolidated Balance Sheet IFRS Adjustments at 1 May 2004 Foreign IAS 12 IAS 19 IAS 38 Total Dividend Exchange Income Tax Employee Intangible benefits assets £'000 £'000 £'000 £'000 £'000 £'000ASSETSNon current assetsProperty, plant and equipment - - - - (15) (15)Intangible assets - - - - 15 15Investment in joint venture - - - - - -Deferred income tax asset - - 584 - - 584 - - 584 - - 584Current assetsInventories - - - - - -Pension prepayment - - - (6,368) - (6,368)Trade and other receivables - - - - - -Prepayments - - - - - -Cash and cash equivalent - - - - - - - - - (6,368) - (6,368) TOTAL ASSETS - - 584 (6,368) - (5,784) EQUITY AND LIABILITIES EquityIssued capital - - - - - -Capital redemption reserve - - (309) - - (309)Revaluation reserve - - - - - -Special reserve - - - - -Foreign exchange reserve - 313 1,911 (6,368) - (4,144)Own shares - - - - - -Retained earnings 250 (313) 1,515 (5,051) - (3,599) 250 - 3,117 (11,419) - (8,052)Non current liabilitiesPension liability - - - 5,051 - 5,051Loans and borrowings - - - - - -Provisions - - - - - -Government grants - - - - - -Deferred income tax liability - - (2,533) - - (2,533) - - (2,533) 5,051 - 2,518Current liabilitiesDividends payable (250) - - - - (250)Trade and other payables - - - - - -Loans and borrowings - - - - - -Government grants - - - - - -Income tax payable - - - - - -Provisions - - - - - - (250) - - - - (250) TOTAL EQUITY AND LIABILITIES - - 584 (6,368) - (5,784) Appendix 4 Movement on Reserves and Reconciliation of Movement in Equity Share Capital Revaluation Foreign Special Own Retained Total exchange capital Redemption reserve reserve reserve Shares Earning reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1st May 2004 as 2,096 645 1,853 3,959 1,629 (738) 3,717 13,161previously reported IFRS AdjustmentsDividend - - - - - - 250 250Foreign Exchange - - - 313 - - (313) -Pension prepayment - - - (6,368) - - (6,368)Deferred tax on building - - (309) - - - - (309)revaluationDeferred tax on pension - - - 1,911 - - 1,911prepaymentPension liability - - - - - - (5,051) (5,051)Deferred tax on pension - - - - - - 1,515 1,515liabilityRestated 1st May 2004 2,096 645 1,544 (185) 1,629 (738) 118 5,109Profit Attributable to - - - - - - 2,243 2,243MembersDividends - - - - - - (338) (338)Actuarial losses on deferred - - - - - - (203) (203)benefit pension schemeDeferred taxation on - - - - - - 61 61actuarial lossesForeign exchange adjustments - - - 7 - - - 7in retranslation of overseas investmentRepurchase of own shares (210) 210 - - - - (1,325) (1,325)At 30th April 2005 1,886 855 1,544 (178) 1,629 (738) 556 5,554 Appendix 5 Independent Auditors' Report to the Company on the preliminary IFRS FinancialStatements for the year ended 30 April 2005 We have audited the accompanying preliminary International Financial ReportingStandards ("IFRS") consolidated financial statements of MS International plc ("the Company") for the year ended 30 April 2005 which comprise the opening IFRSBalance Sheet as at 1 May 2004, the Income Statement and the Statement ofRecognised Income and Expenses for the year ended 30 April 2005 and the BalanceSheet as at 30 April 2005, together with the related accounting policies noteset out on pages 1 to 20 inclusive. This report is made solely to the Company in accordance with our engagementletter dated 27 September 2005. Our audit work has been undertaken so that wemight state to the Company those matters we are required to state to them in anauditors' report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility or liability to anyone other thanthe Company for our audit work, for this report, or for the opinions we haveformed. Respective responsibilities of directors and auditors These preliminary IFRS financial statements are the responsibility of theCompany's directors and have been prepared as part of the Company's conversionto IFRS. They have been prepared in accordance with the basis set out in theaccounting policies note. Our responsibility is to express an independent opinion on the preliminary IFRSfinancial statements based on our audit. We read the other informationaccompanying the preliminary IFRS financial statements and consider whether itis consistent with the preliminary IFRS financial statements. We consider theimplications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the preliminary IFRS financial statements. Ourresponsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standardsissued by the Auditing Practices Board. Those Standards require that we planand perform the audit to obtain reasonable assurance about whether thepreliminary IFRS financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the preliminary IFRS financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall presentation of the preliminaryIFRS financial statements. We believe that our audit provides a reasonablebasis for our opinion. Emphasis of matter Without qualifying our opinion, we draw attention to the fact that page 2explains why there is a possibility that the preliminary IFRS financialstatements may require adjustment before constituting the final IFRS financialstatements. Moreover, we draw attention to the fact that, under IFRSs only acomplete set of financial statements with comparative financial information andexplanatory notes can provide a fair presentation of the Company's financialposition, results of operations and cash flows in accordance with IFRSs. We also draw your attention to the fact that we have not audited theconsolidated preliminary IFRS balance sheet of the Company, the relatedpreliminary IFRS income statement, statement of recognised income and expenseand cash flow statement for the half year ended 31 October 2004. Opinion In our opinion, the preliminary IFRS financial statements for the year ended 30April 2005 have been prepared, in all material respects, in accordance with thebasis set out in the accounting policies note, which describes how IFRS havebeen applied under IFRS 1, including the assumptions management has made aboutthe standards and interpretations expected to be effective, and the policiesexpected to be adopted, when management prepares its first complete set of IFRSfinancial statements as at 30 April 2006. ERNST & YOUNG LLP Date Leeds This information is provided by RNS The company news service from the London Stock Exchange