Smart (J) & Co Regulatory News (SMJ)

24 Apr 2006 14:33

Smart(J.)&Co(Contractors) PLC24 April 2006 J SMART & CO. (CONTRACTORS) PLC INTERIM REPORT 6 MONTHS TO 31 JANUARY 2006 CHAIRMAN'S REVIEW INTERIM REPORT Unaudited Group profits for the six months to 31st January 2006 amounted to£3,026,000 compared with profits of £2,446,000 for the corresponding period lastyear. Turnover increased by 23%. The improvements in turnover and profit figures are due in the main to increasedcontracting activity. The Board anticipates that turnover for the full year willagain be more than last year. Private house sales are down again and apart fromphase three of our joint venture development with EDI at Livingston referred toin the last annual report, no industrial or commercial developments werecommenced in the half year under review. We are now required to adopt International Financial Reporting Standards whichoblige us to take account of, inter alia, unrealised profits in revaluedproperty, the deficit in pensions obligations and deferred tax. Consequently,the restated Consolidated Income Statement (formerly Profit and Loss Account)for the year ended 31st July 2005 shows a substantially increased profit and theConsolidated Balance Sheet shows a substantial reduction. The notes on page 7refer. INTERIM DIVIDEND The Board announces an interim dividend of 3.00p per share (2005, 2.90p) to bepaid on 10th July 2006 to shareholders on the register at the close of businesson 16th June 2006. After waivers by members holding approximately 51% of theshares the interim dividend will cost the Company £148,000. FUTURE PROSPECTS The amount of work in hand in contracting is less than at this time last yearand at the end of last year. Private house sales for the full year should be similar to last year. We will commence an internal modernisation and refurbishment of our large officeproperty at Links Place, Leith before the end of this financial year. We alsoanticipate starting three commercial and industrial new build developments thiscalendar year. I expect profit for the second half of the year to be not less than the profitfor the first half subject to the effect of property revaluation and unforeseenor exceptional circumstances. 24th April 2006 J.M. SMART Chairman CONSOLIDATED INCOME STATEMENT Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes £000 £000 £000 Revenue 12,843 10,403 22,180Own workcapitalised 49 18 20 --------------- --------------- --------------- 12,892 10,421 22,200Cost of sales (10,771) (8,636) (11,670) --------------- --------------- ---------------Gross Profit 2,121 1,785 10,530Otheroperatingincome 3,103 2,992 6,065Net operatingexpenses (2,569) (2,541) (11,403) --------------- --------------- ---------------OperatingProfit beforenet revaluationgains on investmentproperties 2,655 2,236 5,192 Net gain onvaluation ofinvestmentproperties - - 10,036 --------------- --------------- ---------------OperatingProfit 2,655 2,236 15,228 Share ofprofits inJoint Ventures 206 197 848Income from investments 27 18 49Decrease in amount writtenoff investments 21 41 40Finance income 182 37 131Finance costs (65) (83) (305) --------------- --------------- ---------------Profit onordinaryactivitiesbefore tax 3,026 2,446 15,991 Tax on profiton ordinaryactivities 5 (908) (734) (4,277) --------------- --------------- ---------------Profitattributableto equityshareholders 2,118 1,712 11,714 =============== =============== =============== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes £000 £000 £000Actuarial lossrecognised ondefinedbenefitpensionschemes - - (1,035)Deferredtaxation onactuarial loss - - 310 --------------- --------------- ---------------Net deficitrecogniseddirectly inequity - - (725)Profit for theperiod 2,118 1,712 11,714 --------------- --------------- ---------------Totalrecognisedincome andexpense forthe period 2,118 1,712 10,989 =============== =============== =============== Attributableto equityshareholders 2,118 1,712 10,989 =============== =============== =============== STATEMENT OF CHANGES IN EQUITY Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes £000 £000 £000Totalrecognisedincome andexpense forthe period 2,118 1,712 10,989Dividends 6 (468) (450) (593) --------------- --------------- --------------- 1,650 1,262 10,396Openingshareholders'funds 74,597 64,201 64,201 --------------- --------------- ---------------Closingshareholders'funds 76,247 65,463 74,597 =============== =============== =============== CONSOLIDATED BALANCE SHEET Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.0 5ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) £000 £000 £000Non-current assetsProperty,plant andequipment 1,564 1,492 1,428Investmentproperties 73,825 65,996 75,985Investments inJoint Ventures 3,317 2,626 3,172Otherreceivables 2,056 1,656 1,656 --------------- --------------- --------------- 80,762 71,770 82,241 --------------- --------------- --------------- Current assetsInventories 4,758 3,673 4,924Otherinvestments 1,039 1,098 1,038Trade andotherreceivables 3,401 2,905 2,766Cash and bank 5,039 674 2,014 --------------- --------------- --------------- 14,237 8,350 10,742 --------------- --------------- --------------- Total Assets 94,999 80,120 92,983 =============== =============== =============== Non-current liabilitiesRetirementbenefitobligations 7,028 6,049 7,028Deferred taxliabilities 6,768 4,257 6,768 --------------- --------------- --------------- 13,796 10,306 13,796 --------------- --------------- ---------------Current liabilitiesTrade andother payables 3,965 3,617 3,917Current tax 991 734 673 --------------- --------------- --------------- 4,956 4,351 4,590 --------------- --------------- --------------- Total Liabilities 18,752 14,657 18,386 =============== =============== =============== Net Assets 76,247 65,463 74,597 =============== =============== =============== EquityCalled upshare capital 1,008 1,008 1,008Retained earnings 75,239 64,455 73,589 --------------- --------------- ---------------Total Equity 76,247 65,463 74,597 =============== =============== =============== CONSOLIDATED CASH FLOW STATEMENT Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 (Unaudited) (Unaudited) (Unaudited) Notes £000 £000 £000Cash flowsfrom operatingactivities 8 2,040 1,850 4,147 Tax paid on profits (590) (577) (1,299) --------------- --------------- ---------------Net cash flowfrom operating activities 1,450 1,273 2,848 --------------- --------------- --------------- Cash flows from investingactivitiesPurchase of property,plant and equipment (348) (171) (385)Purchase ofinvestment properties (21) (243) (308)Sale of property,plant and equipment 19 39 69Sale of investmentproperties 2,443 218 386Expenditure on own workcapitalised (49) (18) (20)Interest received - 8 5Interest paid (1) (32) (38) --------------- --------------- ---------------Net cash usedin investing activities 2,043 (199) (291) --------------- --------------- --------------- Cash flows from financingactivitiesDividends paid (468) (450) (593) --------------- --------------- ---------------Net cash usedin financing activities (468) (450) (593) --------------- --------------- ---------------Increase incash, cashequivalentsand bank 3,025 624 1,964 --------------- --------------- --------------- Cash, cash equivalentsand bank at beginning ofperiod 2,014 50 50 --------------- --------------- ---------------Cash, cash equivalentsand bank at end of period 5,039 674 2,014 =============== =============== =============== NOTES TO INTERIM FINANCIAL STATEMENTS 1. Basis of preparation These interim financial statements do not constitute statutory accounts asdefined in Section 240 of the Companies Act 1985. The figures for the year to 31July 2005 have been derived from the published statutory accounts as amended bythe IFRS adjustments as set out in note 9. The statutory accounts for 2005,which were prepared under UK GAAP and upon which the auditors issued anunqualified audit report, have been delivered to the Registrar of Companies. These interim financial statements have been prepared in accordance withInternational Accounting Standard (IAS) 34, Interim Financial Reporting and arecovered by International Financial Reporting Standard (IFRS) 1, First-timeAdoption of IFRS, because the period of these financial statements is within thegroup's first IFRS financial statements for the year ended 31 July 2006. 2. Accounting policies The accounting policies set out below have been consistently applied to allperiods presented in these interim financial statements. Consolidated financial statements of the group until 31 July 2005 have beenprepared in accordance with UK Generally Accepted Accounting Principles (UKGAAP). UK GAAP differs in certain respects from IFRS. When preparing theconsolidated interim financial statements for 2006, management has amendedcertain accounting and valuation methods applied in the UK GAAP financialstatements to comply with IFRS. There have been no other changes to accountingpolicies from those stated in the group's 2005 annual consolidated financialstatements. The comparative figures in respect of the interim period ended 31 January 2005and the year ended 31 July 2005 have been restated to reflect these adjustments.Reconciliations and descriptions of the effect of the transition from UK GAAP toIFRS on the group's equity and its net income are given in note 9. The group has recognised actuarial gains and losses in full for the year inwhich they occur in the Consolidated Statement of Recognised Income and Expensein accordance with the proposed amendment to IAS 19. The group has assumed thatthe European Commission will endorse the amendment to IAS 19 Employee Benefits -Actuarial Gains and Losses, Group Plans and Disclosures. For the interim accounts the assets and liabilities of the pension scheme areestimated to be unchanged from the values included at the previous year end. In accordance with long standing practice, the group's investment properties arerevalued annually on 31 July each year. No revaluation adjustment is made in theinterim financial statements. 3. Adoption of new and revised International Financial Reporting Standards EU law (IAS Regulation EC 1606/2002) requires that the group's annualconsolidated financial statements for the year to 31 July 2006 be prepared inaccordance with IFRS adopted for use in the EU. This financial information has been prepared in accordance with the ListingRules of the Financial Services Authority. In preparing this financialinformation management has used its best knowledge of the expected standards andinterpretations, facts and circumstances, and accounting policies that will beapplied when the group prepares its first set of financial statements inaccordance with IFRSs as adopted for use in the EU as at 31 July 2006. However, additional standards and interpretations or amendments to existingstandards and interpretations that will be applicable, on a mandatory oroptional basis, at 31 July 2006 are not known with certainty at the time ofpreparing these interim financial statements. Accordingly the restated financialinformation for the year to 31 July 2005 presented herein, which has not beenaudited, may differ from the financial information presented as comparativefigures with the 2006 final audited financial statements. 4. Segmental information The group's primary basis of segmentation is by activities. All of the group'sactivities are undertaken within the UK. Total Revenue Inter segment External Profit attributable to equity shareholders Revenue Revenue £000 £000 £000 £000 £000 £00031 January 2006Constructionactivities 12,892 49 12,843 484 - -Investmentactivities 3,103 - 3,103 2,171 - -Joint - - - 206 - -Ventures --------------- --------------- --------------- --------------- --------------- --------------- 15,995 49 15,946 2,861 - - --------------- --------------- --------------- --------------- --------------- --------------- 31 January 2005Constructionactivities 10,421 18 10,403 - 76 -Investmentactivities 2,992 - 2,992 - 2,160 -Joint - - - - 197 -Ventures --------------- --------------- --------------- --------------- --------------- --------------- 13,413 18 13,395 - 2,433 - --------------- --------------- --------------- --------------- --------------- --------------- 31 July 2005Constructionactivities 22,200 20 22,180 - - 870Investment activities 6,065 - 6,065 - - 14,358Joint - - - - - 848Ventures --------------- --------------- --------------- --------------- --------------- --------------- 28,265 20 28,245 - - 16,076 --------------- --------------- --------------- --------------- --------------- --------------- Result 2,861 2,433 16,076Finance income 230 96 220Finance cost (65) (83) (305) --------------- --------------- ---------------Profit on OrdinaryActivities before tax 3,026 2,446 15,991 Tax on Profiton Ordinary (908) (734) (4,277)Activities --------------- --------------- ---------------Profit attributableto equity shareholders 2,118 1,712 11,714 =============== =============== =============== 5. Taxation The tax charge for the 6 months to 31 January 2006 is based on the corporationtax rate at 30% (2005 - 30%). 6. Dividends Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 £000 £000 £000Ordinary dividends2005 Final dividend declared of 9.50p per share 468 - -2005 Interim dividend declared of 2.90p per share - - 1432004 Final dividend of 9.15p per share - 450 450 --------------- --------------- --------------- 468 450 593 =============== =============== =============== Certain shareholders holding approximately 51% of the shares have waived theirrights to the interim and final dividends paid for the years to 31 July 2004 and31 July 2005. The interim dividend of 3.00p per share for the year to 31 July 2006 will bepaid on 10 July 2006 to shareholders on the register at 16 June 2006. Afterwaivers by members holding approximately 51% of the shares the interim dividendwill cost the company £148,000. 7. Earnings per share Profit Basic Earnings attributable to equity shareholders Per share £0006 months to 31 January 2006 2,118 21.01p =============== ===============6 months to 31 January 2005 1,712 16.98p =============== ===============Year to 31 July 2005 11,714 116.19p =============== =============== Basic earnings per share are calculated by dividing the profit attributable toequity shareholders by the number of ordinary shares in issue during the period. There is no difference between basic and diluted earnings per share. 8. Reconciliation of operating profit to cash flows from operatingactivities Restated Restated 6 Months ended 6 Months ended Year 31.1.06 31.1.05 ended 31.7.05 £000 £000 £000Profit before tax 3,026 2,446 15,991Share of profits fromJoint Ventures (206) (197) (848)Depreciation 200 179 434Unrealised revaluationgains on investmentproperties - - (10,036)Gain on sale of property,plant and equipment (6) (16) (23)Gain on sale of investmentproperties (213) (77) (131)(Gain)/Loss on sale ofinvestments (54) 4 (22)Amounts written backto investments (21) (41) (40)Change in retirement benefits - - (56)Interest received - (8) (5)Interestreceived byJoint Ventures (3) (1) (3)Interest paid 1 32 38Interest paid by JointVentures 65 51 99Proceeds of sale ofinvestments 194 28 114Purchase of investments (120) (250) (250)Change in inventories 166 892 (359)Change in receivables -current (635) (829) (690)Change inreceivables -non current (400) (176) (176)Change in payables 46 (187) 110 --------------- --------------- ---------------Net cashgenerated fromoperations 2,040 1,850 4,147 =============== =============== =============== 9. Reconciliation of UK GAAP to IFRS Reconciliation of Income Statement - 6 months to 31 January 2005 UK GAAP Effect of IFRS transition to IFRS Notes £000 £000 £000Revenue 10,403 - 10,403Own workcapitalised 18 - 18 --------------- --------------- --------------- 10,421 - 10,421Cost of sales (8,636) - (8,636) --------------- --------------- ---------------Gross Profit 1,785 - 1,785 Other operating income 2,992 - 2,992Net operating expenses 9(c) (2,541) - (2,541) --------------- --------------- ---------------OperatingProfit beforenet revaluationgains on investmentproperties 2,236 - 2,236 Net gain on valuation of 9(e) - - -investment properties --------------- --------------- ---------------OperatingProfit 2,236 - 2,236 Share ofprofits inJoint Ventures 9(e) 197 - 197Income frominvestments 18 - 18Decrease inamount writtenoff investments 41 - 41Finance income 37 - 37Finance costs 9(c) (83) - (83) --------------- --------------- ---------------Profit onordinaryactivitiesbefore tax 2,446 - 2,446 Tax on profiton ordinaryactivities 9(b)(c) (734) - (734) --------------- --------------- ---------------Profitattributableto equityshareholders 1,712 - 1,712 =============== =============== =============== Reconciliation of Income Statement - Year to 31 July 2005 UK GAAP Effect of IFRS transition to IFRS Notes £000 £000 £000Revenue 22,180 - 22,180Own workcapitalised 20 - 20 --------------- --------------- --------------- 22,200 - 22,200Cost of sales (11,670) - (11,670) --------------- --------------- ---------------Gross Profit 10,530 - 10,530 Other operating income 6,065 - 6,065Net operating expenses 9(c) (11,627) 224 (11,403) --------------- --------------- ---------------OperatingProfit beforenet revaluationgains oninvestmentproperties 4,968 224 5,192 Net gain onvaluation ofinvestmentproperties 9(e) - 10,036 10,036 --------------- --------------- ---------------OperatingProfit 4,968 10,260 15,228 Share ofprofits inJoint Ventures 9(e) 407 441 848Income frominvestments 49 - 49Decrease inamount writtenoff investments 40 - 40Finance income 131 - 131Finance costs 9(c) (137) (168) (305) --------------- --------------- ---------------Profit onordinaryactivitiesbefore tax 5,458 10,533 15,991 Tax on profiton ordinaryactivities 9(b)(c) (1,449) (2,828) (4,277) --------------- --------------- ---------------Profitattributableto equityshareholders 4,009 7,705 11,714 =============== =============== =============== Reconciliation of equity at 31 January 2005 UK GAAP Effect of IFRS transition to IFRS Notes £000 £000 £000Non-current assetsIntangibleassets 1 (1) -Property,plant andequipment 1,492 - 1,492Investmentproperties 65,996 - 65,996Investments inJoint Ventures 2,626 - 2,626Otherreceivables 9(f) - 1,656 1,656 --------------- --------------- --------------- 70,115 1,655 71,770 --------------- --------------- ---------------Current assetsInventories 3,673 - 3,673Otherinvestments 1,098 - 1,098Trade andotherreceivables 9(f) 4,560 (1,655) 2,905Cash and bank 674 - 674 --------------- --------------- --------------- 10,005 (1,655) 8,350 --------------- --------------- --------------- Total Assets 80,120 - 80,120 =============== =============== =============== Non-current liabilitiesRetirementbenefitobligations 9(c) - 6,049 6,049Deferred tax liabilities 9(b)(c) 148 4,109 4,257 --------------- --------------- --------------- 148 10,158 10,306 --------------- --------------- ---------------Current liabilitiesTrade andother payables 9(a) 3,760 (143) 3,617Current tax 734 - 734 --------------- --------------- --------------- 4,494 (143) 4,351 --------------- --------------- ---------------TotalLiabilities 4,642 10,015 14,657 =============== =============== ===============Net Assets 75,478 (10,015) 65,463 =============== =============== ===============EquityCalled upshare capital 1,008 - 1,008Revaluationreserve 9(e) 26,751 (26,751) -Retainedearnings 47,719 16,736 64,455 --------------- --------------- ---------------Total Equity 75,478 (10,015) 65,463 =============== =============== =============== Reconciliation of equity at 31 July 2005 UK GAAP Effect of IFRS transition to IFRS Notes £000 £000 £000Non-current assetsIntangibleassets 1 (1) -Property,plant andequipment 1,428 - 1,428Investmentproperties 75,985 - 75,985Investments inJoint Ventures 3,172 - 3,172Otherreceivables 9(f) - 1,656 1,656 --------------- --------------- --------------- 80,586 1,655 82,241 --------------- --------------- --------------- Current assetsInventories 4,924 - 4,924Otherinvestments 1,038 - 1,038Trade andotherreceivables 9(f) 4,421 (1,655) 2,766Cash and bank 2,014 - 2,014 --------------- --------------- --------------- 12,397 (1,655) 10,742 --------------- --------------- --------------- Total Assets 92,983 - 92,983 =============== =============== =============== Non-current liabilitiesRetirementbenefitobligations 9(c) - 7,028 7,028Deferred taxliabilities 9(b)(c) 141 6,627 6,768 --------------- --------------- --------------- 141 13,655 13,796 --------------- --------------- --------------- Current liabilitiesTrade andother payables 9(a) 4,385 (468) 3,917Current tax 673 - 673 --------------- --------------- --------------- 5,058 (468) 4,590 --------------- --------------- --------------- TotalLiabilities 5,199 13,187 18,386 =============== =============== =============== Net Assets 87,784 (13,187) 74,597 =============== =============== =============== EquityCalled upshare capital 1,008 - 1,008Revaluationreserve 9(e) 37,157 (37,157) -Retainedearnings 49,619 23,970 73,589 --------------- --------------- ---------------Total Equity 87,784 (13,187) 74,597 =============== =============== =============== Reconciliation of equity at 1 August 2004 UK GAAP Effect of IFRS transition to IFRS Notes £000 £000 £000Non-current assetsIntangibleassets 1 (1) -Property,plant andequipment 1,522 - 1,522Investmentproperties 65,877 - 65,877Investments inJoint Ventures 2,478 - 2,478Otherreceivables 9(f) - 1,480 1,480 --------------- --------------- --------------- 69,878 1,479 71,357 --------------- --------------- --------------- Current assetsInventories 4,565 - 4,565Otherinvestments 840 - 840Trade andotherreceivables 9(f) 3,555 (1,479) 2,076Cash and bank 50 - 50 --------------- --------------- --------------- 9,010 (1,479) 7,531 --------------- --------------- --------------- Total Assets 78,888 - 78,888 =============== =============== ===============Non-current liabilitiesRetirementbenefitobligations 9(c) - 6,049 6,049Deferred taxliabilities 9(b)(c) 148 4,109 4,257 --------------- --------------- --------------- 148 10,158 10,306 --------------- --------------- ---------------Current liabilitiesTrade andother payables 9(a) 4,255 (450) 3,805Current tax 576 - 576 --------------- --------------- --------------- 4,831 (450) 4,381 --------------- --------------- --------------- TotalLiabilities 4,979 9,708 14,687 =============== =============== =============== Net Assets 73,909 (9,708) 64,201 =============== =============== ===============EquityCalled upshare capital 1,008 - 1,008Revaluationreserves 9(e) 26,751 (26,751) -Retainedearnings 46,150 17,043 63,193 --------------- --------------- ---------------Total Equity 73,909 (9,708) 64,201 =============== =============== =============== Notes to the Reconciliations from UK GAAP to IFRS a) IAS 10 - Events after the Balance Sheet Date Under UK GAAP proposed dividends were accrued into the accounts for the periodto which they related. Under IFRS the proposed dividend can only be accountedfor when it has been declared and approved at the Annual General Meeting. Thusthe proposed dividend at the end of each financial period has been derecognised,which has resulted in a decrease in Trade and other payables and an increase inRetained earnings. Interim dividends are recognised when paid. As at 31 As at 31 As at 1 August January 2005 2004 July 2005 £000 £000 £000 Decrease inTrade andother payables 468 143 450 =============== =============== ===============Increase inRetainedearnings 468 143 450 =============== =============== =============== Additionally IFRS requires dividends to be presented differently from UK GAAP.Under IFRS dividends are not considered to be an expense and therefore are notincluded in the Income Statement, but charged against Retained earnings. b) IAS 12 - Income Tax Under UK GAAP the contingent capital gains tax that would be payable if allinvestment properties were sold at their valuation on the Balance Sheet date wasdisclosed as a note to the accounts but not recognised in the Balance Sheet.Under IFRS a provision for the deferred tax liability based on the tax which mayarise on the sale of the investment properties is recognised in the BalanceSheet and movements from year to year are recognised in the tax charge in theIncome Statement. Under UK GAAP deferred tax is calculated by reference to temporary timingdifferences arising on the Income Statement. Under IFRS a Balance Sheet approachis adopted by applying the appropriate tax rate to the temporary differencesarising between the carrying values of assets and liabilities and their taxbase. The effect on the Balance Sheet of applying IAS 12 is:- As at 31 As at 31 As at 1 August January 2005 2004 July 2005 £000 £000 £000Deferred taxliability arising onrevaluation of investmentproperties (8,649) (5,892) (5,892)Deferred taxliabilityarising ontemporarydifferences (86) (32) (32) --------------- --------------- ---------------Decrease inRetainedearnings (8,735) (5,924) (5,924) To reconcile to IFRS adjustmentto deferred tax liability:-Retirement benefitsdeferred tax asset (Note 9(c)) 2,108 1,815 1,815 --------------- --------------- --------------- (6,627) (4,109) (4,109) =============== =============== =============== The effect on the Income Statement of applying IAS 12 is:- Increase in deferred taxliability arising onrevaluation ofinvestment properties (2,757) -Increase indeferred taxliability arising ontemporary differences (54) -Increased taxcharge on pension schemeservice costs(Note 9(c)) (17) - --------------- --------------- (2,828) - =============== =============== c) IAS 19 - Employee Benefits Under UK GAAP the net deficit in the defined benefit pension scheme and therelated deferred tax asset were not required to be recognised in the BalanceSheet. Under IFRS the deficit in the scheme and the related deferred tax assetare recognised on the face of the Balance Sheet. IAS 19 allows several alternative options for the accounting for actuarial gainsand losses. The group has elected to recognise all actuarial gains and losses infull in the period in which they occur in the Statement of Recognised Income andExpense. This option has been selected as it is consistent with the requirementsunder UK GAAP treatment under FRS 17, that had previously been disclosed by wayof a note in the group's financial statements. The effect on the Balance Sheet of applying IAS 19 is:- As at 31 As at 31 As at 1 August January 2005 2004 July 2005 £000 £000 £000 Retirement benefitobligations recognised (7,028) (6,049) (6,049)Deferred taxasset on retirementbenefit deficit(Included withindeferred taxation Note9(b)) 2,108 1,815 1,815 --------------- --------------- ---------------Decrease inRetained earnings (4,920) (4,234) (4,234) =============== =============== =============== The effect on the Income Statement of applying IAS 19 is:- Decrease inpension costswithin Netoperatingexpenses 224 - Increase inpensionfinance costs (168) - Increased taxcharge arisingon above (17) - =============== =============== d) IAS 31 - Interest in Joint Ventures Under UK GAAP, the group recognised its share of Joint Ventures operating profitbefore interest and its share of interest with the group figures on the face ofthe Profit and Loss Account. In the Balance Sheet the group's share of the JointVentures' gross assets and liabilities were separately shown. IAS 31 allows the company to make a one-off decision as to whether JointVentures are to be accounted for under the equity method or by proportionalconsolidation. The company has chosen to apply the equity method. e) IAS 40 - Investment Properties Under UK GAAP revaluation surpluses or deficits on investment properties weretaken directly to reserves. Under IFRS these surpluses and deficits arerecognised in the Income Statement. As a result the revaluation reserve is nolonger reported separately as a component of equity in the Balance Sheet. At thedate of transition the accumulated revaluation reserve has been reallocated toretained earnings. This treatment does not have any effect on the distributableprofits of the group as these will continue to be determined by the applicationof the Companies Act 1985. As the group only revalues its investment properties annually on 31 July eachyear no adjustments regarding IAS 40 are required for the periods 31 January2005 or 31 January 2006. Revaluation of investment properties in Joint Venture companies have beentreated in line with the group policy. f) Reclassifications Under IFRS other receivables not recoverable within one year are shown underNon-current assets. This information is provided by RNS The company news service from the London Stock Exchange