The Group will publicly report under IFRS for the first time in the year ending 31 March 2006, with restated comparative figures for the year to 31 March 2005 as required by IFRS. The first set of consolidated financial statements to be published under IFRS will be the interim report for the six months to 30 September 2005, with restated comparatives for the six months to 30 September 2004.
The Group is well advanced in its preparation for the changes required by the transition, and has for some time been analysing information that will comply with IFRS. Although some of the changes required by IFRS will affect the Group's reported profits and net assets, no changes to the Group's free cash flow are expected.
It is too early to provide a complete analysis of the impact the changes will have on the Group's income statement for the year to 31 March 2005, given that the transition process has not been completed and that further pronouncements by the International Accounting Standards Board may lead to a decision to make additional changes. Nevertheless, a preliminary analysis has identified that the principal and material change to operating profit will be a charge in respect of employee stock options of approximately € 32 million, reflecting the introduction of a new accounting Standard (IFRS 2). Other impacts on operating profit are not anticipated to be material, although certain reclassifications may be required.
Below operating profit, the Group anticipates a number of technical restatements. These are likely to include an increase in deferred taxation assets arising on intra-Group inventory transfers and certain changes in the Group's share of results from British American Tobacco ('BAT'). Overall, Group net profit for the year is expected to be higher following the IFRS restatement.
The share of results from BAT will significantly increase, partly due to the reversal of goodwill amortisation charges. Other technical adjustments relative to BAT include the reclassification of exceptional items between income and equity. Details on the effects of BAT's IFRS transition on its own financial statements are disclosed in BAT's most recent annual report.
The changes required by the transition to IFRS are expected to have a positive impact on Group net assets at 31 March 2005.
The transition to IFRS is not expected to have an impact on the Group's business model or its underlying performance.
Print
Mail to
Bookmark