LONDON, Nov. 18, 2003 (PRIMEZONE) -- Enodis PLC (NYSE:ENO) (LSE:ENO) Part II
Group profit and loss account
52 weeks to 27 September 2003
52 weeks to 27 September 2003
Before Exceptional Total
exceptional items
items (note 4)
Notes GBPm GBPm GBPm
Turnover
Food Equipment 663.7 -- 663.7
Property 15.7 -- 15.7
1, 679.4 -- 679.4
2
Operating profit/(loss) before goodwill
amortisation
Food Equipment 64.9 (4.7) 60.2
Property 5.4 (3.3) 2.1
Corporate (9.5) (4.5) (14.0)
costs
60.8 (12.5) 48.3
Goodwill amortisation and (13.8) -- (13.8)
impairment
Operating 3 47.0 (12.5) 34.5
profit/(loss)
Profit /(loss) 4 -- 3.3 3.3
on disposal of
business
Profit/(loss) 47.0 (9.2) 37.8
on ordinary
activities
before
interest and
taxation
Net interest (21.9) -- (21.9)
payable and
similar
charges
Profit/(loss) 25.1 (9.2) 15.9
on ordinary
activities
before
taxation
Tax on 5 (8.2) 1.8 (6.4)
profit/(loss)
on ordinary
activities
Profit/(loss) 16.9 (7.4) 9.5
on ordinary
activities
after taxation
Equity (0.1) -- (0.1)
minority
interests
Retained 16.8 (7.4) 9.4
profit/(loss)
Earnings/(loss) 6 pence
per share
(pence)
Basic 2.4
earnings/(loss)
per share
Adjusted basic 7.7
earnings/(loss) per share
Diluted 2.4
earnings/(loss)
per share
Adjusted diluted earnings/(loss) per 7.7
share
52 weeks to 28 September 2002
Before Exceptional
exceptional items
items (note 4) Total
Notes GBPm GBPm GBPm
Turnover
Food Equipment 777.1 -- 777.1
Property 16.1 -- 16.1
1, 793.2 -- 793.2
2
Operating profit/(loss)
before goodwill
amortisation
Food Equipment 67.2 (8.9) 58.3
Property 8.0 -- 8.0
Corporate (7.9) (0.5) (8.4)
costs
67.3 (9.4) 57.9
Goodwill amortisation and (19.0) (48.9) (67.9)
impairment
Operating 3 48.3 (58.3) (10.0)
profit/(loss)
Profit /(loss) 4 -- (38.1) (38.1)
on disposal of
business
Profit/(loss) 48.3 (96.4) (48.1)
on ordinary
activities
before
interest and
taxation
Net interest (29.3) (8.4) (37.7)
payable and
similar
charges
Profit/(loss) 19.0 (104.8) (85.8)
on ordinary
activities
before
taxation
Tax on 5 (1.2) 0.2 (1.0)
profit/(loss)
on ordinary
activities
Profit/(loss) 17.8 (104.6) (86.8)
on ordinary
activities
after taxation
Equity (0.2) -- (0.2)
minority
interests
Retained 17.6 (104.6) (87.0)
profit/(loss)
Earnings/(loss) 6 pence
per share
(pence)
Basic (24.8)
earnings/(loss)
per share
Adjusted basic 10.4
earnings/(loss) per share
Diluted (24.8)
earnings/(loss)
per share
Adjusted diluted 10.4
earnings/(loss) per share
52 weeks to 52 weeks to
27 September 28 September
2003 2002
Group statement GBPm GBPm
of total
recognised
gains and
(losses)
Gain/(loss) for 9.4 (87.0)
the period
Goodwill written -- 65.1
back on
disposals,
previously
written off
Currency translation differences on (4.6) (5.7)
foreign currency net investments
Total recognised 4.8 (27.6)
gains and
(losses) for the
period
Group profit and loss account
13 weeks to 27 September 2003
13 weeks to 27 September 2003
Before Exceptional Total
exceptional items
items (note 4)
Notes GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited)
Turnover
Food 181.1 -- 181.1
Equipment
Property 15.7 -- 15.7
Total 1, 2 196.8 -- 196.8
turnover
Operating
profit/(loss) before
goodwill
amortisation
Food 22.7 (2.8) 19.9
Equipment
Property 5.4 (0.8) 4.6
Corporate (3.3) (1.7) (5.0)
costs
24.8 (5.3) 19.5
Goodwill (3.6) -- (3.6)
amortisation
Operating 3 21.2 (5.3) 15.9
profit/(loss)
Profit -- 0.8 0.8
/(loss) on
disposal of
business
Profit/(loss) 21.2 (4.5) 16.7
on ordinary
activities
before
interest and
taxation
Net interest (5.5) -- (5.5)
payable and
similar
charges
Profit/(loss) 15.7 (4.5) 11.2
on ordinary
activities
before
taxation
Tax on (4.9) 1.8 (3.1)
profit/(loss)
on ordinary
activities
Profit/(loss) 10.8 (2.7) 8.1
on ordinary
activities
after
taxation
Equity (0.1) -- (0.1)
minority
interests
Retained 10.7 (2.7) 8.0
profit/(loss)
Earnings/(loss) 6 pence
per share
(pence)
(unaudited)
Basic earnings/(loss) per share 2.0
Adjusted basic earnings/(loss) per share 3.6
Diluted earnings/(loss) per share 2.0
Adjusted diluted earnings/(loss) per share 3.6
13 weeks to 28 September 2002
Before Exceptional
exceptional items
items (note 4) Total
Notes GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited)
Turnover
Food Equipment 181.9 -- 181.9
Property 16.1 -- 16.1
Total turnover 1, 2 198.0 -- 198.0
Operating
profit/(loss) before
goodwill amortisation
Food Equipment 17.7 (0.5) 17.2
Property 8.0 -- 8.0
Corporate (1.7) (0.2) (1.9)
costs
24.0 (0.7) 23.3
Goodwill (3.8) -- (3.8)
amortisation
Operating 3 20.2 (0.7) 19.5
profit/(loss)
Profit /(loss) -- (0.8) (0.8)
on disposal of
business
Profit/(loss) 20.2 (1.5) 18.7
on ordinary
activities
before
interest and
taxation
Net interest (6.4) -- (6.4)
payable and
similar
charges
Profit/(loss) 13.8 (1.5) 12.3
on ordinary
activities
before
taxation
Tax on 1.3 0.2 1.5
profit/(loss)
on ordinary
activities
Profit/(loss)
on ordinary 15.1 (1.3) 13.8
activities
after taxation
Equity -- -- --
minority
interests
Retained 15.1 (1.3) 13.8
profit/(loss)
Earnings/(loss) 6 pence
per share
(pence)
(unaudited)
Basic earnings/(loss) 3.5
per share
Adjusted basic 4.7
earnings/(loss) per
share
Diluted 3.5
earnings/(loss) per
share
Adjusted diluted 4.7
earnings/(loss) per
share
Group 13 weeks to 13 weeks to
statement of 27 September 28 September
total 2003 2002
recognised GBPm GBPm
gains and
(losses)
(unaudited) (unaudited)
Gain/(loss) 8.0 13.8
for the
period
Goodwill -- --
written back
on disposals,
previously
written off
Currency translation (0.7) (3.0)
differences on foreign
currency net investments
Total 7.3 10.8
recognised
gains and
(losses) for
the period
Group balance sheet
27 September 28 September
2003 2002
GBPm GBPm
Fixed assets
Intangible assets: Goodwill 208.8 235.4
Tangible assets 81.6 88.0
Investments 5.0 5.9
295.4 329.3
Current assets
Stocks 75.2 77.7
Debtors 118.3 127.4
Deferred tax asset 23.8 25.3
Cash at bank and in hand 77.7 72.7
295.0 303.1
Creditors falling due within one
year
Borrowings (49.3) (33.4)
Other creditors (174.6) (183.8)
(223.9) (217.2)
Net current assets 71.1 85.9
Total assets less current 366.5 415.2
liabilities
Financed by:
Creditors falling due after more
than one year
Borrowings 160.2 214.1
Provisions for liabilities and 44.6 44.3
charges
204.8 258.4
Capital and reserves
Called up equity share capital 200.2 200.2
Share premium account 234.2 234.2
Profit and loss account (272.8) (277.6)
Equity shareholders' funds 161.6 156.8
Equity minority interests 0.1 --
366.5 415.2
Group cash flow statement
52 weeks to 52 weeks to
27 September 28 September
2003 2002
Notes GBPm GBPm
Net cash flow from
operations before 80.0 100.0
exceptional items
Net cash flow effect of (6.5) (27.4)
exceptional items
Net cash
inflow/(outflow) from (a) 73.5 72.6
operating activities
Return on investments
and servicing of finance
Interest paid (18.9) (23.3)
Financing fees paid -- (18.9)
(18.9) (42.2)
Taxation
Overseas and UK tax paid (7.1) (3.3)
Capital expenditure and
financial investment
Payments to acquire (10.0) (9.9)
tangible fixed assets
Receipts from sale of 0.6 0.9
tangible fixed assets
(9.4) (9.0)
Acquisitions and
disposals
Disposal of subsidiary (1.3) 88.6
undertakings
(1.3) 88.6
Cash inflow/(outflow) 36.8 106.7
before financing
Financing
Issue of shares -- 70.3
Net increase/(decrease) in term (32.3) (242.5)
loans and other borrowings
Issue of 10 3/8% senior subordinated -- 100.0
notes
Capital element of finance lease (0.2) (0.5)
payments
(32.5) (72.7)
Increase/(decrease) in cash in 4.3 34.0
the period
Notes to the group cash flow statement
(a) Reconciliation of operating profit/(loss) to net cash
inflow/(outflow) from operating activities
52 weeks to 27 September 2003
Before Effect of Total
exceptional exceptional
items items
GBPm GBPm GBPm
Operating profit/(loss) 47.0 (12.5) 34.5
Depreciation 12.4 -- 12.4
Amortisation 13.8 -- 13.8
/impairment of goodwill
Increase/(decrease) in (2.8) 4.5 1.7
provisions
(Increase)/decrease in 2.6 -- 2.6
stock
(Increase)/decrease in 7.5 -- 7.5
debtors
Increase/(decrease) in (0.5) 1.5 1.0
creditors
Net cash 80.0 (6.5) 73.5
inflow/(outflow) from
operating activities
52 weeks to 28 September 2002
Before Effect of
exceptional exceptional
items items Total
GBPm GBPm GBPm
Operating 48.3 (58.3) (10.0)
profit/(loss)
Depreciation 15.7 -- 15.7
Amortisation 19.0 48.9 67.9
/impairment of
goodwill
Increase/(decrease) in (2.2) (5.6) (7.8)
provisions
(Increase)/decrease in 5.5 5.9 11.4
stock
(Increase)/decrease in 19.7 -- 19.7
debtors
Increase/(decrease) in (6.0) (18.3) (24.3)
creditors
Net cash 100.0 (27.4) 72.6
inflow/(outflow) from
operating activities
(b) Reconciliation of net cash flow to movement in net debt
27 September 28 September
2003 2002
GBPm GBPm
Net debt at the start of period (186.1) (365.9)
Increase/(decrease) in net cash 4.3 34.0
in the period
Issue of 10 3/8% senior subordinated -- (100.0)
notes
Net (increase)/decrease in other 32.5 241.5
loans
Translation differences 9.6 4.3
Net debt at the end of the period (139.7) (186.1)
Notes to the group cash flow statement (continued)
(c) Reconciliation of net debt to balance sheet
27 September 28 September
2003 2002
GBPm GBPm
Cash at bank and in hand 77.7 72.7
Short term borrowing (49.3) (33.4)
Long term borrowing (160.2) (214.1)
(131.8) (174.8)
Exclude deferred financing costs (7.9) (11.3)
(139.7) (186.1)
Notes to the financial statements
1. Basis of Preparation
The accounts in this statement do not comprise full accounts within the meaning of section 240 of the Companies Act 1985. The figures for the 52 weeks to 28 September 2002 are based upon the 2002 Annual Report but do not comprise statutory accounts for that period. The audited financial statements for the 52 weeks to 28 September 2002 have been delivered to the Registrar of Companies. The Auditors made an unqualified report on those accounts and their report did not contain any statement under section 237 (2) or (3) of the Companies Act 1985.
The figures for the 13 week period to 27 September 2003 and 28 September 2002 have been extracted from underlying accounting records and have been prepared in accordance with accounting principles generally accepted in the United Kingdom ("U.K. GAAP"). The quarterly financial statements are unaudited but include all adjustments (consisting of normal recurring adjustments) which the Group's management considers necessary for a fair presentation of the financial position of the Group as of such dates and the operating results and cash flows for those periods. Certain information and footnote disclosures normally included in statutory financial statements prepared in accordance with U.K. GAAP have been condensed or omitted.
U.K. GAAP differs in certain significant respects from accounting principles generally accepted in the United States of America ("U.S. GAAP"). The application of U.S. GAAP on the retained profit/(loss) is summarised in Note 9.
Freight and shipping revenues have previously either been booked against the original freight costs or reflected as part of turnover. As of 29 September 2002, we have chosen to adopt a consistent treatment of these revenues as part of turnover. All comparative disclosures have been reclassified in this respect. The impact on turnover is:
Period As previously reported Reclassified
GBPm GBPm
13 weeks ended 28 195.9 198.0
September 2002
52 weeks ended 28 783.2 793.2
September 2002
The reclassification did not have any impact on gross profit or operating profit for any period.
2. Turnover
52 weeks to 52 weeks to 13 weeks to 13 weeks to
27 28 27 September 28 September
September September 2003 2002
2003 2002 GBPm GBPm
GBPm GBPm (unaudited) (unaudited)
Food 408.4 474.1 109.0 117.8
Service
Equipment --
North
America
Food 144.5 145.0 39.8 35.1
Service
Equipment --
Europe/Asia
Global Food 552.9 619.1 148.8 152.9
Service
Equipment
Food Retail 110.8 158.0 32.3 29.0
Equipment
Food 663.7 777.1 181.1 181.9
Equipment
Property 15.7 16.1 15.7 16.1
679.4 793.2 196.8 198.0
Notes to the financial statements (continued)
3. Operating profit/(loss)
52 weeks to 27 September 2003
Before Total
exceptional Exceptional
items Items
GBPm GBPm GBPm
Food Service 50.7 (3.0) 47.7
Equipment -- North
America
Food Service 10.2 (1.7) 8.5
Equipment --
Europe/Asia
Global Food Service 60.9 (4.7) 56.2
Equipment
Food Retail 4.0 -- 4.0
Equipment
64.9 (4.7) 60.2
Food Equipment (13.8) -- (13.8)
goodwill
amortisation
Food Equipment 51.1 (4.7) 46.4
Property 5.4 (3.3) 2.1
Corporate costs (9.5) (4.5) (14.0)
47.0 (12.5) 34.5
52 weeks to 28 September 2002
Before
exceptional Exceptional
items items Total
GBPm GBPm GBPm
Food Service 60.8 0.2 61.0
Equipment -- North
America
Food Service 9.7 (2.5) 7.2
Equipment --
Europe/Asia
Global Food 70.5 (2.3) 68.2
Service Equipment
Food Retail (3.3) (6.6) (9.9)
Equipment
67.2 (8.9) 58.3
Food Equipment (19.0) (48.9) (67.9)
goodwill
amortisation
Food Equipment 48.2 (57.8) (9.6)
Property 8.0 -- 8.0
Corporate costs (7.9) (0.5) (8.4)
48.3 (58.3) (10.0)
13 weeks to 27 September 2003
Before Total
exceptional Exceptional
items items
GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited)
Food Service 17.3 (1.3) 16.0
Equipment
-- North America
Food Service 3.3 (1.5) 1.8
Equipment
-- Europe/Asia
Global Food 20.6 (2.8) 17.8
Service
Equipment
Food Retail 2.1 -- 2.1
Equipment
22.7 (2.8) 19.9
Food Equipment (3.6) -- (3.6)
goodwill
amortisation
Food Equipment 19.1 (2.8) 16.3
Property 5.4 (0.8) 4.6
Corporate costs (3.3) (1.7) (5.0)
21.2 (5.3) (15.9)
13 weeks to 28 September 2002
Before
exceptional Exceptional
items items Total
GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited)
Food Service 18.6 0.2 18.8
Equipment
-- North America
Food Service 2.7 -- 2.7
Equipment
-- Europe/Asia
Global Food 21.3 0.2 21.5
Service
Equipment
Food Retail (3.6) (0.7) (4.3)
Equipment
17.7 (0.5) 17.2
Food Equipment (3.8) -- (3.8)
goodwill
amortisation
Food Equipment 13.9 (0.5) 13.4
Property 8.0 -- 8.0
Corporate costs (1.7) (0.2) (1.9)
20.2 (0.7) 19.5
Notes to the financial statements (continued)
4. Exceptional items
(a) Operating exceptional items 52 weeks to 52 weeks to
27 September 28 September
2003 2002
GBPm GBPm
Restructuring costs, cost
reduction measures and inventory 6.1 9.4
write downs
Vacant leasehold provisions 3.3 --
Litigation costs 3.1 --
12.5 9.4
Goodwill impairment -- 48.9
Operating exceptional items 12.5 58.3
2003
On 8 April 2003, the Group announced a restructuring and cost reduction programme including salaried headcount reduction and the relocation of the CEO's office to Tampa, Florida. Subsequently, further restructuring programmes were announced in Europe.
In addition, as a result of a slowdown in the property market, GBP3.3m has been recognised in respect of vacant leasehold properties.
The Group has reassessed its accruals for legal costs for defending the claims in the Consolidated Industries litigation following an adverse summary judgement on certain of the claims totalling $8.6m. The Group believes that the adverse decision is incorrect, and intends to appeal the decision. The Group's view of the outcome of the Consolidated Industries litigation remains unchanged.
2002
Restructuring costs in the 52 weeks to 28 September 2002 principally represented costs associated with the closure of excess operating capacity in our Food Retail Equipment Group. This included the write down of inventory at Kysor Warren which reflected the decline in the business and employee termination costs that resulted from a headcount reduction of 30. There was also further rationalisation of administration functions and simplification of management structures in the European businesses within the Global Food Service Equipment Group.
Following downturns in the US economy, in particular in the retail markets, it was necessary to reassess the carrying value of goodwill in respect of the Scotsman acquisition during 2001 and 2002. In accordance with the methodology presented in FRS11 "Impairment of Fixed Assets and Goodwill," which requires consideration of the net present value of estimated future cash flows, the fair value was reassessed and compared to the carrying value of net assets, including the carrying value of the goodwill. In 2001, an impairment of GBP100m was booked. In 2002, due to the poor performance of Kysor Warren, the carrying value of goodwill was written down by a further GBP48.9m.
(b) Disposal of businesses 52 weeks to 52 weeks to
27 September 28 September
2003 2002
GBPm GBPm
Profit/(loss) on disposals 3.3 (38.1)
2003
In February 2003, the Group paid GBP1.3m to release it from the majority of the warranties and indemnities that were given at the time of the disposal of one of its subsidiaries. As a result, associated accruals of GBP2.5m, along with GBP0.8m of excess provisions from other disposals have been credited to the profit and loss account in the 52 weeks ended 27 September 2003.
Notes to the financial statements (continued)
4. Exceptional Items (continued)
2002
During the 52 weeks to 28 September 2002, the Group disposed of Sammic SA, Belshaw Bros Inc, Austral Refrigeration Pty Ltd, Aladdin Temp-Rite and Prolon LLC. The Group realised a loss on these disposals of GBP41.4m after writing off goodwill of GBP65.1m previously charged against reserves.
In December 2001, GBP2.1m was paid to Nobia AB in respect of the value of net assets transferred following the sale of the Building and Consumer Products business in June 2001. As part of the disposal proceeds the Group had received a GBP20.0m vendor loan note and share warrants. In June 2002, Nobia AB's shares were listed on the Stockholm Stock Exchange and the Group received GBP24.4m being GBP20.0m for the vendor loan note, GBP0.4m compensation for early repayment of the note and GBP4.0m for the sale of the shares arising from the exercise of the warrants. After writing off deferred finance fees arising from the early repayment of debt and other associated costs, the net profit on disposal was GBP3.3m.
The net cash consideration, after expenses, of all the above disposals was used to repay debt.
(c) Net interest payable and 52 weeks to 52 weeks to
similar charges 27 September 28 September
2003 2002
GBPm GBPm
Deferred financing fees written -- 4.2
off
Refinancing fees -- 4.2
-- 8.4
Deferred finance fees written off of GBP4.2m in the 52 weeks to 28 September 2002 related to amounts previously capitalised in respect of the multi-currency revolving credit facility that was replaced by the refinancing announced on 20 February 2002.
Refinancing fees represent amounts paid to banks in relation to the termination of our previous multi-currency revolving credit facility and costs associated with the bridging facility under the Group's new arrangements.
5. Taxation
(a) Analysis of charge in period 52 weeks to 52 weeks to
27 September 28 September
2003 2002
GBPm GBPm
The tax charge for the current
period comprised:
UK taxation at 30% (2002:30%) -- --
Foreign taxation -- current year 7.4 5.8
-- prior year (0.7) (3.8)
6.7 2.0
Deferred taxation 1.5 (0.8)
8.2 1.2
Tax relief on exceptional items (1.8) (0.2)
6.4 1.0
(b) The Group tax rate benefits from the effect of tax losses brought forward. A current tax charge arises principally because of profits arising in overseas countries where there are no available losses.
Notes to the financial statements (continued)
6. Earnings/(loss) per share
52 Weeks to 52 weeks to 13 weeks to 13 weeks to
27 28 27 28
September September September September
2003 2002 2003 2002
GBPm GBPm GBPm GBPm
(unaudited) (unaudited)
Basic and 9.4 (87.0) 8.0 13.8
diluted
earning/(loss)
attributable
to shareholders
m m m m
Basic and 399.2 351.0 399.2 399.2
diluted
weighted
average
number of
shares
52 weeks to 52 weeks to 13 weeks to 13 weeks to
27 28 27 28
September September September September
2003 2002 2003 2002
Pence pence pence pence
(unaudited) (unaudited)
Basic and 2.4 (24.8) 2.0 3.5
diluted
earnings/(loss)
per share
Effect per 1.8 15.9 0.7 0.3
share of
exceptional
items
Effect per 3.5 19.3 0.9 0.9
share of
goodwill
amortisation
and
impairment
Adjusted 7.7 10.4 3.6 4.7
basic and
diluted
earnings per
share
Adjusted earnings per share before exceptional items (note 4) and goodwill amortisation are disclosed to reflect the underlying performance of the Group.
7. Contingencies
In February 2003, a Group company received a letter from a former customer alleging a breach of contract.
On 19 September 2003, the former customer commenced legal proceedings claiming GBP6.1m in damages. The Company is still investigating the basis of the claim which has yet to be substantiated. We intend to vigorously defend our position.
8. Foreign currency translation
The results of subsidiary companies reporting in currencies other than Pounds Sterling, principally US dollars, have been translated at the following rates:
52 weeks to 52 weeks to 13 weeks to 13 weeks to
27 28 27 September 28 September
September September 2003 2002
2003 2002 (unaudited) (unaudited)
Average 1.60 1.47 1.61 1.55
exchange
Rate
GBP1= US$
Closing 1.66 1.55 1.66 1.55
exchange
Rate GBP1
=US$
Notes to the financial statements (continued)
9. Supplementary information for US Investors
Reconciliation to generally accepted accounting principles in the United States of America
The consolidated financial statements have been prepared in accordance with UK GAAP, which differs in certain significant respects from US GAAP. The following is a summary of the adjustments to operating profit/(loss) and net profit/(loss) for the period required when reconciling such amounts recorded in the consolidated financial statements to the corresponding amounts in accordance with US GAAP.
52 weeks to 52 weeks to
27 September 28 September
2003 2002
GBPm GBPm
Retained profit/(loss) in 9.4 (87.0)
accordance with UK GAAP
Items increasing/(decreasing) UK
GAAP operating profit/(loss)(*):
-- Goodwill amortisation 13.5 (13.5)
-- Pension costs 2.2 (2.5)
-- Leasing transactions (0.1) 0.1
-- Share option plans 0.1 1.1
-- Restructuring charges 0.8 (0.4)
-- Derivative instruments 0.1 (4.0)
-- Other (0.5) (0.7)
-- Loss contingencies 1.8 2.4
Items increasing/(decreasing) UK
GAAP non-operating
profit/(loss):
-- Deferred taxation (36.9) (16.5)
-- Capitalised interest 0.4 --
-- Gain on sale of businesses -- 18.0
Net profit/(loss) in accordance (9.2) (103.0)
with US GAAP before cumulative
effect of change in accounting
principle
Cumulative effect of change in (84.9) --
accounting principle
Net profit/(loss) in accordance (94.1) (103.0)
with US GAAP
(*) All adjustments exclude the effect of taxes, with all tax related adjustments included within the deferred taxation line item.
Description of differences
A discussion of the material variations in the accounting principles, practices and methods used in preparing the audited consolidated financial statements in accordance with UK GAAP from the principles, practices and methods generally accepted in the US is provided in the annual report as of 28 September 2002. There are no new material variations between UK GAAP and US GAAP accounting principles, practices and methods used in preparing these consolidated financial statements other than those discussed below.
Notes to the financial statements (continued)
9. Supplementary information for US investors (continued)
Adoption of new accounting standards
Effective from 29 September 2002, under US GAAP, the Group adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). In accordance with SFAS 142, goodwill is no longer amortised but instead is subject to a transitional impairment test in the year of adoption as well as annual impairment tests. Using discounted cash flow valuation methods and also considering the Group's market capitalisation, the Group reviewed the fair values of each of its reporting units. As a result of the transitional impairment test, the Group recorded a goodwill impairment charge of GBP84.9 million in its Global Food Service Equipment segment. This amount was recorded as a cumulative effect of a change in accounting principle as at 29 September 2002. The Group's annual impairment test during the year resulted in no additional goodwill impairment.
A reconciliation of the previously reported net profit/(loss) and earnings/(loss) per share to the amounts adjusted to exclude the amortisation of goodwill under US GAAP is as follows:
52 weeks to 52 weeks to
27 September 28 September
2003 2002
GBPm GBPm
Reported net profit/(loss) in (94.1) (103.0)
accordance with US GAAP
Add: Goodwill amortisation -- 32.5
Adjusted net profit/(loss) in (94.1) (70.5)
accordance with US GAAP
Basic and diluted profit/(loss) per share
in accordance with US GAAP (23.6)p (29.3)p
Add: Goodwill amortisation -- 9.2p
Adjusted basic and diluted profit/(loss)
per share in accordance with US GAAP (23.6)p (20.1)p
Other unaudited financial information
(i) Reconciliation of like-for-like information in the 52 weeks to 27 September 2003
52 52 Effect Effect Like-for Like-
Weeks weeks of of -like for-
to 27 to 28 Disposals Foreign 28 like
September Septem Ex September
2003 ber change 2002
2002
a) Turnover GBPm GBPm GBPm GBPm %
Food 408.4 474.1 (25.0) (33.4) 415.7 (2%)
Service
Equipment
- North
America
Food 144.5 145.0 (8.0) 6.7 143.7 1%
Service
Equipment
- Europe/
Asia
Global 552.9 619.1 (33.0) (26.7) 559.4 (1%)
Food
Service
Equipment
Food 110.8 158.0 (27.0) (10.9) 120.1 (8%)
Retail
Equipment
Food 663.7 777.1 (60.0) (37.6) 679.5 (2%)
Equipment
b) Operating
profit
before
exceptional
items,
goodwill
amortisation,
property
and
corporate
costs
Food 50.7 60.8 (1.7) (4.1) 55.0 (8%)
Service
Equipment
-- North
America
Food 10.2 9.7 (0.5) 0.7 9.9 3%
Service
Equipment
-- Europe/
Asia
Global 60.9 70.5 (2.2) (3.4) 64.9 (6%)
Food
Service
Equipment
Food 4.0 (3.3) (2.2) 0.4 (5.1) n/m
Retail
Equipment
Food 64.9 67.2 (4.4) (3.0) 59.8 9%
Equipment
(ii) Reconciliation of like-for-like information for the 13
weeks to 27 September 2003
13 13 Effect Effect Like-for- Like-for-
weeks weeks of of like like
to to Dispo Foreign 28
27 28 sals Ex September
Septem Septe change 2002
ber mber
2003 2002
a) GBPm GBPm GBPm GBPm %
Turnover
Food 109.0 117.8 -- (3.6) 114.2 (5%)
Service
Equipment
-- North
America
Food 39.8 35.1 -- 2.0 37.1 7%
Service
Equipment
-- Europe/
Asia
Global 148.8 152.9 -- (1.6) 151.3 (2%)
Food
Service
Equipment
Food 32.3 29.0 -- (0.9) 28.1 15%
Retail
Equipment
Food 181.1 181.9 -- (2.5) 179.4 1%
Equipment
b) Operating profit before exceptional items, goodwill
amortisation, property and corporate costs
Food 17.3 18.6 -- (0.5) 18.1 (4%)
Service
Equipment
-- North
America
Food 3.3 2.7 -- 0.1 2.8 18%
Service
Equipment
-- Europe/
Asia
Global 20.6 21.3 -- (0.4) 20.9 (1%)
Food
Service
Equipment
Food 2.1 (3.6) -- 0.1 (3.5) n/m
Retail
Equipment
Food 22.7 17.7 -- (0.3) 17.4 30%
Equipment
Other unaudited financial information (continued)
(iii) Reconciliation of non-UK GAAP measures
Adjusted Group profit/(loss) before tax
52 weeks 52 weeks 13 weeks 13 weeks
to to to to
27 28 27 28
September September September September
2003 2002 2003 2002
GBPm GBPm GBPm GBPm
Profit/(loss) 15.9 (85.8) 11.2 12.3
before tax
Add back:
Goodwill 13.8 67.9 3.6 3.8
amortisation
and
impairment
Exceptional 9.2 55.9 4.5 1.5
items
excluding
goodwill
impairment
Adjusted 38.9 38.0 19.3 17.6
Group
profit/(loss)
before tax
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