Basis of preparation
This condensed set of financial statements for the half year ended 30 June 2013 has been prepared in accordance with IAS 34, 'Interim Financial Reporting'.
The Interim Management Report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union and in accordance with those disclosed in the annual report for the year ended 31 December 2012, which was filed with the Registrar of Companies on 5 June 2013.
Going concern
In determining the basis of preparation for the Interim Management Report, the Directors have considered the Group's business activities, together with the factors likely to affect its future development, performance and position which are set out in the Financial Overview. This includes an overview of the Group's financial position, its cash flows, liquidity position and borrowing facilities.
The Group meets its working capital requirements through a combination of committed and uncommitted facilities and overdrafts.The overdrafts and uncommitted facilities are repayable on demand but the committed facilities are due for renewal as set out below.There is sufficient headroom in the committed facility covenants to assume that these facilities can be operated as contracted for the foreseeable future.
The committed facilities as at 30 June 2013 were as follows:
- £125m Revolving Credit Facility maturing 31 August 2016
- €125m Revolving Credit Facility maturing 1 March 2018
- $10m Letter of Credit Facility maturing 31 August 2016
The weighted average life of the revolving credit committed facilities on 30 June 2013 was 3.9 years.
The Group's forecasts and projections, which cover a period of at least 12 months from the date of approval of this Interim Management Report, taking account of reasonable potential changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.
The Directors have reviewed forecasts and projections for the Group's markets and services, assessing the committed facility and financial covenant headroom, central liquidity and the Group's ability to access further funding. The Directors also reviewed downside sensitivity analysis over the forecast period, thereby taking into account the uncertainties arising from the current economic environment. Following this review, the Directors have formed a judgement, at the time of approving the condensed financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the condensed financial statements.
Changes in accounting policies
In the current financial year, the Group has adopted the amendments to IAS 1 'Presentation of Items of Other Comprehensive Income', IAS 19 (Revised) 'Employee Benefits' and IFRS 13 'Fair Value Measurement'. Otherwise, the same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.
The amendments to IAS 1 'Presentation of Items of Other Comprehensive Income' require items of other comprehensive income to be grouped by those items that will be reclassified subsequently to profit or loss and those that will never be reclassified, together with their associated income tax. The amendments have been applied retrospectively, and hence the presentation of items of comprehensive income have been restated to reflect the change. The effect of these changes is evident from the condensed consolidated statement of comprehensive income.
IAS 19 (Revised) 'Employee Benefits' and the related consequential amendments have impacted the accounting for the Group's defined benefit scheme by:
- reclassifying pension scheme administration costs from finance costs to operating costs in the income statement;
- replacing the interest cost and expected return on plan assets with a net interest charge on the net defined benefit liability; and
- charging past service costs immediately to the income statement as incurred.
As a result of this change in accounting policy the comparative amounts have been restated, as follows:
| Year ended
31 Dec 2011
£m | Year ended
31 Dec 2012
£m | Half year to
30 June 2012
£m |
|---|
| Statement of financial position | | | |
| Retained earnings (as previously reported) | 110.3 | 152.0 | 127.3 |
| Increase in deferred tax asset | 0.2 | 0.2 | 0.2 |
| Increase in pension deficit | (0.5) | (0.5) | (0.5) |
| Retained earnings (as restated) | 110.0 | 151.7 | 127.0 |
| Year ended
31 Dec 2012
£m | Half year to
30 June 2012
£m |
|---|
| Statement of comprehensive income | | |
| Profit for the period (as previously reported) | 67.0 | 32.6 |
| Increase in operating costs | (0.4) | (0.2) |
| Reduction in finance costs | 0.6 | 0.3 |
| Profit for the period (as restated) | 67.2 | 32.7 |
| Other comprehensive expense (as previously reported) | (18.1) | (11.7) |
| Increase in actuarial losses on defined benefit pension schemes | (0.2) | (0.1) |
| Other comprehensive expense (as restated) | (18.3) | (11.8) |
For the current period, the profit is £0.1m higher and other comprehensive expense is £0.1m higher than it would have been prior to the adoption of IAS 19 (Revised).
| Year ended
31 Dec 2012
(as previously
reported)
£m | Year ended
31 Dec 2012
(as restated)
£m | Variance
£m |
|---|
| Operating costs | 1.1 | 1.5 | 0.4 |
| Net finance charge | 1.2 | 0.6 | (0.6) |
| Total IAS 19 charge | 2.3 | 2.1 | (0.2) |
| Headline operating profit | 97.9 | 97.5 | (0.4) |
The adoption of IFRS 13 'Fair Value Measurement' has had no material impact.