Restatement of Financial Information under IFRS

Restatement of Financial Information under IFRS

24 April 2006 - Stock exchange announcement

Care UK has to date prepared its consolidated financial statements in compliance with UK Generally Accepted Accounting Practice ("UK GAAP"). From 1 October 2005 Care UK is required to report its consolidated financial statements under adopted IFRS. Care UK's first reported result under adopted IFRS will be for the six months ending 31 March 2006, to be announced on 22 May 2006, and the first full year reporting under adopted IFRS will be the year ending 30 September 2006.

Highlights
Conversion to adopted IFRS is an accounting change which will have no significant overall impact on Care UK's earnings before interest, tax and amortisation ("EBITA") financial performance and does not affect its cash generation.

The impact of adopted IFRS on Care UK is most notable in the following areas:

• Business combinations and the treatment of related goodwill and intangible assets;
• Accounting for equity-settled share-based payments such as share options;
• Pension accounting;
• Accounting for proposed dividends;
• Reporting the group's share of results of joint venture undertakings; and
• Accounting for deferred taxation.

In addition, under IFRS 1 -  First Time Adoption of IFRS, Care UK is not required to adopt "International Accounting Standard ("IAS") 32 - Financial Instruments: Disclosure and Presentation" and "IAS 39 - Financial Instruments: Recognition and Measurement" until 1 October 2005. The group's hedging strategy is unchanged under adopted IFRS. There will be no significant impact on the group's income statement, balance sheet or statement of cash flows as a result of the adoption of IAS 32 and 39.

The effect of adopted IFRS on Care UK's reported profits for the year ended 30 September 2005 is to increase operating profit from £17.5m to £18.2m predominantly due to the removal of the requirement to amortise goodwill (2005 £1.2m). Net assets have increased from £53.2m to £55.3m predominantly due to the net impact of recognising a deficit in the group's pension scheme (£0.6m net of tax), not accruing for dividends declared post year end (£1.2m) and not amortising goodwill.
 

The effect of adopted IFRS is included in this summary in respect of the following financial information:

• Opening adopted IFRS balance sheet as at 1 October 2004;
• Six months ended 31 March 2005; and
• Year ended 30 September 2005.

The restated financial information for the year ended 30 September 2005 has been audited by KPMG Audit plc whose audit opinion is attached in appendix 4. The financial information for the period ended 31 March 2005 has been reviewed by KPMG Audit Plc whose review opinion is attached in appendix 5 of the full restatement.

Click here for full restatement of financial information under IFRS.

Click here for IFRS slide presentation.