The week in finance

Analysts and shareholders will get one of the first opportunities to see what a set of final results looks like under international financial reporting standards when AstraZeneca publishes its results today.

The company will publish comparable figures under UK GAAP and IFRS today when it reveals its finals for 2004.

In October, AstraZeneca’s CFO Jonathan Symonds gave the City its first taste of reporting under IFRS when he revealed comparable figures for the first six months of the year and restated 2003 results under the new standards.

The exercise wiped $104m (£56m) off the operating profits. At the time, Symonds described the overall effect of the new standards on AstraZeneca as ‘modest’.

Today’s results will allow analysts to examine whether IFRS has made any significant difference to the company’s bottom line, and give some broad indication of what to expect from other companies as they restate and report under the new standards.

October’s restatement reflected on Symonds’ decision that AstraZeneca should adopt the modified version of the controversial standard IAS39.

He defended the use of the standard, saying there was a degree of uncertainty over the clauses that had been removed.

Figures drawn up by AstraZeneca showed that the modified IAS39 would reduce operating profit for the first half of 2004 by $70m.

Other analysis produced by the company revealed that IFRS2, recognising share-based payments at fair value in the accounts, would cut operating profit by $64m.

IFRS3, which deals with mergers and acquisitions, boosted operating profit by $27m thanks to the removal of amortisation, previously charged on the restructuring of the company’s Merck joint venture. The overall cut to amortisation was $59m.

IAS12, meanwhile, had net benefits for AstraZeneca. Indeed, the application of the standard gave the company’s accounts a $67m boost. IAS12 requires separate disclosure of deferred tax assets and liabilities, as well as changing the methodology used to calculate deferred tax.

The standard also demands a deferred tax provision for all rolled over capital gains.

Indeed, the overall effect of IFRS was to cut profit under the UK group from $1.64bn to $1.61bn.

In Brief
London Scottish Bank has revealed it is ‘not in a position’ to draw conclusions on the impact of international financial reporting standards despite undertaking a high-level impact analysis. Announcing preliminary results for the year to 31 October 2004, group profit before tax increased 4.8% to £20.7m on revenue of £312.6m.

Clothing retailer Beales has adopted FRS5 on revenue recognition, so that turnover now no longer includes the non-commission element of sales made by agencies. Turnover for 2002/03 was therefore restated by the company, reducing revenues for 2003/04 by 4% to £109.6m.

Somerfield has revealed that its pension deficit has increased since the close of its last financial year from £75.2m to £78.7m under FRS17. The supermarket reported operating profit before exceptional items at £32.7m, up from £17.2m for the six months to 6 November last year.