Significant changes in the accounting treatment of derivatives and share options under international financial reporting standards are expected to have a significant impact on the company’s financial picture, it reported as it announced today (Tuesday) its preliminary results for the year ended 30 September.
Despite the potentially huge change to its financial picture, the group moved to assure investors it was well prepared for the change, outlining the processes in place to deal with the switch to IFRS.
The caterer said it has created a project steering committee to co-ordinate the transition, and a dedicated project team to study the effects on the group’s accounts of adopting IFRS.
‘The team has been following a three-phase transition plan: preliminary assessment, detailed impact study and implementation. It provides the project steering committee and the audit committee with regular updates of its progress and also works closely with the divisional teams through a network of key contacts,’ the group reported in notes to the accounts.
After a difficult period in 2004 and the looming change to IFRS, the group said it enters the new financial year ‘confident that actions have been taken to address the challenges of 2004 to give a solid platform from which to grow’.
The group will be implementing IFRS from 1 October 2005. It will have to provide comparative information for the balance sheet as at 30 September 2004 and primary statements for the six months to 31 March 2005 and the year to 30 September 2005.
Sir Francis Mackay, chairman, said: ‘We have a market leading position in all the major world economies, a strong management team and a strategy for delivering shareholder value in an expanding sector of the economy.
‘2004 was a challenging year for the group with a number of trading issues, which had an impact on performance. Actions have been put in place to address these issues and I remain confident about the future prospects for the group.’
Compass said pre-tax profit fell 2.4% to £645m in the year to September, on turnover up 4.3% to £11.8bn.
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