2016_Halma_ARA_160610_2

C14 EXPLANATION OF TRANSITION TO FRS 101
Reconciliation of Shareholders’ funds
29 March 28 March
2014 2015
Note
£000 £000
Shareholders’ funds reported under previous GAAP 360,028 408,775
Adjustments to equity on transition to FRS 101:
I Reinstatement of retirement benefit obligation (26,028) (46,741)
II Deferred tax asset on retirement benefit obligation 5,256 9,344
III Excess tax on share-based payment transactions – –
Shareholders’ funds reported under FRS 101 339,256 371,378
I – Retirement benefit obligation
Under UK GAAP (FRS 17), as the defined benefit plan was a multi-employer scheme and the Company was unable to identify its share
of the underlying assets and liabilities, the plan was accounted for as a defined contribution scheme, recognising only the contribution
payable by the Company.
Under FRS 101 the multi-employer exemption is no longer available. There is no contractual agreement or stated policy for charging the
net defined benefit cost within the Group amongst the participating companies. Therefore the Company, as the sponsoring employer,
has recognised the full defined benefit plan’s net obligation on the Company Balance Sheet. None of the net obligation is, or was,
recognised on the individual Balance Sheet of any other UK company within the Group.
The impact has been to increase Creditors falling due after more than one year at 30 March 2014 by £26,028,000 and at 29 March
2015 by £46,741,000.
As prescribed under FRS 101 any actuarial gains and losses are recognised through the Company Statement of Comprehensive
Income and Expenditure. In 2015 actuarial losses of £25,080,000 were recognised.
II – A deferred tax asset of £5,256,000 relating to the retirement benefit obligation was recognised on the Company Balance Sheet
at the transition to FRS 101. This results in an increase in the Profit and Loss Account reserve by £5,256,000.
The increase in the pension plan obligation during 2015, as described above, has given rise to an increase in the corresponding
deferred tax asset from £5,256,000 to £9,344,000 and has increased the Profit and Loss Account reserve by a further £4,088,000.
III – Under UK GAAP current and deferred tax relating to share-based payment transactions is taken to profit or loss in full. Under
FRS 101, current and deferred tax is recognised in profit or loss for the year to the extent it relates to the share based payment charge
recognised. It is taken to equity where it exceeds the related cumulative share-based payment charge. This results in a reduction in the
profit for 2015 of £534,000 but does not change the reported equity.
Reconciliation of profit for the year ending 28 March 2015
In accordance with the exemption provided by Section 408 of the Companies Act 2006, the Company has not presented its own
Profit and Loss Account. As a result of the adjustments noted above, the transition to FRS 101 has increased the profit after tax for
2015 by £2,917,000, comprising £3,451,000 increase relating to the net impact of reinstating the defined benefit obligation and
£534,000 decrease relating to the treatment of current and deferred tax in relation to share-based payments.
Presentation of software in the Company Balance Sheet
Previously under UK GAAP, software was presented within tangible assets. Under FRS 101, this is classified as an intangible asset.
There is no change in the value ascribed to the software asset.
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
Halma plc Annual Report and Accounts 2016 173 171