New reporting regime hits profits at Tullow Oil
The company, which reported pre-tax profits of nearly £33 million (E48m) for the year to December, said that the new International Financial Reporting Standards (IFRS) would have no effect on reported revenues, but that the bottom line would appear lower than under the older GAAP system. It restated its 2004 results yesterday to take account of the new standards and also to update investors on what they could expect when it formally reports under the IFRS format this year.
Publicly-quoted companies are obliged to use IFRS for reporting periods beginning on or after 1 January 2005.
Most of the hit to the operating profit line, which would have been over £10m (E14.5m) lower at £56.8m (E81.8m) last year if the IFRS rules had been applied, would come from higher amortisation charges in relation to leases. The operating profit line would also suffer from tax charges arising from the takeover of Energy Africa last year.
But these charges would have little or no impact on reported pre-tax profits. Cashflow and net asset figures would also be unchanged under the new regime.
The company said the main adjustments to its existing accounting practices would centre on the treatment of share-based payments; property, plant and equipment; income taxes; leases and financial instruments such as derivatives and hedging instruments.
New rules about the treatment of existing share-based payment schemes to staff and executives would have wiped £0.33m (E0.48m) off last year’s profits.
The company told the stock exchange yesterday it would host a briefing for analysts in London to discuss the details of its new accounting procedures and the transition to IFRS.
Chief financial officer Tom Hickey and finance manager Julian Teddy will brief analysts later today.
