Announcing the changes and restated figures for its last financial year, ending 30 September 1992, Lonrho said that in order to comply with the requirements of Financial Reporting Standard 3, it had to separate continuing and discontinued operations in the accounts.
'Consequently, results of significant discontinued operations and the profit or loss on their disposal or closure are disclosed separately and clearly distinguished from the results of the continuing operations,' Lonrho said.
The definition of extraordinary items has been changed. As a result, items previously recorded by the group as 'extraordinary' are either treated as exceptional or are included in operating profit. The effect of the change on the 1992 results is to increase profits before tax by pounds 41m and profit after tax and minority interests by pounds 38m.
Lonrho has also adopted the guidelines issued by the accounting authorities, contained in 'Urgent Issues Task Force Abstract 9', which urges companies to change their accounting methods for the treatment of profits generated in hyper-inflationary economies.
'Some of the countries in which the Lonrho group operates are considered hyper-inflationary,' Lonrho said yesterday. 'Therefore, the results of operations in those countries have been adjusted to reflect current price levels in the country concerned. The effect of this change of accounting policy is to reduce 1992 profit before tax and profit after tax and minority interests by pounds 8m and pounds 5m respectively.' A further change adopted by the board related to exchange rates. Until now Lonrho has used weighted average exchange rates for translating the earnings of its overseas companies. This, Lonrho said, is now considered inappropriate because of the regular devaluation of the currencies of the African countries in which the conglomerate operates.
'It has been decided to adopt the more prudent policy of using the closing year-end exchange rates to translate results. The effect of this change . . . is to reduce profit before tax and profit after tax and minority interests by pounds 10m and pounds 7m respectively,' the group said.
The changes were proposed by Philip Tarsh, chairman of Lonrho's finance committee, and agreed by the board and Dieter Bock, the arch-rival to Roland 'Tiny' Rowland, the group's chief executive.Reuse content