Manders defies FRS3 purists

MANDERS, the paint, ink and property group, yesterday created a squall of controversy about its interpretation of the new FRS3 accounting standard, writes Robert Cole.

Manders successfully beat off a hostile bid approach from the Yorkshire-based paint maker Kalon last summer, but classed the pounds 1.9m bid defence cost as an extraordinary item in preliminary accounts for the year to 31 December.

The new FRS3 rules more or less outlaw extraordinary items, which are not included in the calculation of the earnings per share.

Compulsory adherence to FRS3 is not required until June, and Manders prepared its figures for last year under the old rules. However, John Farmer, Manders' finance director, said he would still class the costs of repulsing Kalon as extraordinary.

It is expected that the Financial Reporting Review Panel would look carefully at any company that adopted such a stance.

Manders' pre-tax profits jumped 50 per cent to pounds 9m as the company reaped the benefit of a pounds 40m four-year capital investment programme.

The investment allowed Manders to produce greater volumes of paint and ink for little extra overhead cost.

Stated earnings per share - calculated before the bid costs, were 17.3p (13p). The total dividend is 28 per cent up at 9p.