StockMarketWire.com - N Brown has restated its debtor impairment provisions and consequent increases to reported profits following a review of the group's accounting policies, specifically the application of International Accounting Standard 39.

The group says this is as a direct result of a change in the technical interpretation of this accounting standard and in no way affects the way in which we have operated or will operate our business. It says: "These restatements do not create any negative impact on historic cash flows or cash balances, nor do we expect any effect on banking arrangements, previous dividends or bonus payments. They do not reflect any changes to the Group's underlying trading performance or on the risk profile of the Group's debtor balances. The Group's current business practices, approach to payment arrangements and customer rehabilitation are all unaffected by the revised IAS 39 accounting treatment."

Restatements:

The final audit of the Group's financial statements for the year ended 27 February 2016 has not yet commenced. However, on the basis of preliminary work undertaken in conjunction with the Group's new auditors KPMG, the Board expects to make revisions to certain Balance Sheet and Profit & Loss line items pursuant to the requirements of IAS 39. As a consequence, it will be necessary, in preparing the 2016 financial statements, to record the following, presently unaudited, adjustments to historic and current financial years:

- An adjustment to reduce net assets at 1 March 2014 by between £45million and £55million. This reflects the impact on net assets from an increase in the provision against debtors within payment arrangements, net of anticipated associated tax impacts. A similar, albeit lower, net asset adjustment will be required as at 28 February 2015.

- These net asset adjustments reflect an increase in the debtor impairment provision level from c.8.0% (expressed as a percentage of the gross debtor value) to a range of between 17.5% and 19.0% as at 1 March 2014; from c.6.5% to a range of between 15.5% and 16.5% as at 28 February 2015; and an estimated increase in the debtor impairment provision to a range of between 14.5% and 15.5% for the year ended 27 February 2016.

- Small changes, as a result of these restatements, to revenue, cost of goods sold and, therefore, percentage gross margin of Financial Services.

- The net result of the adjustments above is an increase to expected Profit before Tax for the year ended 27 February 2016 of c.£4million to £7million and of c.£3million to £4million for the previous year; and

- An increase to expected Profit after Tax for the year ended 27 February 2016 of c.£3million to £6million and of c.£2million to £3million for the previous year.

As has been previously communicated, the quality of the Group's credit book has been improving over recent years. This is the primary reason for the upward adjustments to profit for 2015 and 2016, following the higher provision to be made at 1 March 2014.




Story provided by StockMarketWire.com