IFRS reports & accounts - WPP applies merger accounting to group reconstruction

UK marketing services company WPP uses merger accounting principles to install a new parent company in a group reconstruction, resulting in a transfer of £5.8bn to distributable reserves.

Under a court-approved scheme of arrangement, shares were issued in the new parent company at 475 pence with the result that no share premium arose and the increase in capital utilised share premium and merger reserve balances. The shares were subsequently redenominated to 10 pence, resulting in a capital reduction of £5.8bn which is moved to retained earnings and cancels the existing deficit of £712m.

Reports & accounts is compiled from information supplied by companyreporting.com, an independent business information and publishing house.

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