Notes from the November 2012 IFRS Interpretations Committee meeting

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http://www.iasplus.com/en/meeting-notes/ifrs-interpretations-committee-meeting-2014-13-14-november-2012

Investors Predict U.S. Will Adopt IFRS

U.S. investors expect the country will eventually support International Financial Reporting Standards, but the process will take time and require substantial investment in staff and training, according to new research from the Association of Chartered Certified Accountants.

Fifty-seven percent of investors anticipate the SEC will one day require reporting under IFRS, with more investors agreeing than disagreeing that the long-term benefits of adoption would outweigh the costs, 41 percent compared to 29 percent.

The SEC already allows over 400 multinational companies based abroad to file their financial reports in IFRS without first reconciling it with U.S. GAAP. However, despite a decade-long convergence effort between the U.S. Financial Accounting Standards Board and the International Accounting Standards Board, many differences remain between the two sets of standards and the SEC has held off on making a decision on whether to allow U.S. companies to report their financial results in accordance with IFRS.

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It appears more likely that even if the SEC decides to allow IFRS to be incorporated into the U.S. financial reporting system, it will continue to call it U.S. GAAP because of the many references to U.S. GAAP in legal documents and loan covenants.

ACCA’s research was published in a report, IFRS in the U.S.: An investor’s perspective. The research was conducted for ACCA by Forbes Insights, surveying 493 U.S.-based investors.

“The ACCA’s findings are consistent with anecdotal feedback we hear from the US investor community,” said IASB chairman Hans Hoogervorst in a statement. They also lend further credence to the argument that the USA is well prepared for a successful transition to IFRS.”

The most significant challenges identified by investors are the one-off transition matters, while longer-term concerns are rated less highly. The most informed investors polled believe it will take U.S. corporations some four and a half years to get ready for IFRS. They believe that convergence plans should aim for full convergence, allowing adequate time for investors and industry to adjust. Awareness of IFRS among U.S.-based investors is modest: when asked, only 34 percent of investors felt able to cite specific differences between U.S. GAAP and IFRS.

However, 38 percent of investors said they were comfortable comparing statements prepared under IFRS with statements prepared under U.S. GAAP. Investors saw marginal differences between IFRS and U.S. GAAP, with 22 percent of investors claiming that the quality of disclosures under IFRS is higher, versus 25 percent who favored U.S. GAAP. Among investors with a solid understanding of IFRS, however, the balance shifts to 40 percent to 21 percent in favor of IFRS.

“More investors believe the eventual adoption of IFRS in the USA will result in a net benefit to the American economy than not,” said ACCA technical director Sue Almond in a statement. “In ACCA’s view, U.S. adoption of IFRS would give a tremendous boost to the cause of globally comparable financial reporting, and more importantly, the US and world economies. ACCA has repeatedly called for putting investors at the heart of the standard-setting process globally, and this is why we commissioned this research, to understand what American investors thought about the future of IFRS in the USA.”

“While there are clearly challenges and reservations highlighted in the survey, attitudes to IFRS appear to be changing in the U.S., irrespective of any action by the SEC,” she added. “The more familiar investors are with IFRS, the more confidence they have in the standards, which echoes the experience in countries that have already adopted IFRS.”

Questions remain for the future, as looking ahead ACCA’s report also identified the issues that are most responsible for shaping U.S. investors’ attitudes towards IFRS. By order of significance, these are:

•    Will IFRS adoption lead to reduced complexity for U.S. corporations? 
•    Is IFRS adoption going to lead to a dangerous loss of U.S. influence over the standard-setting process? 
•    Are U.S. corporations likely to see cost savings and synergies emerging as a result of IFRS adoption? 
•    Will IFRS adoption make it easier to compare the performance of U.S. corporations with that of other companies overseas? 
•    Are U.S. auditors likely to second-guess management more frequently as a result of IFRS adoption?

“A better understanding of global standards produces greater assurance—and it will also prompt more investors to learn about the International Accounting Standards Board and the work they are doing on convergence,” said Almond. “The accountancy profession—on the global stage as much as in the USA—will have a significant role to play in educating the business community about global standards and needs to prepare for this.”

ICAN Wants IFRS Training For Accountants

OWING to the complexities of adoption of the International Financial Reporting Standard (IFRS), President of the Institute of Chartered Accountants of Nigeria (ICAN), Mr. Adedoyin Owolabi, has tasked district societies on the need to train members on the standard.

The president, while speaking at a members’ forum organised by ICAN Lagos District and Society, called on serving district society chairpersons to improve the intellectual capacity of their members, specifically with the recent adoption of the IFRS model in the accounting system.

He explained that ICAN attained enormous heights because local districts and societies developed their members, adding that past presidents have come from the various units.

“IFRS ensures a single set of high quality globally converged financial reporting standards. Further, it presents consistent, comparable, unbiased, transparent and relevant information wherever the location of the reporting entity is.

“The speed, with which IFRS had emerged as the leading financial reporting framework, is to say the least, telegraphic and wonderful. It is now the language of accounting in major capital markets. ” Owolabi stated.

He advised members of the accounting profession to educate themselves on IFRS if they wish to remain relevant in the scheme of things in the profession and in the business community.

Chairman of the Lagos and District Society, Patrick Akujobi, lauded the ICAN president for his enduring legacy and enviable track record of leadership.

IASB hosts public forum to discuss disclosure overload

The International Accounting Standards Board (IASB) today announced that it will host a public Disclosure Forum (“Forum”) to consider the challenging area of disclosure overload. The Forum, to be held in London on 28 January 2013, is intended to foster dialogue between preparers, auditors, regulators, users of financial statements and the IASB about how to improve the usefulness and clarity of financial disclosures. Output from the Forum will inform the IASB’s work on its Conceptual Framework.

It is a widely-held view that not all of the information presented in financial statements is useful. Various factors are cited that affect the clarity and usefulness of disclosed information. Some are critical of what they see as overly burdensome financial reporting requirements. Others point to the application of ‘boilerplate’ disclosure statements by companies, a ‘checklist’ approach used by auditors or a need to meet the perceived ‘compliance’ requirements of regulators.

The Forum will bring together parties with an interest in financial report disclosures (including investors, preparers, auditors, regulators and standard setters) to get a better understanding of the issues related to disclosure overload, and where and how improvements can be made. It will include presentations from invited speakers as well as panel and open discussions, and will discuss;

• The current state of financial report disclosures;
• Identifying and understanding the main concerns preparers, auditors, regulators and users have about disclosures in financial reports, and their possible causes;
• Identifying potential ways that entities can improve the clarity of financial reports within the context of the current IFRS requirements; and
• Providing input into the disclosure and presentation sections of the IASB’s Conceptual Framework project.

Commenting on the Forum, Hans Hoogervorst, Chairman of the IASB said:

"It has become increasingly clear that we are suffering from disclosure overload. However, there are many reasons why this is the case. Standard-setters are not blameless, but neither are preparers, auditors or regulators. So, the idea is to get everybody in a room and see what we can do to address this topic.

However, no one should expect quick wins. One investor’s disclosure clutter is another investor’s golden nugget of information. Taking information away is never easy.

We will proceed with caution, and build upon the impressive work that has already been done by others in this area."

The Forum will be held at a venue in the City of London on Monday 28 January 2013.  It will start at 9:00am and finish at approximately 1:00pm.  If you would like to attend this event please register your interest by emailing kmaybin@ifrs.org. 

End

Press enquiries:

Chris Welsh, Communications Manager, IFRS Foundation
Telephone: +44 (0)20 7246 6495
Email: cwelsh@ifrs.org

Mark Byatt, Director of Communications and External Affairs, IFRS Foundation
Telephone: +44 (0)20 7246 6472
Email: mbyatt@ifrs.org

IFRS adoption will eventually happen, US investors tell ACCA Read more: http://www.accountancyage.com/aa/news/2224876/ifrs-adoption-will-eventually-happen-us-investors-tell-acca#ixzz2CLW6EZDP Accountancy Age - Finance, business and accountancy news, features and resources. Claim your free subscription today.

US INVESTORS expect the country will eventually adopt IFRS, but this will take time and require substantial investment in staff and training, ACCA has said.

According to research surveying nearly 500 US-based investors, many expect the SEC will one day require reporting under IFRS.

More investors agreed than disagreed that the long-term benefits of adoption would outweigh the costs, the report found.

"US adoption of IFRS would give a tremendous boost to the cause of globally comparable financial reporting, and more importantly, the US and world economies," said Sue Almond, technical director at ACCA.

Among the main challenges identified, investors believed it will take four and a half years for most companies to be ready for IFRS, and that awareness of IFRS among US-based investors is modest.

Hans Hoogervorst, chairman of the IASB, said: "The ACCA's findings are consistent with anecdotal feedback we hear from the US investor community. They also lend further credence to the argument that the US is well prepared for a successful transition to IFRS."

Almond added: "While there are clearly challenges and reservations, attitudes to IFRS appear to be changing in the US, irrespective of any action by the SEC."

SEC Still Has Reservations about IFRS

Officials with the Securities and Exchange Commission are taking a wait-and-see attitude toward incorporating International Financial Reporting Standards into the U.S. financial system, even as an increasing number of foreign companies file their financial reports with the SEC using IFRS.

A pair of SEC officials spoke about the status of IFRS in the U.S. during a panel discussion Tuesday at Financial Executives International’s 31st Annual Current Financial Reporting Issues conference in New York, while adding the standard disclaimer that they are only speaking for themselves and not for the SEC. Paul Beswick, acting chief accountant in the SEC’s Office of the Chief Accountant, reviewed the results of the SEC’s staff reports on IFRS, including the final report which outlined many of the problems with IFRS. So far, the SEC commissioners for whom the reports were prepared have not yet made any formal decision about whether to move forward with incorporating IFRS.

“When thinking about sufficient development of IFRS, some areas that the staff focused on were the comprehensiveness of IFRS, the auditability and enforceability and then the comparability among jurisdictions,” said Beswick. “One of the things that both preparers and investors told us was if the information isn’t comparable across jurisdictions, is it really worth it making this effort to go to a single set of standards?”

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He noted that the final staff report was issued on Friday, July 13. “We acknowledge that we issued a report on Friday the 13th,” said Beswick. “It was the Friday before I got named acting chief. You could kind of flip that the other way and [say] it was Jim Kroeker’s last day as chief accountant, so one could then say he wasn’t allowed to leave until he got the report out.”

“I think a number of people were surprised that the final staff report didn’t have a recommendation to the commission,” Beswick added. “I think it’s important to understand that wasn’t really the intent of the work plan. The intent of the work plan really was to be more information gathering, to help inform the commission’s thought process. It is important to highlight, though, that the staff noted, looking directly to the IASB would be a challenge in the U.S. And I think we cited three specific reasons in the report. One is influence on standard-setting. As we surveyed the 42 largest capital markets in the world, only two of them—and they were two of the smallest ones—looked directly to the IASB. All the other ones had what I refer to as a ‘suitability mechanism’ to make sure that the IFRS standards are suitable for their capital markets.”

Conversion Burden
The SEC staff also looked at the burden of conversion. “One of the things we learned in reaching out to a number of specialized industries is that references to U.S. GAAP are buried in literally thousands of pages of U.S. law and U.S. regulations,” said Beswick. “That’s not to say the staff was entirely downbeat on further incorporating IFRS into the U.S. markets. We thought the focus should be more on an endorsement mechanism. But that doesn’t mean it’s a fait accompli. There are still challenges even under an endorsement mechanism.”

Among those drawbacks are fostering a greater consistency in application and enforcement, maintaining U.S. influence in the standard-setting process, and the funding mechanism for the International Accounting Standards Board.

“I think one of the things that took people a little by surprise in the final staff report was the commission’s statement at the front of the report that the commission, while appreciating all the hard work of the staff, wasn’t coming to a final policy decision,” said Beswick. “It wasn’t meant to make a recommendation on the final policy, the threshold policy question.”

Beswick acknowledged that there are benefits in the endorsement mechanism, as it retains influence to make sure the U.S. voice is heard in the standard-setting process. “That’s one of the things, as we did our outreach, we heard pretty consistently: a concern that the uniqueness of the U.S. capital markets needs to be appropriately reflected in the standard-setting process,” he added. “We also thought that an endorsement mechanism might be able to lessen the burden on conversion.”

Beswick noted that Canada has recently converted to IFRS, using a so-called “Big Bang approach.”
“They set a date and said, ‘On this date, everyone is going to incorporate IFRS into their financial reporting,’ and then they quickly started carving out certain industries because IFRS didn’t work in those industries,” Beswick pointed out. He noted that FEI is leading a study in Canada analyzing the cost of converting to IFRS. “I think that will be an interesting data point for people just because Canada is probably the most similar to the U.S. capital markets in that they have an equivalent of [Sarbanes-Oxley Section] 404 and the approach to financial reporting is much more similar in Canada than in some of the other jurisdictions,” said Beswick.

In terms of the development of IFRS, Beswick noted that the SEC staff was fairly positive in its final report about the efforts that the IASB has undertaken over the past 10 years with the standards. “They generally are perceived to be high quality,” he said. “However, there are some notable gaps that continue to exist in IFRS. Regarding the interpretive process, that’s one of the things that we heard loud and clear across all constituents, including overseas, that the interpretive process needs to be improved. The IASB has recently made some changes to their equivalent to the EITF [Emerging Issues Task Force], IFRIC [IFRS Interpretations Committee], and we’re hopeful that process results in more timely addressing of interpretive issues.”

The SEC staff acknowledged in their final report that there have been some notable steps to try to increase global application and enforcement of IFRS, Beswick pointed out. The European Securities and Markets Authority, which oversees all 27 security regulators in Europe, has made efforts to foster greater comparability amongst preparers. In terms of independent standard-setting for the benefit of investors, both the IFRS Foundation and the Monitoring Board of financial regulators overseeing it have both undergone some corporate governance reviews in the last two years, Beswick noted.

“While we think that these are definitely improvements, one of the things that the staff wants to see is how they function,” he added. “Anytime you talk about corporate governance, there’s what’s written down on paper and what actually happens. And I think what we hear is still concern in the U.S. about how it’s going to function in reality. So we’ve been continuing to monitor that.”

The SEC’s final staff report noted that there is a wide spectrum of investor understanding of IFRS, both large and small. “When you talk about the largest investors in the country, they’re already using IFRS in many cases, and they use financial statements that have been prepared under IFRS and make capital decisions based on that,” said Beswick. “But then you think about some of the smaller investors and they don’t have a real understanding of IFRS.”

If the commission were to decide to move forward with IFRS, there would need to be mechanisms in place to improve investor understanding of IFRS, Beswick noted.

In terms of the impact on the regulatory environment, Beswick acknowledged they were surprised about that too. “We clearly understood the importance of U.S. GAAP to the banking regulators,” he said. “We’ve had a long history of that. But we identified many other regulatory agencies that rely on U.S. GAAP as the starting point for their regulatory regime. To give you an example, FERC [Federal Energy Regulatory Commission] relies on U.S. GAAP in the context of overseeing the utilities, the insurance industry.”

Next the SEC staff looked at the audit regulation and standard-setting process and reached out to the Public Company Accounting Oversight Board and to the large accounting firms. “One of the things we learned is that there are already FPIs [foreign private issuers] that are getting audits on PCAOB standards using IFRS, so we thought from the approach of an endorsement mechanism, it wasn’t going to impact audit regulation and audit standard-setting significantly,” said Beswick

The SEC also considered the impact on private companies, even though the SEC technically only has oversight over public companies. “One of the things I do like to highlight is the AICPA did recognize IFRS as a basis for which auditors can issue opinions, and they did it in 2007 or 2008,” said Beswick. “In addition, the FASB has made changes to their processes in response to a Blue-Ribbon Panel where they’re going to further think about how private companies are going to be impacted by their standard-setting process.”

Exit Strategy
As for the impact on issuers, Beswick said the SEC received a lot of helpful feedback from them. “Not surprisingly, there were a couple of things we heard from issuers,” he added. “One was sort of change fatigue. The FASB and the IASB are working on some of the most fundamental standards in terms of accounting, and I think there is concern that there is a certain level of fatigue in the system. We keep having exposure drafts, and people spend a lot of time providing helpful comments. So one of the things we heard is that this needs to be done in a rational manner that doesn’t overtax the system. Also, there’s a real concern about the cost of conversion and the burden it might have, and it’s something the staff is acutely aware of.”

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In terms of human capital readiness, Beswick said it is largely dependent on whatever method the SEC would use in terms of further incorporating IFRS.

“One of the things we do need to acknowledge is that IFRS is used in the U.S. capital markets,” he noted. “There are close to 500 FPIs that are now using IFRS, and there are also a significant number of subsidiaries of foreign companies, so the use of IFRS is expanding. But that doesn’t mean that should then drive whatever decision the commission should make. I thought somebody made a good point. Before we make this determination, we need to think about an exit strategy. They compared this to the E.U. and the euro and said, ‘Several years ago, the idea of a euro was a great idea, but then when they ran into problems, they didn’t have a great exit strategy.’ So we need to have an exit strategy. If we take the next steps, one of the things we need to think about is what if this doesn’t work and how would we resolve that? I thought that was an important thing the staff really took to heart.”

SEC Corporate Finance Perspective
Craig Olinger, deputy chief accountant of the SEC’s Division of Corporate Finance, spoke alongside Beswick and said the SEC has about 9,000 domestic registrants, mostly using U.S. GAAP, and 1,000 foreign registrants, some of which use IFRS and some U.S. GAAP. Most Canadian companies are now using IFRS or are preparing to switch to IFRS. Companies in Europe are mostly using IFRS, while offshore companies in island nations and China are mainly using U.S. GAAP. Israeli companies are mostly using U.S. GAAP, although some use IFRS. Other parts of the world are using a mixture of IFRS, U.S. GAAP and their home countries’ versions of GAAP, which still need to be reconciled with U.S. GAAP. “That number is shrinking, with most of them moving over to IFRS,” Olinger added.

He said the SEC has seen issues with some of the foreign registrants, particularly those whose operations are in China. “They tend to have interesting consolidation structures,” he said. “VIE [variable interest entity] type issues can come up, and revenue recognition. Some of these are incorporated offshore and they are foreign private issuers. But there are literally hundreds that are domestically incorporated, but their operations are in China as well. There are some interesting revenue recognition issues there, because business practices can be pretty different, and even things that seem pretty basic in the United States aren’t automatically the way things are done over there. We’ve seen some ICFR [internal controls over financial reporting] issues. The question about the basic ability to prepare U.S. GAAP compliant statements when you’re in an environment that’s fundamentally not a U.S. GAAP one can be pretty interesting. Also there are parts of the world where the PCAOB is not allowed yet to do inspections, so we have some risk factor disclosures that we seek along those lines.”

Olinger noted that IFRS is an area that the SEC’s Division of Corporate Finance needs to deal with, notwithstanding the status of whether it is ultimately going to be incorporated into U.S. GAAP. “With hundreds of Canadian companies having come over to IFRS and with other companies coming, we have 400 to 500 companies on IFRS, so it’s number 2 next to U.S. GAAP in terms of quantity of filers,” he said. “So we do look at it carefully. We review IFRS [filings] with the same scope of review that we would do with a domestic issuer. We look for full compliance. We train our staff on IFRS. We try to stay current with what’s going on with IFRS, just as we do with U.S. GAAP. We consult the OCA [Office of the Chief Accountant] on IFRS matters, just as we consult with them on U.S. GAAP matters.”

Olinger noted that the frequent comment areas for IFRS filers are fairly similar to those for U.S. GAAP filers. “It tends to be driven by the nature of their business activities and the complexity of their instruments or the complexity of their business combinations, things like that more so than anything that’s unique to IFRS as a different set of standards,” he said.

Olinger noted that the SEC sometimes send comments to filers on the IFRS 1 standards, which relate to companies that are adopting IFRS for the first time, particularly for Canadian companies. “The population of Canadian companies coming over is a little different,” Olinger observed. “Our pre-existing IFRS filer population had been largely European, mostly big companies, and now we have a lot more smaller Canadian companies, a lot of them in the extractive industry, and those companies tend to have issues of their own, regardless of the GAAP. I think the Canadian regulators have paid a lot of attention to the first-time adoption in Canada, and that’s a good thing. What we’re tending to see in review is probably not so much the IFRS application issues per se, but more the reporting issues where our rules intersect with Canadian rules, like is the assertion of IFRS as issued by the IASB appropriate, the assertion you need to make in order not to reconcile with U.S. GAAP. We’ve seen some things in selected data putting the Canadian GAAP side by side with the IFRS figures, and of course we have some prohibitions against that. So far, there are not a ton of IFRS application issues, but we are continuing to pay attention there.”

Alaris Royalty Corp. Announces $19,000,000 Additional Contribution to KMH Partnership

CALGARY, ALBERTA--(Marketwire - Nov. 9, 2012) - Alaris Royalty Corp. ("Alaris" or the "Company") (TSX:AD) is pleased to announce that it has completed an additional $19,000,000 contribution (the "Contribution") to KMH Cardiology Limited Partnership ("KMH" or the "Partnership") in support of KMH's growth program. Pursuant to the terms of the Contribution, Alaris subscribed for additional non-voting preferred partnership units, which units entitle Alaris to receive an additional $2,814,800 preferred distribution ("Distribution") for the first full year following the Contribution. The Contribution was funded with funds drawn on the Company's senior credit facility.
The Contribution is Alaris' fourth capital contribution to KMH since the Partnership's formation in 2010. To date, Alaris has contributed an aggregate of $48,600,000 to KMH and, after giving effect to the Contribution, the total aggregate distribution payable to Alaris from KMH is $7,350,700, on an annualized basis. Alaris will begin receiving the additional Distribution immediately. Following the Contribution, on an annualized basis distributions from KMH now account for approximately 19.6% of Alaris' total revenue, an increase from 13.1% prior to the Contribution.
"KMH has proven to be a tremendous operator in the stable medical diagnostics industry. We are excited to be growing our partnership and supporting their successful acquisition strategy. Deploying more capital into this industry and with this management team is very positive for Alaris shareholders." - Steve King, President and CEO, Alaris Royalty Corp.
Uses of Capital
KMH will use the net proceeds from the Contribution to acquire a group of four (4) jointly owned Independent Diagnostic Testing Facility centers in the United States. The acquisitions will be accretive to KMH and will result in KMH becoming a larger and financially stronger partner to Alaris. Following these acquisitions KMH will own and operate nine (9) clinics in the United States and eight (8) clinics in Canada.
"KMH is pleased to announce that, with the support and involvement of Alaris, we have taken bold new steps to increase our market penetration and presence in the North American healthcare market." - Neena Kanwar, President and CEO of KMH. Ms. Kanwar further stated, "These new ventures would not have been possible without the full support and confidence of Alaris our major partner in achieving our corporate strategic goal of dominance and pre-eminence in the provision of diagnostic services. KMH is fortunate to be in a position to partner with an organization that has and will continue to support our corporate growth strategy and has enabled us to grow our business and realize true investor value."
Impact on Alaris
On an annualized basis, the transaction increases revenue by $2,814,800 and increases interest expense by $1,140,000; for an expected net earnings increase of $1,674,800, or $0.075 on a per share (basic) basis. Alaris expects that its payout ratio, on an annualized basis, will be reduced to approximately 85% after giving effect to the Contribution.
About Alaris:
The Company provides alternative financing to a diversified group of private businesses ("Private Company Partners") in exchange for royalties or distributions from the Private Company Partners, with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions to Alaris from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin, same clinic sales, gross revenues and same-store sales and rank in priority to the owners' common equity position.
About KMH:
KMH provides access to rapidly-evolving medical technology, state-of-the-art diagnostic equipment and highly qualified specialists in Canada and the United States. According to KMH management, KMH has grown from a single facility in 1988 to become the largest provider of Nuclear Cardiology services in North America.
KMH services include Nuclear Medicine, Cardiology and Magnetic Resonance Imaging (MRI) diagnostic services. Physician practice management solutions by KMH further enhance patient care by providing access to specialist consultations and treatment. According to KMH management, more than 85,000 patients visit KMH annually after being referred by physicians, insurance companies, employers and other third party service providers. KMH has successfully administered more than 600,000 cardiology, nuclear cardiology and nuclear medicine diagnostic tests and more than 40,000 magnetic resonance imaging scans. KMH consistently provides a high level of service which has created a strong rapport within the healthcare community. KMH is well recognized by more than 10,000 physicians and has established a preferred provider relationship within the insurance and health services industry.
Non-IFRS Measures
The terms "distributable cash per share" and "payout ratio" (the "Non-IFRS Measures") are financial measures used in this news release that are not standard measures under International Financial Reporting Standards ("IFRS"). The Company's method of calculating the Non-IFRS Measures may differ from the methods used by other issuers. Therefore, the Company's Non-IFRS Measures may not be comparable to similar measures presented by other issuers. Payout ratio means Alaris' annualized dividend per share divided by its distributable cash per share. Distributable cash per share means Alaris' cash flow from operating activities divided by the weighted average number of common shares issued and outstanding in the share capital of the Company over such period. The Non-IFRS measures should only be used in conjunction with the Corporation's annual audited and quarterly reviewed financial statements, which are available on SEDAR at www.sedar.com.
Forward-Looking Statements
This news release contains forward-looking statements as defined under applicable securities laws. Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning the transaction described herein including: the Distribution payable to the Company; the timing of the payment of the Distribution; the impact of the Contribution on the Company's payout ratio; expected impact on net earnings; and the expected impact of the clinic acquisitions on KMH and its financial position. Many of these statements can be identified by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements are based will occur.
Statements containing forward-looking information by their nature involve numerous assumptions and significant known and unknown facts and uncertainties of both a general and a specific nature. Key assumptions include, but are not limited to assumptions that: the Partnership will grow and may require capital from Alaris in the future; the Canadian and U.S. economies will grow moderately over the balance of 2012; the businesses of the Private Company Partners will continue to grow; interest rates will not rise in a material nature over the next 12 months; and more private companies will require access to alternative sources of capital. In determining the Company's expectations for economic growth, management primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
The forward-looking statements contained herein are subject to numerous known and unknown risks that may cause actual results to vary from those set forth in the forward-looking statements, including, but not limited to risks associated with: general economic conditions and changes in the financial markets; risks associated with KMH and its business; and a change in the ability of the KMH to continue to pay Alaris' preferred distributions. In addition, the information set forth under the heading "Risk Factors" in the Company's Annual Information Form dated March 25, 2011 (a complete copy of which can be found on SEDAR at www.sedar.com) identifies additional factors that could affect the operating results and performance of the Company and may cause the actual results of the Company to differ materially from those anticipated in forward-looking statements.
As forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. Statements containing forward-looking information reflect management's current beliefs and assumptions based on information in its possession on the date of this news release. Although management believes that the assumptions reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations will prove to be correct.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release and Alaris does not undertake or assume any obligation to update or revise such statements to reflect new events or circumstances except as expressly required by applicable securities legislation.