IFRS Reconciliation
Guinness Peat Group PLC
12 September 2005
FOR IMMEDIATE RELEASE UK RELEASE
COMPANY ANNOUNCEMENT
Guinness Peat Group plc ("GPG" or "the Company")
Report on transition to International Financial Reporting Standards ("IFRS")
The following release provides an analysis of the key changes to GPG
consolidated reported results arising from the implementation of IFRS.
GPG is publishing in this separate Announcement a narrative explanation and
reconciliations between IFRS and previously reported financial information under
UK GAAP as at 1 January 2004, 30 June 2004 and 31 December 2004.
Richard Russell
Company Secretary
Guinness Peat Group plc
London
12 September 2005
Contact Telephone Numbers:
London Blake Nixon ) 0044 20 7484 3370
Richard Russell )
Sydney Gary Weiss 00612 8298 4300
Auckland Tony Gibbs 0064 9379 8888
INTRODUCTION
Transition to International Financial Reporting Standards.
In accordance with EU Regulations, Guinness Peat Group plc and its subsidiaries
together ("the Group") is required to adopt International Financial Reporting
Standards ("IFRS") for accounting periods beginning on or after 1 January 2005
and prepare its consolidated financial statements on an IFRS basis.
The Group will report under IFRS for the first time in its interim results for
the six months to 30 June 2005 and its first full financial statements under
IFRS will be in its 2005 Annual Report. The IFRS results for the 2005 half year
and the 2005 full year will include comparative IFRS information for the
relevant corresponding periods in 2004.
This statement includes the consolidated results of the Group converted from a
UK Generally Accepted Accounting Principles ("UK GAAP") basis to an IFRS basis
for the year to 31 December 2004, six months to 30 June 2004 and an opening
balance sheet as at 1 January 2004.
This document also contains the principal accounting policies adopted under
IFRS.
The more significant changes arising from the restatement relate to:
- The recognition, on the balance sheet, of pension scheme liabilities and of
brands.
- The cessation of goodwill amortisation.
- The de-recognition of proposed dividends as liabilities at the balance sheet
date.
BASIS OF PREPARATION
The financial information has been prepared in accordance with IFRS. The
accounting policies applied are consistent with those that the Directors expect
to use in the 31 December 2005 financial statements and assume that all IFRS,
including the interpretation of those standards, issued by the IASB effective
for 2005 reporting will be endorsed by the European Commission. There is,
however, a possibility that the Directors may determine that some changes to
these policies are necessary when preparing the full annual financial statements
for the first time in accordance with IFRS at 31 December 2005.
The rules for first time adoption are set out in IFRS 1 - First-time Adoption of
International Financial Reporting Standards. In general, a company is required
to select IFRS accounting policies and apply these retrospectively to determine
its opening balance sheet under IFRS. The standard allows a number of exceptions
to this general principle to assist companies as they change to reporting under
IFRS. The Group has taken advantage of certain of these exemptions as noted
below:
Business combinations: business combinations prior to the IFRS transition date
(1 January 2004) have not been restated onto an IFRS basis.
Financial instruments: financial instruments in the comparative period to be
presented in the 2005 Annual Report are recorded on the existing UK GAAP basis,
rather than in accordance with IAS 32 - Financial Instruments: Disclosure and
Presentation and IAS 39 - Financial Instruments: Recognition and Measurement.
Transition to IAS 32 and IAS 39 is effective from 1 January 2005.
Fair value or revaluation as deemed cost: the Group has not elected to fair
value its property, plant and equipment at IFRS transition date and has adopted
the UK GAAP values at the date of IFRS transition.
Share based payments: the Group has elected only to apply IFRS 2: Share-based
Payment to equity instruments that were granted on or after 7 November 2002 and
that vested after 1 January 2005.
Employee benefits: all cumulative actuarial gains and losses on the Group's
defined benefit pension schemes have been recognised in equity at the IFRS
transition date.
Cumulative translation difference: IAS 21: The Effects of Changes in Foreign
Exchange Rates requires translation differences relating to net investments in
foreign operations to be classified as a separate component of equity. In
accordance with IFRS 1, the cumulative translation differences for all foreign
operations are deemed to be zero at the date of transition.
ACCOUNTING POLICIES ADOPTED UNDER IFRS
Significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below.
Statement of compliance
The consolidated financial statements have been prepared in accordance with IFRS
as adopted by the European Commission, which comprise standards and
interpretations approved by the International Accounting Standards Board
("IASB") and International Accounting Standards and Standing Interpretations
Committee interpretations approved by the predecessor International Accounting
Standards Committee that have been subsequently authorised by the IASB and
remain in effect.
An explanation of how the transition to IFRS has affected the reported position,
financial performance and cash flows of the Group is provided later in this
document.
Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for accounting periods after 1 January 2005 where certain
financial instruments have been measured at fair value. The accounting policies
set out below have been applied consistently to all periods presented in these
consolidated financial statements and in preparing an opening IFRS balance sheet
at 1 January 2004 for the purposes of the transition to IFRS except for the
accounting policies required by IAS 32 and IAS 39 which will not be adopted
until 1 January 2005 when the Group adopts these standards.
Basis of consolidation
(i) Subsidiaries
Subsidiaries are consolidated from the date on which control over the operating
and financial decisions is obtained and cease to be consolidated from the date
on which control is transferred out of the Group. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain economic benefits from its
activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered in determining the existence
or otherwise of control.
(ii) Investment in associates
The Group's investment in associates is accounted for under the equity method of
accounting. These are entities in which the Group has the ability to exert
significant influence and which are neither subsidiaries nor joint ventures.
The investment in associates is carried in the balance sheet at cost plus
post-acquisition changes in the Group's share of net assets of the associate,
less any impairment in value. The income statement reflects the share of the
results of operations of associates.
If the Group's share of losses exceeds the carrying amount of an associated
undertaking, the carrying amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group has incurred
obligations in respect of the undertaking.
Where there has been a change recognised directly in the associate's equity, the
Group recognises its share of any changes and discloses this, where applicable,
in the statement of recognised income and expenses.
(iii) Interest in joint ventures
Joint venture arrangements that involve the establishment of a separate entity
in which each venturer has an interest are referred to as jointly controlled
entities. The Group reports its interests in jointly controlled entities using
the equity method as allowed under the 'alternative accounting rules' set out in
IAS 31 - Interests in Joint Ventures
Where a group entity undertakes its activities under joint venture arrangements
directly, the Group's share of jointly controlled assets and any liabilities
incurred jointly with the other venturers are recognised in the financial
statements of the relevant entity and classified according to their nature.
Liabilities and expenses incurred directly in respect of interests in jointly
controlled assets are accounted for on an accrual basis. Income from the sale or
use of the Group's share of the output of jointly controlled assets, and its
share of joint venture expenses, are recognised when it is probable that the
economic benefits associated with the transactions will flow to/from the Group
and their amount can be measured reliably.
Basis of consolidation continued:-
(iv) Transactions eliminated on consolidation
Intra-group balances, transactions, income and expenses are eliminated in full
in preparing the consolidated financial statements.
Foreign currency
(i) Foreign currency translation
GPG's functional and the Group's presentation currency is the Pound Sterling.
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. All currency differences are taken to the income statement with the
exception of differences on receivables and payables that represent a net
investment in a foreign operation, which are taken directly to equity until
disposal of the net investment, at which time they are recycled through the
income statement.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate as at the date of initial
transaction.
(ii) Group companies
Assets and liabilities of overseas subsidiaries are translated into the
presentation currency of GPG at the rate of exchange ruling at the balance sheet
date and their income statements are translated at the average exchange rates
for the year. The exchange differences arising on the retranslation since 1
January 2004 are taken to a separate component of equity. On disposal of a
foreign entity, the deferred cumulative amount recognised in equity relating to
that particular foreign operation is recognised in the income statement.
Translation differences that arose before the date of transition to IFRS in
respect of all foreign entities are not presented as a separate component.
Goodwill and fair value adjustments arising on acquisition of a foreign
operation are regarded as assets and liabilities of the foreign operation,
expressed in the functional currency of the foreign operation and recorded at
the exchange rate at the date of the transaction and subsequently retranslated
at the applicable closing rates.
Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairments.
(ii) Leased assets
Finance leases, which transfer to the Group substantially all the risks and
benefits incidental to ownership of the leased items, are capitalised at the
inception of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly against income. Capitalised leased assets
are depreciated over the shorter of the estimated useful life of the asset or
the lease term. Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating leases. Operating
lease payments are recognised as an expense in the income statement on a
straight-line basis over the lease term.
(iii) Subsequent expenditure
Expenditure incurred to replace a component of an item of property, plant and
equipment that is accounted for separately, including major inspection and
overhaul expenditure, is capitalised. Other subsequent expenditure is
capitalised only when it increases the future economic benefits embodied in the
item of property, plant and equipment. All other expenditure is recognised in
the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of property, plant and equipment, and major
components that are accounted for separately. Land is not depreciated. The
estimated useful lives are as follows:
Freehold buildings - 50 years to 100 years
Leasehold buildings - 10 years to 25 years or over the term of the lease if
shorter
Plant and equipment - 3 years to 50 years
Vehicles and office equipment - 2 years to 10 years
Assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
Intangible assets
(i) Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or joint venture at the date
of acquisition. Goodwill is recognised as an asset and reviewed for impairment
at least annually. Any impairment is recognised immediately in profit or loss
and is not subsequently reversed. On disposal of a subsidiary, associate or
joint venture, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
In respect of acquisitions prior to 1 January 2004, goodwill is included on the
basis of its deemed cost, which represents the amount recorded under previous
GAAP. The classification and accounting treatment of business combinations that
occurred prior to 1 January 2004 has not been reconsidered in preparing the
Group's opening IFRS balance sheet at 1 January 2004.
(ii) Brands
Brands with finite useful lives are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method over
their useful lives of up to 10 years. Brands with indefinite useful lives are
carried at cost less impairment.
(iii) Computer software
Acquired computer software licences and computer software development costs are
capitalised on the basis of the costs incurred to acquire and bring to use the
specific software and are amortised over their estimated useful lives of up to 5
years.
(iv) Research and development
All research and development costs are expensed as they are incurred.
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs
incurred in bringing each product to its present location and condition are
accounted for as follows:
Raw materials - purchase cost on a first-in, first-out basis;
Finished goods and work in progress - cost of direct materials and labour and a
proportion of manufacturing overheads based on normal operating capacity but
excluding borrowing costs. Net realisable value is the estimated selling price
in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale. Provision is made for obsolete, slow
moving and defective inventories.
Progress payments in excess of the value of the work performed are included in
creditors as payments on account.
Land for resale, which is included in work in progress, is valued at the lower
of cost and net realisable value. Cost includes capitalised interest and those
costs necessary to prepare the land for sale.
Amounts recoverable on construction contracts, which are included in debtors,
are stated at the net sales value of the work done less amounts received as
progress payments on account. Cumulative costs incurred, net of the amounts
transferred to cost of sales, after deducting foreseeable losses, provisions for
contingencies and payments on account not matched with turnover, are included as
construction contract balances in inventories.
Trade and other receivables
Trade receivables are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts. An estimate for doubtful debts is made
when collection of the full amount is no longer probable. Bad debts are written
off when identified.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less. For
the purposes of the consolidated cash flow statement, cash and cash equivalents
consist of cash and cash equivalents as defined above, net of outstanding bank
overdrafts.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and its value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units).
Investments
Investments acquired with the intention of being held for the long term
(excluding investments in subsidiaries, associates, joint ventures and joint
arrangements) are recorded as fixed asset investments and are stated at cost or,
where there has been a permanent diminution in value, at directors' valuation.
Investments in art portfolios are valued at cost or, where there has been an
impairment in value, at directors' valuation.
Listed investments held as current assets, including derivatives held as part of
the Group's investment portfolio, are stated at market value.
Unlisted investments held as current assets are stated at the lower of cost and
directors' valuation, including subsidiaries acquired with the intention of
resale.
The following accounting policy will be adopted in the full year financial
statements for 2005 when the Group adopts IAS 32 and IAS 39 on 1 January 2005:
Investments are recognised and derecognised on a trade date basis and are
initially measured at fair value plus directly attributable transaction costs.
Investments are classified as either held for trading or long-term investments
(available-for-sale), and are measured at subsequent reporting dates at fair
value. Where securities are held for trading purposes, gains and losses arising
from changes in fair value are included in profit or loss for the period. For
long-term investments, gains and losses arising from changes in fair value are
recognised directly in equity, until the security is disposed of or is
determined to be impaired, at which time the cumulative gain or loss previously
recognised in equity is included in profit or loss for the period. Impairment
losses recognised in profit or loss for equity investments classified as
long-term investments are not subsequently reversed through profit or loss.
Borrowings
The following accounting policies will be adopted in the full year financial
statements for 2005 when the Group adopts IAS 32 and IAS 39 on 1 January 2005.
(i) Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on
an accruals basis in the profit and loss account using the effective interest
method, and are added to the carrying amount of the instrument to the extent
that they are not settled in the period in which they arise.
(ii) Convertible loan notes ("CLNs")
Convertible loan notes are regarded as compound instruments, consisting of a
liability component and an equity component. At the date of issue, the fair
value of the liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference between the
proceeds of issue of the convertible loan notes and the fair value assigned to
the liability component, representing the embedded option for the holder to
convert the loan note into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the
convertible loan notes based on their relative carrying amounts at the date of
issue. The portion relating to the equity component is charged directly to
equity. Interest expense on the liability component is calculated by applying
the prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. The difference between this amount and
the interest paid is added to the carrying amount of the convertible loan note.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. Investment income earned on
the temporary investment or specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs, except where otherwise stated, are recognised in
profit or loss in the period in which they are incurred.
Employee benefits
(i) Pension obligations
The retirement benefit obligation recognised in the balance sheet in respect of
defined benefit pension plans is the present value of the defined benefit
obligation at the balance sheet date less the fair value of plan assets,
together with adjustments for unrecognised actuarial gains and losses and past
service costs. The defined benefit obligation is calculated annually by
independent actuaries using the projected unit credit method, and includes
administration costs in relation to pension scheme obligations. The present
value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid,
and that have terms of maturity approximating to the terms of the related
pension liability.
Actuarial gains and losses arising from experience adjustments and changes in
actuarial assumptions are charged directly to equity. Past service costs are
recognised immediately in income, unless the changes to the pension plan are
conditional on the employees remaining in service for a specified period of time
(the vesting period). In this case, the past service costs are amortised on a
straight-line basis over the vesting period.
For defined contribution plans, the Group pays contributions to publicly or
privately administered pension plans on a mandatory, contractual or voluntary
basis. The contributions are recognised as employee benefit expenses when they
are due. Repaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in the future payments is available.
(ii) Share-based compensation
The Group operates equity-settled compensation plans for the granting of
non-transferable options to employees Equity-settled share-based payments are
measured at fair value (excluding the effect of non market-based vesting
conditions) at the date of grant. The fair value determined at the grant dates
of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of the shares that will
eventually vest and adjusted for the effect of non market-based vesting
conditions, with a corresponding increase in equity. For shares granted to
employees, the fair value of the shares is measured at the market price of GPG
shares, adjusted to take into account the terms and conditions upon which the
shares were granted. The fair value of share options is measured using an
adjusted version of the Black-Scholes pricing model to reflect the terms and
conditions of the options granted, based on management's best estimate of the
effects of non-transferability, exercise restrictions and behavioural
considerations.
(iii) Termination benefits
Termination benefits are payable when employment is terminated before the normal
retirement date, or whenever an employee accepts voluntary redundancy in
exchange for these benefits. The Group recognises termination benefits when it
is demonstrably committed to either: terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal;
or providing termination benefits as a result of an offer made to encourage
voluntary redundancy. Benefits falling due more than 12 months after the balance
sheet date are discounted to present value.
Employee benefits continued:-
(iv) Profit-sharing plans
The Group recognises a liability and an expense for bonuses and profit-sharing,
based on a formula that takes into consideration the profit attributable to the
Company's shareholders after certain adjustments. The Group recognises a
provision where contractually obliged or where there is a past practice that has
created a constructive obligation.
(v) Short term employee benefits
Employee entitlements to salaries and wages and annual leave, to be settled
within 12 months of the reporting date, represent present obligations resulting
from employees' services provided up to the reporting date, calculated at
undiscounted amounts based on remuneration rates that the Group expects to pay.
Provisions
A provision is recognised in the balance sheet when the Group has a legal or
constructive obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of
time is recognised as a borrowing cost.
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be
derived by the Group from a contract are lower than the unavoidable cost of
meeting its obligations under the contract.
Restructuring
A provision for restructuring is recognised when the Group has approved a
detailed and formal restructuring plan, and the restructuring has either
commenced or has been announced publicly. Future operating costs are not
provided for.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in
its present condition, management must be committed to the sale, which is
expected to qualify for recognition as a completed sale within one year from the
date of classification. Non-current assets (and disposal groups) classified as
held for sale are measured at the lower of the assets' previous carrying amount
and their fair value less costs to sell.
Revenue recognition
Revenue comprises the fair value of the sale of goods and services, net of VAT,
discounts and after eliminating sales within the Group. Revenue is recognised as
follows:
(i) Sales of goods
Sales of goods are recognised in revenue when the associated risks and rewards
of ownership of the goods have been transferred to the buyer.
(ii) Sales of services
Sales of services are recognised in the period in which the services are
rendered, by reference to completion of the specific transaction assessed on the
basis of the actual service provided as a proportion of the total services to be
provided.
(iii) Income from sales of property
Income from sales of property is recognised on completion when legal title of
the land passes to the buyer.
(iv) Contracting revenue
Contracting revenue comprises the fair value of work executed during the year.
(v) Dividends
Income from equity investments is recognised when the legal entitlement vests.
Dividends from UK companies are presented net of the attributable tax credit.
Dividends received from overseas companies include any withholding taxes, but
exclude any underlying tax paid by the investee company on its own profit.
Special dividends arising from the Group's investments are included as income in
the income statement and, where appropriate, an impairment provision is
recognised against the investment.
Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity. Current tax is the expected tax payable on the taxable
income for the year, using rates enacted or substantially enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
Deferred taxation is measured on a non-discounted basis. The following temporary
differences are not provided for: goodwill not deducted for tax purposes, the
initial recognition of assets or liabilities that affect neither accounting nor
taxable profit and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantially enacted at the balance sheet date. A
deferred tax asset is recognised only to the extent that it is probable that
future profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realised. Additional income taxes that arise
from the distribution of dividends are recognised at the same time as the
liability to pay the related dividend.
EXPLANATION OF IFRS ADJUSTMENTS
The following paragraphs explain the key adjustments made to the financial
results for the opening balance sheet as at 1 January 2004, the six months to 30
June 2004 and for the year ended 31 December 2004.
The explanatory notes below should be read in conjunction with the appendices
referred to below:
Appendix (a) - presents the previously published UK GAAP balance sheet as at 31
December 2003 in IFRS format.
Appendix (b) - presents the reconciliation of equity as at 1 January 2004 from
UK GAAP to IFRS.
Appendix (c) - presents the reconciliation of equity as at 31 December 2004.
Appendix (d) - presents the reconciliation of the income statement for the year
ended 31 December 2004.
Appendix (e) - presents the reconciliation of equity as at 30 June 2004.
Appendix (f) - presents the reconciliation of the income statement for the six
months ended 30 June 2004.
IFRS 1 exemptions
IFRS 1 - (First Time Adoption of IFRS), permits companies adopting IFRS for the
first time to take exemptions from applying the full requirements of IFRS to
certain items. In preparing the financial information in this document, the
Group has taken the following exemptions:
a. Business combinations
Business combinations prior to the IFRS transition date (1 January 2004) have
not been restated on to an IFRS basis. As a result, in the transition balance
sheet, goodwill arising from past business combinations remains as stated under
UK GAAP £1.4m. Negative goodwill of £9.7m has been derecognised.
b. Employee benefits
All cumulative actuarial gains and losses relating to employee benefit schemes
have been recognised in equity at the date of transition to IFRS.
c. Cumulative translation reserves
IFRS requires amounts taken to reserves on the retranslation of foreign
subsidiaries to be recorded in a separate translation reserve. The Group has
taken the option to assume that cumulative translation differences are set to
zero at the transition date. On future disposal of a business, the cumulative
amount of exchange differences recognised for that business since the transition
date will be transferred to the income statement as part of the profit or loss
on disposal.
d. Financial instruments
As permitted, the implementation of IAS 32 - Financial Instruments: Disclosure
and Presentation, and IAS 39 - Financial Instruments: Recognition and
Measurement, will be first applied to the financial year ending 31 December
2005. As a result, financial instruments will continue to be accounted for and
presented in accordance with UK GAAP for the year ended 31 December 2004.
Explanations of key IFRS adjustments
1. Intangible assets
a) Goodwill
UK GAAP required goodwill to be amortised over its estimated useful life, which
the Group had determined to be 10 years. Under IFRS, goodwill is considered to
have an indefinite life and so is not amortised. Instead it is subject to an
annual test for impairment. Accordingly the £3.8m goodwill amortisation charge
for the year ended 31 December 2004 under UK GAAP has been reversed. Under IFRS,
negative goodwill is not recognised and so £9.7m and £7.4m of negative goodwill
for subsidiaries and associates respectively has been derecognised as at 1
January 2004. The annual impairment test under IFRS during the year ended 31
December 2004 did not result in any reduction in the carrying value of goodwill.
b) Computer software
Under UK GAAP, all capitalised computer software was included within tangible
fixed assets as plant and equipment. Under IFRS, only computer software that is
integral to a related item of hardware should be included as plant and
equipment. All other computer software should be recorded as intangible assets.
Accordingly, a reclassification of £8.6m and £9.0m between property, plant and
equipment and intangible assets has been made at 30 June 2004. and 31 December
2004 respectively. There is no profit and loss account impact as a result of
this reclassification since, under both UK GAAP and IFRS, computer software is
written down over its estimated useful life.
2. Share-based payments
The Group operates equity-settled compensation plans for the granting of
non-transferable options to senior executives. For shares granted to employees,
the fair value of the shares is measured at the market price of GPG shares,
adjusted to take into account the terms and conditions upon which the shares
were granted. The fair value of share options is measured using an adjusted
version of the Black-Scholes pricing model to reflect the terms and conditions
of the options granted, based on management's best estimate of the effects of
non-transferability, exercise restrictions and behavioral considerations. The
charge to income for the six months ended 30 June 2004 and year ended 31
December 2004 was £0.2m and £0.5m respectively. This charge has no impact on
net assets since the credit is reflected in equity.
3. Pensions
Under UK GAAP, GPG accounted for pensions in accordance with SSAP 24. SSAP 24
adopted a profit and loss driven approach which spread the cost of providing
benefits over the estimated average service lives of employees. This resulted in
a stable, regular cost with the smoothing of assumptions and asset values. The
SSAP 24 discount rate was based on the long-term estimate of the scheme's
investment return. Typically, under SSAP 24, pension costs were reviewed
triennially.
Under UK GAAP, the Group also provided the required disclosures in accordance
with FRS 17 which detailed the pension fund surpluses and deficits and the
assets and liabilities based on the valuation methodologies of that standard.
FRS 17 is fundamentally different to SSAP 24 and adopts a balance sheet driven
approach with market-based measures and thus there is no smoothing of
assumptions. The discount rate under FRS 17 is based on the market yield of a
high quality corporate bond at the valuation date. Valuations are updated
annually. IAS 19 adopts a similar valuation approach to FRS 17. In addition, GPG
has chosen to adopt the amendment to IAS 19 - Employee Benefits - Actuarial
Gains and Losses, Group Plans and Disclosures, from the transition date which
allows actuarial gains and losses to be accounted through the Statement of
Recognised Income and Expense, similar to FRS 17.
The impact of IAS 19 on the UK GAAP net assets is shown below:
Reduction in UK GAAP net assets (including deferred tax):
Transition balance sheet - 1 January 2004 - £90.4m;
30 June 2004 - £92.3m; and
31 December 2004 - £113.3m.
4. Taxation
Under UK GAAP deferred taxation was recognised on the basis of timing
differences, being the difference between accounting profit and taxable profit.
IFRS requires deferred taxation to be based on temporary differences, being the
difference between the carrying value of an asset or liability and its tax base.
Under IFRS, deferred tax assets and deferred tax liabilities are, in certain
circumstances, offset where legally enforceable rights exist. Net additional
deferred tax liabilities of £8.1m have been recognised under IFRS for the year
ended 31 December 2004 and £6.6m for the six months ended 30 June 2004 largely
to reflect deferred tax on the undistributed reserves of subsidiaries.
5. Ordinary dividends
Under UK GAAP, proposed ordinary dividends were accounted for in the period to
which they related even if the approval of that dividend took place after the
balance sheet date. Under IFRS, proposed ordinary dividends do not meet the
definition of a liability until such time as they have been approved. In the
case of a final ordinary dividend this approval is by shareholders at the Annual
General Meeting. The approval of an interim dividend takes place at a meeting of
the Board of Directors. Under IFRS, ordinary dividends are no longer disclosed
on the face of the profit and loss account but shown as a movement in equity.
The final dividend for the year ended 31 December 2003 of £6.9m has been
reversed in the transition balance sheet and charged to equity in 2004. The
final dividend for the year ended 31 December 2004 of £8.7m has been reversed
from the accounts for the period then ended.
6. Cash flow statements
An IFRS cash flow statement is similar to UK GAAP but presents various cash
flows in different categories and in a different order from UK GAAP.
A significant difference between the classification of cash, under UK GAAP and
IFRS frameworks is that IFRS includes "cash equivalents" in the cash flow
statement. Therefore the Group has included significant short term deposits in
the IFRS cash flow statement that were not included in the UK GAAP cash flow
statement.
7. Foreign exchange
IAS 21 requires the income statement of foreign subsidiaries to be translated at
average rates. GPG's policy prior to the transition of IFRS was to use the
exchange rates ruling at the balance sheet date.
8. Discontinued operations
The adjustments to property, plant and equipment, investments in joint ventures,
inventories, trade and other receivables, trade and other payables arise due to
the reclassification under IFRS 5 - Non-Current Assets Held for Sale and
Discontinued Operations certain assets and liabilities as assets and liabilities
held for sale and due to certain businesses being deconsolidated as they
represent joint ventures
9. Revenue recognition
Under UK GAAP the Group accounted for revenue from property development
contracts using the percentage of completion method and therefore recognised
revenue and cost of sales during construction in line with performance on the
contract. However, these contracts do not meet the definition of construction
contracts under "IAS 11: Construction Contracts" and therefore are accounted for
in accordance with "IAS 18: Revenue". IAS 18 only allows revenue to be
recognised on the sale of goods when the risks and rewards of ownership have
been transferred to the buyer which occurs at completion when legal title
passes.
Appendix (a) - Reconciliation of equity at 1 January 2004
(a) IFRS Balance Sheet as at 1 January 2004 (Opening Balance Sheet)
Effect of IAS 1, 'Presentation of Financial Statements' on UK GAAP balances
UK GAAP Balances in UK GAAP Balances in
UK GAAP format IFRS format
Debtors Creditors Investments Provisions
Fixed assets £m £m £m £m £m Non current assets
Intangible assets (8.3) (8.3) Intangible assets
Tangible assets 77.1 77.1 Property, plant and equipment
Investments 291.5 (253.2) 38.3 Investments in associated
undertakings
95.3 95.3 Investments in joint ventures
157.9 157.9 Fixed asset invesments
3.6 3.6 Deferred tax assets
1.6 1.6 Trade and other receivables
Total fixed assets 360.3 5.2 - - - 365.5 Total non-current assets
Current assets Current assets
Stocks 28.2 28.2 Inventories
Debtors 93.2 (5.2) 88.0 Trade and other receivables
Investments 17.4 17.4 Current asset investments
Cash at bank 289.5 289.5 Cash and cash equivalents
Total current assets 428.3 (5.2) - - - 423.1
Creditors: Amounts falling due Current liabilities
within one year
Trade and other creditors 126.9 (6.9) 120.0 Trade and other payables
Convertible subordinated Convertible subordinated
loan notes 6.0 6.0 loan notes
6.9 6.9 Income tax liabilities
2.4 2.4 Provisions
Other borrowings 0.8 0.8 Other borrowings
Total current liabilities 133.7 - - - 2.4 136.1
Creditors: Amounts falling due Non-current liabilities
after one year
Trade and other creditors 1.6 1.6 Trade and other payables
Convertible subordinated Convertible subordinated
loan notes 6.0 6.0 loan notes
Capital notes 166.5 166.5 Capital notes
1.8 1.8 Deferred tax liabilities
Other borrowings 22.5 22.5 Other borrowings
6.4 6.4 Provisions
Total long-term creditors 196.6 - - - 8.2 204.8
Provisions for liabilities and 10.6 - - - (10.6) -
charges
Net assets 447.7 - - - - 447.7
Capital and reserves Equity
Share capital 34.5 34.5 Share capital
Share premium account 3.4 3.4 Share premium account
Other reserves 261.1 261.1 Other reserves
Profit and loss account 130.9 130.9 Retained earnings
Equity shareholder's funds 429.9 - - - - 429.9
Minority interests 17.8 17.8 Minority interests
447.7 - - - - 447.7
Appendix (b) - Reconciliation of equity at 1 January 2004
(b) IFRS Balance Sheet as at 1 January 2004 (Opening Balance Sheet)
UK GAAP Events
Balances after
in IFRS bs Income Employee Foreign Investments
format UK date taxes Leases Revenue Benefits exchange in assoc.
GAAP IAS 10 IAS 12 IAS 17 IAS 18 IAS 19 IAS 21 IAS 28
£m £m £m £m £m £m £m £m
Non current
assets
Intangible
assets (8.3)
Property,
plant and
equipment 77.1
Investments in
associated
undertakings 38.3 (0.4) (0.1) (0.9) 0.1 1.1
Investments in
joint ventures 95.3 (5.6) (49.4) (0.1)
Fixed asset
investments 157.9 (0.5)
Deferred tax
assets 3.6 0.9
Trade and
other
receivables 1.6
Total
non-current
assets 365.5 - (5.1) (0.1) (0.9) (49.3) (0.1) 0.6
Current
assets
Inventories 28.2 2.2
Trade and
other
receivables 88.0 (0.9) (7.4)
Held for
trading
investments 17.4
Cash and cash
equivalents 289.5
Total current
assets 423.1 - (0.9) - (5.2) - - -
Non current
assets
Held-for-Sale
Total assets 788.6 - (6.0) (0.1) (6.1) (49.3) (0.1) 0.6
Current
liabilities
Trade and
other payables 120.0 (6.9) (0.6) (0.2)
Current income
tax
liabilities 6.9
Convertible
subordinated
loan notes 6.0
Provisions 2.4
Other
borrowings 0.8
Total current
liabilities 136.1 (6.9) - - (0.6) (0.2) - -
Non-current
liabilities
Trade and
other payables 1.6
Convertible
subordinated
loan notes 6.0
Capital notes 166.5
Deferred tax
liabilities 1.8 (1.0)
Other
borrowings 22.5
Retirement
benefit
obligations 41.5
Provisions 6.4 (0.2)
Total
Non-current
liabilities 204.8 - (1.0) - - 41.3 - -
Total
Liabilities 340.9 (6.9) (1.0) (0.6) 41.1
Net assets 447.7 6.9 (5.0) (0.1) (5.5) (90.4) (0.1) 0.6
Equity
Share capital 34.5
Share premium
account 3.4
Other reserves 261.1
Retained
earnings 130.9 6.9 (5.3) (0.1) (3.8) (90.4) (0.1) 0.4
Total equity
shareholders'
funds 429.9 6.9 (5.3) (0.1) (3.8) (90.4) (0.1) 0.4
Minority
interests 17.8 0.3 (1.7) 0.2
Total equity 447.7 6.9 (5.0) (0.1) (5.5) (90.4) (0.1) 0.6
Appendix (b) - Reconciliation of equity at 1 January 2004
(b) IFRS Balance Sheet as at 1 January 2004 (Opening Balance Sheet)
UK GAAP
Balances Share
in IFRS Impairment based Business Discontinued Total
format of assets Agriculture payments combinations operations IFRS
IAS 36 IAS 41 IFRS 2 IFRS 3 IFRS 5 Adjs IFRS
£m £m £m £m £m £m £m
Non current
assets
Intangible
assets 9. 7 9.7 1.4
Property,
plant and
equipment (0.7) (0.7) 76.4
Investments
in associated (0.3) (1.0) 7.4 5.9 44.2
undertakings
Investments
in joint 1.0 (54.1) 41.2
ventures
Fixed asset
investments (0.5) 157.4
Deferred tax
assets 0.9 4.5
Trade and
other
receivables - 1.6
Total
non-current
assets (0.3) - (1.0) 18.1 (0.7) (38.8) 326.7
Current
assets
Inventories 2.2 30.4
Trade and
other
receivables 0.1 (8.2) 79.8
Held for
trading
investments 17.4
Cash and cash
equivalents 289.5
Total current
assets - 0.1 - - - (6.0) 417.1
Non current
assets
Held-for-Sale 0.7 0.7 0.7
Total (0.3) 0.1 (1.0) 18.1 - (44.1) 744.5
assets
Current
liabilities
Trade and
other (7.7) 112.3
payables
Current
income
tax 6.9
liabilities
Convertible
subordinated
loan notes 6.0
Provisions 2.4
Other
borrowings 0.8
Total current
liabilities - - - - - (7.7) 128.4
Non-current
liabilities
Trade and
other 1.6
payables
Convertible
subordinated
loan notes 6.0
Capital 166.5
notes
Deferred tax
liabilities (1.0) 0.8
Other
borrowings - 22.5
Retirement
benefit
obligations 41.5 41.5
Provisions (0.2) 6.2
Total
Non-current
liabilities - - - - - 40.3 245.1
Total
Liabilities 32.6 373.5
Net assets (0.3) 0.1 (1.0) 18.1 - (76.7) 371.0
Equity
Share 34.5
capital
Share premium
account 0.1 0.1 3.5
Other 261.1
reserves
Retained
earnings (0.3) 0.1 (1.1) 18.1 (75.6) 55.3
Total equity
shareholders'
funds (0.3) 0.1 (1.0) 18.1 - (75.5) 354.4
Minority
interests (1.2) 16.6
Total (0.3) 0.1 (1.0) 18.1 - (76.7) 371.0
equity
Appendix (c) - Reconciliation of equity at 31 December 2004
(c) IFRS Balance Sheet as at 31 December 2004
Events
after
UK GAAP Balances in IFRS BS
format UK date Income Revenue Employee Foreign Consolidated
UK IAS taxes Leases Recognition benefits exchange FS
GAAP 10 IAS 12 LAS 17 IAS 18 IAS 19 IAS 21 IAS 27
£m £m £m £m £m £m £m £m
Non current assets
Intangible assets 137.9 2.7 8.6 (0.2)
Property, plant and 399.3 (15.7)
equipment
Investments in associated 39.6 (0.1) (0.1) (0.2) 0.2
undertakings
Investments in joint 9.5 (6.6) 9.3
ventures
Available-for sale 159.2
investments
Deferred tax assets 15.2 0.7 0.7
Trade and other 50.8 (23.3)
receivables
Total non-current assets 811.5 - 3.3 (0.1) (0.2) (20.4) (0.2) (6.4)
Current assets
Inventories 183.8 5.4 (2.3)
Trade and other 273.4 (7.9) (0.8) 3.7
receivables
Held for trading 27.3
investments
Cash and cash equivalents 283.7 (1.1)
Total current assets 768.2 - - - (2.5) - (0.8) 0.3
Non-current assets
classified as
held-for-sale
Total assets 1,579.7 - 3.3 (0.1) (2.7) (20.4) (1.0) (6.1)
Current liabilities
Trade and other payables 278.1 (8.7) (0.9) 0.1 (0.3) 4.5
Current income tax 23.5
liabilities
Convertible subordinated 6.0
loan notes
Provisions 98.7 6.6
Other borrowings 46.7 (1.3)
Total current liabilities 453.0 (8.7) - - (0.9) 6.7 (0.3) 3.2
Non-current liabilities
Trade and other payables 3.6
Capital notes 172.0
Deferred tax liabilities 5.4 9.6 (0.1)
Other borrowings 267.2
Retirement benefit 90.8
obligation - funded
Retirement benefit 61.1
obligation - unfunded
Provisions 100.2 (65.6)
Total Non-current 548.4 - 9.6 - - 86.2 - -
liabilities
Liabilities directly
associated with
non-current
assets classified as
held-for-sale
Total liabilities 1,001.4 (8.7) 9.6 (0.9) 92.9 (0.3) 3.2
Net assets 578.3 8.7 (6.3) (0.1) (1.8) (113.3) (0.7) (9.3)
Equity
Share capital 43.5
Share premium account 10.6
Other reserves 304.9 0.2 0.2 (1.2) (0.1)
Retained earnings 155.4 8.7 (6.1) (0.1) (1.4) (112.1) (0.6)
Total equity 514.4 8.7 (5.9) (0.1) (1.2) (113.3) (0.7) -
shareholders' funds
Minority interests 63.9 (0.4) (0.6) (9.3)
Total equity 578.3 8.7 (6.3) (0.1) (1.8) (113.3) (0.7) (9.3)
Appendix (c) - Reconciliation of equity at 31 December 2004
(c) IFRS Balance Sheet as at 31 December 2004
Discon-
Investments Impairment Intan- Share Business tinued
UK GAAP Balances in IFRS in of gible based combina- opera- Total
format UK assoc. assets assets Payments tions tions IFRS
IAS 28 IAS 36 IAS 38 IFRS 2 IFRS 3 IFRS 5 Adjs IFRS
£m £m £m £m £m £m £m £m
Non current assets
Intangible assets 5.3 9.0 (1.0) (2.2) 22.2 160.1
Property, plant and equipment (9.0) (32.0) (56.7) 342.6
Investments in associated undertakings 1.2 (0.9) (1.0) 8.1 7.2 46.8
Investments in joint ventures 0.4 3.1 12.6
Available-for sale investments (0.5) (0.5) 158.7
Deferred tax assets 1.4 16.6
Trade and other receivables (23.3) 27.5
Total non-current assets 0.7 4.8 - (1.0) 7.1 (34.2) (46.6) 764.9
Current assets
Inventories (1.1) 2.0 185.8
Trade and other receivables (0.4) (5.4) 268.0
Held for trading investments (6.7) (6.7) 20.6
Cash and cash equivalents (1.1) 282.6
Total current assets - - - - - (8.2) (11.2) 757.0
Non-current assets classified as 59.9 59.9 59.9
held-for-sale
Total assets 0.7 4.8 - (1.0) 7.1 17.5 2.1 1,581.8
Current liabilities
Trade and other payables (0.1) (5.4) 272.7
Current income tax liabilities 23.5
Convertible subordinated loan notes 6.0
Provisions (3.1) 3.5 102.2
Other borrowings (1.3) 45.4
Total current liabilities - - - - (3.1) (0.1) (3.2) 449.8
Non-current liabilities
Trade and other payables 3.6
Capital notes 172.0
Deferred tax liabilities 9.5 14.9
Other borrowings 267.2
Retirement benefit obligation - funded 90.8 90.8
Retirement benefit obligation - 61.1 61.1
unfunded
Provisions (12.7) (78.3)) 21.9
Total Non-current liabilities - - - - - (12.7) 83.1 631.5
Liabilities directly associated with
non-current
assets classified as held-for-sale 30.5 30.5 30.5
Total liabilities (3.1) 17.7 110.4 1,111.8
Net assets 0.7 4.8 - (1.0) 10.2 (0.2) (108.3) 470.0
Equity
Share capital - 43.5
Share premium account 0.4 0.4 11.0
Other reserves (0.1) (0.1) (7.3) (8.4) 296.5
Retained earnings 0.5 4.9 (1.4) 17.5 (0.2) (90.3) 65.1
Total equity shareholders' funds 0.5 4.8 - (1.1) 10.2 (0.2) (98.3) 416.1
Minority interests 0.2 0.1 (10.0) 53.9
Total equity 0.7 4.8 - (1.0) 10.2 (0.2) (108.3) 470.0
Appendix (d) - Reconciliation of income statement for the year ended 31 December 2004
(d) IFRS Income statement for the year ended 31 December 2004
Events
UK GAAP Balances in after
IFRS format Presentation BS Income Revenue Employee Foreign Consolitated
UK of FS Inventories date taxes recognition benefits exchange FS
GAAP IAS 1 IAS 2 IAS IAS IAS 18 IAS 19 IAS 21 IAS 27
10 12
£m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 1,194.8 (0.9) (8.1)
Cost of sales (874.5) 0.6 3.2 6.8 (4.1)
Gross profit 320.3 - 0.6 - - 2.3 - (1.3) (4.1)
Profit on disposal of
investments and other
net investment
income 64.8 0.1 (0.1)
Distribution costs (140.3) 2.5 0.1
Administrative expenses (169.9) 0.3 (6.6) 1.1 2.8
Operating profit 74.9 - 0.6 - - 2.6 (6.6) 2.4 (1.3)
Share of profit/(loss)
of joint ventures 3.0 (4.9) 0.3 (1.4) (0.3) 0.1
Share of profit/(loss)
of associated
undertakings (2.2) (4.4) 0.3 0.7 0.2
Finance costs (43.5) 3.7 (0.6) 4.1 1.0 0.5
Profit before tax 32.2 (5.6) - - 0.6 3.3 (3.9) 3.3 (0.7)
Taxes (8.0) 5.6 (1.4) 0.6 0.1 0.2
Profit from continuing
operations 24.2 - - - (0.8) 3.3 (3.3) 3.4 (0.5)
Discontinued operations
Gain on discontinued
operations 1.8
Net profit 26.0 - - - (0.8) 3.3 (3.3) 3.4 (0.5)
Attributable to:
Equity holders of the 25.3 - - - (0.8) 2.2 (3.1) 2.9 0.1
Company
Equity minorities 0.7 1.1 (0.2) 0.5 (0.6)
interests
Appendix (d) - Reconciliation of income statement for the year ended 31 December 2004
(d) IFRS Income statement for the year ended 31 December 2004
Share
UK GAAP Balances in IFRS Investments Impairment Agri- based Business Discontinued Total
format in assoc. of assets culture payments combinations operations IFRS
IAS 28 IAS 36 IAS 41 IFRS 2 IFRS 3 IFRS 5 Adjs IFRS
£m £m £m £m £m £m £m £m
Continuing
operations
Revenue (265.9) (274.9) 919.9
Cost of sales 222.8 229.3 (645.2)
Gross profit - - - - (43.1) (45.6) 274.7
Profit on disposal of
investments and other
net investment
income 64.8
Distribution costs 1.0 3.6 (136.7)
Administrative expenses 5.1 (0.1) (0.5) (1.3) 35.2 36.0 (133.9)
Operating profit - 5.1 (0.1) (0.5) (1.3) (6.9) (6.0) 68.9
Share of profit/(loss)
of joint ventures 0.8 0.8 (4.6) (1.6)
Share of profit/(loss)
of associated
undertakings (0.1) (0.7) 0.8 (0.5) (3.7) (5.9)
Finance costs 8.7 (34.8)
Profit before tax (0.1) 5.2 (0.1) (0.5) (0.5) (6.6) (5.6) 26.6
Taxes 0.3 2.9 8.3 0.3
Profit from continuing
operations 0.2 5.2 (0.1) (0.5) (0.5) (3.7) 2.7 26.9
Discontinued operations
Gain on discontinued
operations 3.4 3.4 5.2
Net profit 0.2 5.2 (0.1) (0.5) (0.5) (0.3) 6.1 32.1
Attributable to:
Equity holders of the
Company 0.2 5.1 (0.1) (0.5) (0.5) (0.4) 5.1 30.4
Equity minorities
interests 0.1 0.1 1.0 1.7
Appendix (e) - Reconciliation of equity at 30 June 2004
(e) IFRS Balance Sheet as at 30 June 2004
Revised
UK GAAP Balances in IFRS UK GAAP Fair UK Income Revenue Employee Foreign Consolidated
format previously value GAAP taxes Leases recognition Benefits exchange FS
presented adjustments figures IAS 12 IAS 17 IAS 18 IAS 19 IAS 21 IAS 27
£m £m £m £m £m £m £m £m £m
Non current assets
Intangible assets 35.6 99.8 135.4 2.8 9.2 (0.2)
Property, plant and 405.4 (11.8) 393.6 (17.2)
equipment
Investments in associated 43.2 (2.3) 40.9 (0.4) (0.1) (0.5) 0.3
undertakings
Investments in joint 9.0 9.0 (6.4) 10.1
ventures
Available-for-sale 161.8 161.8
investments
Deferred tax assets 2.3 2.3 1.8
Trade and other 42.1 42.1 (24.8)
receivables
Total non-current assets 699.4 85.7 785.1 4.2 (0.1) (0.5) (21.7) (0.2) (7.1)
Current assets
Inventories 260.3 (13.4) 246.9 3.0 (5.2)
Trade and other * 315.8 (1.8) 314.0 (0.9) (4.4) 2.5 0.8 3.0
receivables
Held for trading 50.3 0.3 50.6
investments
Cash and cash equivalents 211.5 0.4 211.9
Total current assets 837.9 (14.5) 823.4 (0.9) - (1.4) 2.5 0.8 (2.2)
Non-current assets -
classified as
held-for-sale
Total assets 1,537.3 71.2 1,608.5 3.3 (0.1) (1.9) (19.2) 0.6 (9.3)
Current liabilities
Trade and other payables * 298.6 (12.5) 286.1 0.1 (0.1) 2.8
Current income tax 14.6 14.6
liabilities
Convertible subordinated 6.0 6.0
loan notes
Other borrowings 82.5 82.5 (2.0)
Provisions 24.7 76.1 100.8 6.1
Total current liabilities 426.4 63.6 490.0 - - 6.2 (0.1) 0.8
Non-current liabilities
Trade and other payables 1.1 1.1 35.8
Capital notes 159.5 159.5
Deferred tax liabilities 14.0 (4.6) 9.4 8.4
Other borrowings 309.9 309.9
Retirement benefit (0.6) (0.6) 36.1
obligation - Funded
Retirement benefit 59.5
obligation - Unfunded
Provisions 85.1 11.7 96.8 (64.5)
Total Non-current 569.6 6.5 576.1 8.4 - - 66.9 - -
liabilities
Liabilities directly
associated with
non-current
assets classified as
held-for-sale
Total liabilities 996.0 70.1 1,066.1 8.4 73.1 (0.1) 0.8
Net assets 541.3 1.1 542.4 (5.1) (0.1) (1.9) (92.3) 0.7 (10.1)
Equity
Share capital 42.8 42.8
Share premium account * 5.9 5.9
Other reserves * 304.9 304.9 0.2 0.4 1.2 (14.1)
Retained earnings 127.5 127.5 (4.9) (0.1) (1.7) (93.5) 14.8
Total equity 481.1 - 481.1 (4.7) (0.1) (1.3) (92.3) 0.7 -
shareholders' funds
Minority interests 60.2 1.1 61.3 (0.4) (0.6) (10.1)
Total equity 541.3 1.1 542.4 (5.1) (0.1) (1.9) (92.3) 0.7 (10.1)
* Restated to reflect presentation adopted in December 2004.
Appendix (e) - Reconciliation of equity at 30 June 2004
(e) IFRS Balance Sheet as at 30 June 2004
In- Share
UK GAAP Balances in IFRS Investments Impairment tangible Agri- based Business Discontinued
format in assoc. of assets assets culture payments Combinations operations Total
IAS 28 IAS 36 IAS 38 IAS 41 IFRS 2 IFRS 3 IFRS 5 Adjs IFRS
£m £m £m £m £m £m £m £m £m
Non current assets
Intangible assets 0.4 8.6 7.8 (1.8) 26.8 162.2
Property, plant and 0.2 (8.6) (27.3) (52.9) 340.7
equipment
Investments in associated 1.1 (0.3) (0.9) 8.2 7.4 48.3
undertakings
Investments in joint (0.2) 0.2 3.7 12.7
ventures
Available-for-sale (0.5) (0.5) 161.3
investments
Deferred tax assets 1.8 4.1
Trade and other (24.8) 17.3
receivables
Total non-current assets 0.4 0.5 - - (0.9) 16.0 (29.1) (38.5) 746.6
Current assets
Inventories (20.5) (22.7) 224.2
Trade and other 0.1 (9.0) (7.9) 306.1
receivables
Held for trading 50.6
investments
Cash and cash equivalents 1.3 1.3 213.2
Total current assets - - - 0.1 - - (28.2) (29.3) 794.1
Non-current assets 55.9 55.9 55.9
classified as
held-for-sale
Total assets 0.4 0.5 - 0.1 (0.9) 16.0 (1.4) (11.9) 1,596.6
Current liabilities
Trade and other payables (11.0) (8.2) 277.9
Current income tax 14.6
liabilities
Convertible subordinated 6.0
loan notes
Other borrowings (2.0) 80.5
Provisions (3.3) 2.8 103.6
Total current liabilities - - - - - (3.3) (11.0) (7.4) 482.6
Non-current liabilities
Trade and other payables 35.8 36.9
Capital notes 159.5
Deferred tax liabilities 8.4 17.8
Other borrowings 309.9
Retirement benefit 36.1 35.5
obligation - Funded
Retirement benefit 59.5 59.5
obligation - Unfunded
Provisions (20.4) (84.9) 11.9
Total Non-current - - - - - (20.4) 54.9 631.0
liabilities
Liabilities directly
associated with
non-current
assets classified as 29.7 29.7 29.7
held-for-sale
Total liabilities (3.3) (1.7) 77.2 1143.3
Net assets 0.4 0.5 - 0.1 (0.9) 19.3 0.3 (89.1) 453.3
Equity
Share capital 42.8
Share premium account 0.2 0.2 6.1
Other reserves 0.2 0.1 1.1 (10.9) 294.0
Retained earnings 0.2 0.3 0.1 (1.2) 18.2 0.3 (67.5) 60.0
Total equity 0.2 0.5 - 0.1 (0.9) 19.3 0.3 (78.2) 402.9
shareholders' funds
Minority interests 0.2 (10.9) 50.4
Total equity 0.4 0.5 - 0.1 (0.9) 19.3 0.3 (89.1) 453.3
* Restated to reflect presentation adopted in December 2004.
Appendix (f) - Reconciliation of income statement for the six months ended 30 June 2004
(f) IFRS Income statement for the six months ended 30 June 2004
UK GAAP Balances in IFRS Presentation Income Revenue Employee Foreign Consolidated
format UK of FS Inventories taxes recognition benefits exchange FS
GAAP IAS 1 IAS 2 IAS 12 IAS 18 IAS 19 IAS 21 IAS 27
£m £m £m £m £m £m £m £m
Continuing operations
Revenue 478.6 1.6 2.5
Cost of sales (349.7) 0.2 1.0 (2.3) (1.4)
Gross profit 128.9 - 0.2 - 2.6 - 0.2 (1.4)
Profit on disposal of
investments and other
net investment income 28.5
Distribution costs (50.9)
Administrative expenses (78.1) 0.1 (1.8) 0.7 0.9
Operating profit 28.4 - 0.2 - 2.7 (1.8) 0.9 (0.5)
Share of profit/(loss) 3.9 (5.0) 0.3 (1.5) (0.2)
of joint ventures
Share of profit/(loss) (0.5) (1.1) 0.4 0.1
of associated
undertakings
Finance costs (19.1) 3.9 (0.2) (0.1) 1.2 0.2
Profit before tax 12.7 (2.2) - 0.3 3.1 (3.4) 2.0 (0.3)
Taxes (7.1) 2.2 0.1 0.1 0.1
Profit from continuing 5.6 - - 0.4 3.1 (3.4) 2.1 (0.2)
operations
Discontinued operations
Gain on discontinued
operations
Net profit 5.6 - - 0.4 3.1 (3.4) 2.1 (0.2)
Attributable to:
Equity holders of the 5.3 - - 0.3 2.0 (3.2) 1.7 -
Company
Equity minorities 0.3 0.1 1.1 (0.2) 0.4 (0.2)
interests
Appendix (f) - Reconciliation of income statement for the six months ended 30 June 2004
(f) IFRS Income statement for the six months ended 30 June 2004
UK GAAP Balances in IFRS Investments Impairment Share based Business Discontinued Total
format in assoc. of assets payments combinations operations IFRS
IAS 28 IAS 36 IFRS 2 IFRS 3 IFRS 5 Adjs IFRS
£m £m £m £m £m £m £m
Continuing operations
Revenue (144.0) (139.9) 338.7
Cost of sales 116.3 113.8 (235.9)
Gross profit - - - - (27.7) (26.1) 102.8
Profit on disposal of
investments and other net
investment income 28.5
Distribution costs 7.4 7.4 (43.5)
Administrative expenses 0.1 (0.2) (0.6) 18.4 17.6 (60.5)
Operating profit - 0.1 (0.2) (0.6) (1.9) (1.1) 27.3
Share of profit/(loss) of 0.7 0.2 (5.5) (1.6)
joint ventures
Share of profit/(loss) of 0.1 0.8 0.3 (0.2)
associated undertakings
Finance costs (0.2) 0.1 4.9 (14.2)
Profit before tax (0.2) 0.9 (0.2) 0.2 (1.6) (1.4) 11.3
Taxes 0.7 3.2 (3.9)
Profit from continuing (0.2) 0.9 (0.2) 0.2 (0.9) 1.8 7.4
operations
Discontinued operations
Gain on discontinued 1.3 1.3 1.3
operations
Net profit (0.2) 0.9 (0.2) 0.2 0.4 3.1 8.7
Attributable to:
Equity holders of the (0.2) 0.8 (0.2) 0.2 0.3 1.7 7.0
Company
Equity minorities 0.1 0.1 1.4 1.7
interests
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
COMPANIES COVERED:
Latest directors dealings
- 1 day ago Cerillion
- 1 day ago Associated British Foods
- 1 day ago B&M European Value Retail S.A. (DI)
- 1 day ago B&M European Value Retail S.A. (DI)
- 1 day ago Haleon