Final Results
European Motor Hldgs PLC
27 April 2005
EUROPEAN MOTOR HOLDINGS plc ("EMH")
Preliminary results for the year ended 28 February 2005
EMH, consistently one of the UK's most profitable quoted motor retail groups,
announces record results for the year ended 28 February 2005.
Highlights:
• Profit before tax up by 79% to £30.1 million
• Profit before exceptional items, goodwill amortisation and tax up by
13% to £15.8 million
• Motor Retail return on sales 3.3% compared to 3.2% last year
• Earnings per share up by 65% to 38.2p
• Net assets per share 150.1 pence compared to 121.7 pence last year
• Net cash of £36.6 million at 28 February 2005
• Dividends per share for the year up by 12% to 9.5 pence
Commenting on these results, chief executive Richard Palmer said:
"Once again EMH has delivered record results. Our profits and earnings per share
have increased substantially and we are again proposing a significant increase
in dividend. We have continued to refine and strengthen our franchise portfolio
and have substantial cash resources with which to fund our future growth. We
look forward to another successful year."
Enquiries:
Richard Palmer Chief Executive
European Motor Holdings plc
Ann Wilson Finance Director
European Motor Holdings plc
Morning Biddick Associates 020 7448 1000
Afternoon European Motor Holdings plc 01491 413 399
EUROPEAN MOTOR HOLDINGS plc ("EMH")
Preliminary results for the year ended 28 February 2005
Chief Executive's statement
We are pleased to report outstanding results for the year ended 28 February 2005
during which the Group has again achieved record profits:
Year ended Year ended
£ million 28 February 2005 29 February 2005
Profit before taxation, exceptional
items and goodwill amortisation 15.8 14.0
Exceptional items
VAT refund 6.3 -
Interest on VAT refund 6.3 -
Profit on disposal of businesses 2.3 0.1
Profit on disposal of properties 0.3 2.9
Writedown on MG Rover assets (0.6) -
-------- --------
14.6 3.0
Goodwill amortisation (0.3) (0.2)
-------- --------
Profit before taxation 30.1 16.8
-------- --------
Earnings per share 38.2p 23.2p
Earnings per share before
exceptional items and goodwill
amortisation 20.0p 17.7p
Dividend per share 9.5p 8.5p
-------- --------
Our profit before taxation rose 79% to £30.1 million, including exceptional
profits of £14.6 million and our earnings per share increased by 65% to 38.2
pence from 23.2 pence last year. Profit before taxation, exceptional items and
goodwill amortisation rose 13% to £15.8 million and earnings per share before
exceptional items and goodwill amortisation increased by 13% to 20.0 pence. Net
assets per share rose by 23% to 150.1 pence and net funds at the year end stood
at £36.6 million.
We are proposing a final dividend of 5.8 pence per share, making a total
dividend for the year of 9.5 pence per share, a rise of 12%.
Trading
Within the motor retail sector our strategy of concentrating on a small number
of premium and specialist brands has continued to differentiate positively our
performance from that of our peer group. Whilst certain sectors of the market
and areas of the country appear to have suffered in performance, our results
have been protected by our strong franchise portfolio and balanced geographical
spread, mainly away from London, which remains a difficult area in which to
operate, not least because of high occupancy costs.
Our Motor Retail Division profit before taxation and exceptional items increased
by 18% to £16.7 million in a period when our brands continued to expand and to
capture sales from their volume competitors. During the year ended 28 February
2005 national registrations for our key franchises increased by 5% compared with
a decrease in national registrations of 2% for all makes during this period.
We believe that a key reason for the continued growth of the premium sectors of
the market in which we operate is the lower cost of ownership relative to volume
competitors. We have also benefited during the year from a number of important
new products which have helped to continue to stimulate the market. In the
coming year we have more significant new models to look forward to.
The already excellent performance of our BMW group businesses moved forward
again last year and we achieved sales growth of 8%. Although this is behind the
national increase in registrations of 11% for this period, the timing of our
sales was slightly distorted in early 2004 and in the period from January 2004
to February 2005 we exceeded national registrations by 1%. In Mini, sales growth
was 11% compared with a national average growth in registrations of 8%.
During the year we benefited from the introduction of the new 1 series, 6 series
and X3 vehicles which were additional to the existing range and from additional
5 series derivatives. The Mini convertible was also successfully launched in the
period. In 2004 we entered the run-out phase of the 3 series and the new model,
which has already been shown to be an improvement on its class leading
predecessor, was launched in mid March 2005 after the end of our financial year.
We have very high expectations from this new range of cars which will be
augmented in the coming year by replacement 7 series and 3 series Touring and
new M5 and M6. Our aftersales activities have benefited from a refocus to meet
the needs of the increasing BMW and Mini parcs and profits in this area have
shown a significant increase over the previous year.
Building work has commenced on our new BMW and Mini dealerships in Durham and
they are due to open in July this year, increasing the number of our BMW and
Mini businesses to five of each.
Our Premier Automotive Group businesses had a mixed year. Our Jaguar businesses
performed well in the first half of the year, but margins were eroded in the
second half mainly as a result of over supply. However, Jaguar has now addressed
this situation and cut back production. The launch of the new S Type diesel was
a success and we have continued to grow sales within our areas of
responsibility. On a like for like basis we registered 31% more new Jaguars than
in the previous year compared with a national growth of 6%.
Our Volvo businesses had a difficult start to the year without full availability
of the new S40 and V50. However, we had better availability across the range in
the second half and our Volvo businesses performed at a satisfactory level. Like
for like registrations in our Volvo businesses increased by 6% compared with
national growth of 2% and, looking forward, we are encouraged by the anticipated
launches of some exciting new products in the next two years which will not only
replace existing models but will also open new market sectors for the marque.
Both of our Land Rover businesses had a good year with our Chester dealership
becoming the second highest volume seller of Land Rover vehicles in the UK in
2004 and, although sales were flat, this represented a good performance when
compared with a decrease of 2% in national registrations following the run out
and replacement of the Discovery in the period. The new Discovery is proving to
be a valuable addition to the brand's line up which will be extended by the
introduction of the exciting Range Rover Sport in the middle of this year.
Our Volkswagen group businesses had a year of varied levels of success. During
the year we sold our Chester and Sunderland Audi centres to enable Audi to
complete other market areas, achieving profits on disposal of £2 million. Our
Tetbury Audi centre continued to operate at a very high level and achieved
strong growth in registrations of 12% compared with a 10% increase in national
registrations. In August we purchased an adjacent Audi dealer in Swindon and are
currently examining opportunities that will further develop this market area. We
hope that we will be able to move forward further with Audi in the coming year.
The new A6 and A3 Sportback have further stimulated demand for Audi products and
they, together with the new A4 launched in January, give us great confidence for
the year ahead.
Our first Bentley business opened in March 2004 and has had an excellent first
year's trading. We announced on 1 March 2005 the acquisition of two further
Bentley businesses in Leicester and Norwich. With these three businesses we
expect to sell more than 10% of the Bentley brand's volume in the UK. We are
very confident that the launch of the new Continental Flying Spur four door
saloon in July this year will further lift Bentley's prospects in the market.
Our Volkswagen businesses had a difficult twelve months but we managed a
reasonable profit improvement year on year within our continuing businesses. The
progress we made in the first half of the year was partially eroded in the
second half as we were unable to benefit from bulk deals which were available in
the previous year and overall our like for like Volkswagen registrations were
down by 6% compared with a national decrease of 1%. The national registrations
were bolstered by a number of fleet deals directly supported by the
manufacturer. Volkswagen's vehicle replacement cycle was in a period of
transition and, whilst we had the new Golf for the entire period, we did not
have replacements for the Passat saloon and estate, Polo and Bora which will be
launched in the next year. Volkswagen has very recently announced pricing action
across the product range and the price of Golf in particular will now be more
competitive in the retail market. We are confident that, with the forthcoming
new vehicle launches, together with the new Golf and the manufacturer's pricing
action, the performance of our Volkswagen businesses will improve.
In October we disposed of our loss making Volkswagen dealership in Darlington
realising a small profit.
In our Motor Retail dealerships we continue to earn approximately 50% of our
trading margin from aftersales activities. This underpins the Motor Retail
operations' overall performance and in the current year the contribution of
these activities from our continuing businesses grew by 17%.
We are certain that we have made the right choices of manufacturer partners and
both their and our ongoing progress in gaining market share overall will
continue to fuel our growth, both now and in the future. We believe that new
models which are currently giving rise to new vehicle sales growth will generate
increased aftersales and own brand used car activity in the years ahead.
Following the further refinements of our franchise portfolio detailed above and
the disposal of our remaining truck dealership during the year, 35 of our 37
franchises are now held with the BMW group, the Premier Automotive Group and the
Volkswagen group. The two remaining franchises are held with MG Rover. These
dealerships accounted for turnover of £22 million in the last financial year and
made an operating loss of £0.2 million in that period. As we announced on 20
April, following the appointment of administrators to MG Rover Group Limited,
the Board has decided to make an exceptional charge in the Group's financial
statements for the year ended 28 February 2005. This exceptional charge relates
to a reduction in the estimated realisable value of MG Rover stocks and debtors
held by and owed to the Group at that date and amounts to £0.6 million. The
Board has subsequently decided to implement a structured closure of the two
dealerships and will be making an exceptional provision in the financial
statements for the year ending 28 February 2006 which is currently being
quantified and which will cover further asset writedowns and closure costs.
However, the Board does not consider that the effect on trading for the year
ending 28 February 2006 will be significant.
Our auction operations at Telford and Queensferry had another excellent year
with profitability increasing once again. These two businesses give us a
competitive advantage due to the up to date information on used vehicle prices
that we derive from them. This data is made available throughout the Group and
is utilised thoroughly. The auctions also provide an invaluable conduit for us
to dispose effectively of used vehicles which we do not wish to retail.
Our Motor Services Division had a good year although profits were marginally
down, principally due to a reduction of equipment orders by certain customers.
Two continuing customers had made particularly large replacement purchases in
the previous year which were not repeated to the same extent in the year under
review. We have increased the number of service contracts we hold with our
customers by 13% during the period. The retail car washing venture that we
started at superstore sites as a trial in late 2001 did not prove to be
profitable and we therefore disposed of all sites at a small profit in October.
Financial review
As stated above, the Group's profit on ordinary activities before tax for the
year ended 28 February 2005 was £30.1 million compared to £16.8 million in the
previous year. This year's result includes a number of exceptional items. The
major exceptional item is the Group's VAT refund in respect of retrospective
changes in VAT law concerning the VAT treatment of demonstrator vehicles. The
refund amounted to £6.3 million and there is an associated exceptional interest
credit of £6.3 million, all of which has been received in full. In addition,
there were exceptional profits of £2.3 million on the disposal of five
businesses and £0.3 million from the disposal of surplus property less an
exceptional charge of £0.6 million in respect of MG Rover. The exceptional
profits included in the previous year amounted to £0.1 million on the disposal
of businesses and £2.9 million on the disposal of properties.
Excluding the exceptional items referred to above and goodwill amortisation, the
profit for the period was £15.8 million, an increase of 13%.
The Group's effective tax rate in the year ended 28 February 2005 was 32.2%.
This takes account of a number of significant matters. Provision has been
included for corporation tax at the rate of 30% on the exceptional VAT refund
and the associated interest credit, although it may be possible to reduce this
charge in due course. The exceptional profits arising on disposal of businesses
and properties are to be relieved by rollover of the relevant chargeable gains
and, therefore, no tax has been provided in respect of them in the current
period. The tax charge for the year includes an additional charge of £1.1
million in respect of gains arising on the disposal of the Group's Mercedes-Benz
dealerships in the year ended 28 February 2003. On the basis of advice,
including Counsel's opinion, the Group is of the view that the gain in question
relates to the disposal of goodwill and is eligible for rollover relief.
However, the Inland Revenue disputes this opinion and considers that the gain
cannot be rolled over. This is a dispute which affects all of the dealers who
disposed of their Mercedes-Benz businesses around that time and is being dealt
with centrally by both the dealers and the Inland Revenue. Whilst we still
believe that the gain arises from the disposal of goodwill, it is considered
prudent to make this additional charge until the situation is resolved. When the
above items are excluded, the effective tax rate for the year is 32.4%, the same
as last year. This is higher than the standard rate of corporation tax as a
result of permanent disallowable expenditure which arises in the business,
particularly in relation to depreciation of property.
Earnings per share for the year were 38.2p compared to 23.2p last year.
Excluding goodwill amortisation and exceptional items, the figure for this year
is 20.0p, an increase of 13%. The Board is recommending a final dividend of 5.8p
per share, bringing the full year's dividend to 9.5p. This represents a 12%
increase on last year's total dividend of 8.5p per share. Dividend cover,
excluding exceptional items, for the year is 2.07 times, compared to 2.04 times
last year.
The net effect of branches opened, acquired and sold since last year is an
increase in turnover of £2 million. Within our continuing Motor Retail
businesses, higher vehicle sales volumes and average prices of vehicles sold
have increased turnover by a further £37 million. There has also been an
increase in Motor Retail aftersales turnover, which has compensated for the
slight reduction in Motor Services turnover. As a result of all these factors,
there has been a net increase of £39 million in overall Group turnover compared
to last year.
Operating profit excluding exceptional items has been maintained at 2.8% of
turnover, the same as last year and the Group continues to be one of the most
profitable in the industry at this level, an achievement which is even more
pronounced at the profit before taxation level.
Average net cash balances were higher than in the comparative period due to the
net cash inflow during the year. This has resulted in net interest receivable
(excluding new vehicle stocking interest and the exceptional interest on the VAT
refund) for the period of £0.8 million, compared to £0.2 million last year.
As evidenced by the balance sheet, the Group continues to be in a very strong
financial position. Shareholders' funds have increased by £14.8 million to £80.0
million at 28 February 2005. During the year we have invested £2.5 million in
capital expenditure and received £0.4 million in respect of the disposal of
fixed assets. The net proceeds of the businesses disposed of during the year
amounted to £8.0 million and we have invested £1.4 million in the acquisition of
new businesses in the same period.
During the year, the Company issued 180,000 shares in respect of the exercise of
options, and purchased for cancellation 450,000 of its shares resulting in a net
cash outflow of £0.7 million.
Notwithstanding the acquisitions and disposals in the year, we have managed our
working capital efficiently and achieved an improvement of £1.6 million.
Payments in respect of taxation and dividends in the year amounted to £11.4
million and there has been a net outflow of £3.7 million in respect of loans,
finance leases and letters of credit. The net effect of these cash flows and of
the £17.7 million operating profit (before depreciation, amortisation and the
exceptional VAT refund) and the exceptional VAT refund and associated interest
received in the period of £12.6 million is a net cash inflow of £21.4 million.
The Group has a healthy net funds balance of £36.6 million at 28 February 2005,
compared with £13.0 million at the previous year end, an increase of £23.6
million.
The Group's net funds position at the year end is not representative of the year
as a whole because, immediately prior to a month with a registration plate
change, used vehicle stocks and vehicle debtors are lower than at other times of
the year and we are in receipt of deposits on cars being prepared for sale in
March. This year's peak net funds level of £36.6 million occurred at the end of
the financial year and the Group's average net funds during the period were
£17.7 million. The Group remains extremely well placed to expand whilst
retaining low borrowing levels.
The principal elements of our borrowings are a loan from a finance house and
leasing obligations in respect of demonstrator vehicles and certain dealership
refurbishments. Most utilised borrowings are repayable either on demand or
within the current calendar year, although some leases in respect of fixed
assets have five or ten year terms. In addition, the Group has substantial
banking facilities which were unutilised at the balance sheet date.
International Financial Reporting Standards
All listed companies in the European Union will have to report their
consolidated results under International Financial Reporting Standards ("IFRS")
for accounting periods commencing on or after 1 January 2005. This means that
the new standards will first affect the Group's reporting for the year ending 28
February 2006, commencing with the interim results for the six months ending 31
August 2005.
The Group is well advanced in its implementation of IFRS and details of their
estimated impact are included in note 10 to this statement.
Outlook
Our new financial year has started with March recording the second best ever
month for UK new car registrations, last year being the best on record, and our
performance is broadly in line with our expectations, although currently behind
the equivalent period last year. This is due to a combination of factors;
firstly, replacing the established dealerships disposed of during the course of
last year with less mature, growing businesses which will have a greater impact
later in the year and secondly, the effect of the phasing of a number of new
product launches. During the month of April Volkswagen has announced pricing
action on its key vehicles which will help us to continue with the progress we
have made with that franchise. This, together with the large number of
forthcoming new vehicle introductions, gives us cause for optimism in the months
ahead.
We believe that our brands will continue to increase market share in the coming
year and that we will continue to benefit from the growing parc of premium
vehicles in our service and used car operations.
We expect to continue to make progress within our existing operations and
believe that complementary acquisitions will also be made during the year which
can be funded from the Group's significant cash resources. We expect to achieve
continued growth for the Group and its shareholders in the year ahead.
Richard Palmer
Chief Executive
27 April 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Notes Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Turnover 1 528,838 489,525
-------------------------- ----------- --------- ---------
Exceptional VAT refund 6,272 -
Exceptional MG Rover writedowns (588) -
Other cost of sales (453,336) (417,592)
-------------------------- ----------- --------- ---------
Cost of sales (447,652) (417,592)
--------- ---------
Gross profit 81,186 71,933
Distribution costs (35,553) (33,932)
-------------------------- ----------- --------- ---------
Goodwill amortisation (272) (208)
Other administrative expenses (25,010) (24,218)
-------------------------- ----------- --------- ---------
Administrative expenses (25,282) (24,426)
--------- ---------
Operating profit 2 20,351 13,575
Profit on disposal of businesses 3 2,355 117
Profit on disposal of properties 277 2,929
Interest receivable 1,162 377
Interest payable (345) (221)
Exceptional interest on VAT refund 6,279 -
--------- ---------
Profit on ordinary activities before
taxation 30,079 16,777
Tax on profit on ordinary activities (9,694) (4,444)
--------- ---------
Profit for the financial year 20,385 12,333
Dividends 4 (5,065) (4,563)
--------- ---------
Retained profit for the financial year 15,320 7,770
========= =========
Earnings per share (basic) 5 38.2p 23.2p
========= =========
Earnings per share (diluted) 5 37.3p 22.7p
========= =========
Dividend per share 4 9.5p 8.5p
========= =========
There are no recognised gains or losses other than the profit for the financial
year as reported above.
CONSOLIDATED BALANCE SHEET
28 February 29 February
2005 2004
£'000 £'000
Fixed assets
Intangible assets 4,390 2,854
Tangible assets 33,014 36,317
--------- ---------
37,404 39,171
--------- ---------
Current assets
Stocks 89,197 88,096
Debtors 15,757 18,381
Cash at bank and in hand 43,977 22,553
--------- ---------
148,931 129,030
Creditors: amounts falling due within one
year (105,129) (101,727)
--------- ---------
Net current assets 43,802 27,303
--------- ---------
Total assets less current liabilities 81,206 66,474
Creditors: amounts falling due after more
than one year (309) (260)
Provisions for liabilities and charges (902) (1,042)
========= =========
79,995 65,172
========= =========
Capital and reserves
Called up share capital 21,319 21,427
Share premium account 27,392 27,309
Capital redemption reserve 926 746
Profit and loss account 30,358 15,690
========= =========
Equity shareholders' funds 79,995 65,172
========= =========
Net funds 36,573 12,978
========= =========
Net assets per share 150.1p 121.7p
========= =========
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Net cash inflow from operating
activities 22,778 18,967
Returns on investments and
servicing of finance 7,096 156
Tax paid (6,669) (3,868)
Capital expenditure and financial
investment (2,057) 2,359
Acquisitions and disposals 6,605 (4,818)
Equity dividends paid (4,705) (4,105)
--------- ---------
Net cash inflow before financing 23,048 8,691
Financing (1,624) 319
--------- ---------
Increase in cash in the year 21,424 9,010
========= =========
Reconciliation of operating profit to net cash flow from operating activities
Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Operating profit 20,351 13,575
Depreciation 3,350 2,999
Amortisation of goodwill 272 208
(Profit) on sale of tangible fixed
assets (23) (25)
(Increase) in stocks (1,821) (8,211)
Decrease/(increase) in debtors 2,983 (735)
Increase in creditors 447 9,461
Net movement in demonstrator
funding (2,781) 1,695
--------- ---------
Net cash inflow from operating
activities 22,778 18,967
========= =========
Analysis of changes in net
funds
At Cash flow Other non- At 28
1 March cash changes February
2004 2005
£'000 £'000 £'000 £'000
Cash at bank and in hand 22,553 21,424 - 43,977
Debt due within one year (3,128) 128 (30) (3,030)
Debt due after more than
one year - 515 (572) (57)
Finance leases
(demonstrators) (6,049) 18,094 (15,983) (3,938)
Finance leases (other) (398) 259 (240) (379)
18,996
-------- -------- --------- ---------
Total 12,978 40,420 (16,825) 36,573
======== ======== ========= =========
NOTES TO THE STATEMENT OF PRELIMINARY RESULTS
1 Analysis of turnover
Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Motor Retail Division 510,041 468,390
Motor Services Division 14,765 17,248
Other Businesses 4,032 3,887
--------- ---------
528,838 489,525
========= =========
2 Analysis of operating profit
Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Motor Retail Division 16,800 14,855
Motor Services Division 1,085 1,209
Other Businesses 65 (37)
Central costs (3,283) (2,452)
Exceptional VAT refund 6,272 -
Exceptional MG Rover writedowns (588) -
--------- ---------
20,351 13,575
========= =========
3 During the year, the Group disposed of its DAF and LDV trucks business in
Taunton, its Audi dealerships in Sunderland and Chester, its Volkswagen
dealership in Darlington and the assets of its retail car washing venture.
The Group also disposed of its interest in a vacant property in Heswall.
4 The Directors recommend a final dividend of 5.8p (2004, 5.1p) per share,
to be paid on 6 September 2005 to shareholders on the register at 5 August
2005. An interim dividend of 3.7p (2004, 3.4p) per share was paid during
the year, making a total for the year of 9.5p (2004, 8.5p).
5 The calculation of earnings per share for the year ended 28 February 2005
is based on the profit for the financial year of £20,385,000 (2004,
£12,333,000) and on 53,390,052 (2004, 53,208,778) ordinary shares, being
the weighted average number of shares in issue during the year. The number
of dilutive potential ordinary shares arising from share options, as
calculated in accordance with FRS 14: Earnings per Share, is 1,195,969
(2004, 1,021,912). Therefore, the calculation of diluted earnings per share
is based on the profit for the financial year of £20,385,000
(2004, £12,333,000) and on 54,586,021 (2004, 54,230,690) ordinary shares.
Earnings per share before goodwill amortisation and exceptional items has
been calculated on profits for the year of £10,679,000 (2004, £9,598,000)
as detailed below:
Year ended Year ended
28 February 29 February
2005 2004
£'000 £'000
Profit after taxation 20,385 12,333
Goodwill amortisation (net of tax relief) 208 147
(Profit) on disposal of businesses (2,355) (117)
(Profit) on disposal of properties (277) (2,929)
Exceptional VAT refund and associated interest
(net of tax) (8,786) -
Exceptional MG Rover writedowns (net of tax) 412 -
Tax provision in respect of TRP 1,092 164
--------- --------
10,679 9,598
========= ========
6 This preliminary results statement has been prepared on the basis of the
same accounting policies as those set out in the financial statements for
the year ended 29 February 2004.
7 This preliminary results statement was approved by the Board of Directors
on 27 April 2005. The above results for the year ended 28 February 2005
have been abridged from the full Group accounts for that year, which
received an unqualified auditors' report and which will be delivered to the
Registrar of Companies shortly.
8 The above results for the year ended 29 February 2004 have been abridged
from the full Group accounts for that year, which received an unqualified
auditors' report and which have been delivered to the Registrar of
Companies.
9 The Annual Report and Financial Statements will be posted to shareholders
as soon as practicable. Further copies will be available from the company's
registered office at Craigmore House, Remenham Hill, Henley-on-Thames, Oxon
RG9 3EP.
10 The results for the year ended 28 February 2005 set out in this statement
are presented under the standards and practices currently applicable in the
UK known as UK GAAP (UK Generally Accepted Accounting Practice). As a
result of the changeover to IFRS, there will be changes to the format of
the primary financial statements (profit and loss account, balance sheet
and cash flow statement) and there will also be additional disclosures.
However, the main impacts on the results come from differences in the IFRS
accounting treatment for certain items compared to UK GAAP. Those matters
having the most significant impact on the Group are in respect of goodwill,
share options, pensions, deferred tax and dividends payable. The table
below summarises the estimated effect of the change to IFRS on the results
for the year ended 28 February 2005.
Unaudited Profit Profit Net
before tax after assets
£ million £ million £ million
Profit/net assets under UK
GAAP 30.1 20.4 80.0
Adjustments in respect of:
Goodwill - amortisation no
longer permitted 0.3 0.2 0.2
Profit on disposal of
businesses - goodwill
originally written
off to reserves no longer
required to be
adjusted through profit
and loss account on
disposal 0.2 0.2 -
Share options - fair value
of options granted (0.1) (0.1) -
Pensions - incorporation
of deficit onto balance
sheet - 0.1 (1.7)
Deferred tax - provide for
revaluations and
rollover relief, less
reversal of amounts
charged to corporation
tax in year - 1.0 (2.1)
Dividends - dividends
accounted for in year in
which declared or
proposed - - 3.1
-------- -------- --------
Profit/net assets under
IFRS 30.5 21.8 79.5
-------- -------- --------
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