Interim Results
Halfords Group PLC
24 November 2005
24 November 2005
HALFORDS GROUP PLC ('HALFORDS')
INTERIM RESULTS TO 30 SEPTEMBER 2005
Strong sales growth and cash generation
Halfords, the UK's leading auto, leisure and cycling products retailer, today
announces its interim results for the 26 weeks to 30 September 2005.
Financial Highlights
• Revenue up 4.7% to £337.7m (2004: £322.7m)
• Like-for-like1 sales up 2.6%
• Operating profit up 8.7% to £46.0m (2004: £42.3m)
• Pre-tax profit up 20.6% to £40.4m (2004: £33.5m)
• Strong cash generation reduces net bank borrowings by £11.6m
• Interim dividend up 8.1% to 4.0 pence per share (2004: 3.7 pence)
Operational Highlights
• Strong sales growth in Car Enhancement and Cycling
• Store portfolio now 402 stores with further expansion planned in
the Republic of Ireland
• On track to deliver 100 supermezzanine stores by the year end
• Tight cost control
Ian McLeod, Chief Executive commented:
'Our growth strategy, underpinned by our unique service proposition, has
continued to deliver positive results despite a challenging retail environment.
In the six weeks since 30 September 2005 Halfords' like-for-like sales
performance has continued to strengthen, particularly within cycling and in-car
technology, giving us confidence for the second half of our financial year'.
Notes:
1. Like-for-like sales growth is based upon 374 stores, which reached their
opening anniversary at or before 1 April 2005.
2. From 2 April 2005 the Group is required to prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards ('IFRS'). These interim results for the period ending 30 September
2005 have been prepared in accordance with the accounting policies which
have been adopted under IFRS and which are published on the Halfords website
(www.halfordscompany.com).
Enquiries
Halfords Group plc on Thursday 24 November only 0207 190 1705
Ian McLeod, Chief Executive
Nick Carter, Finance Director
Tony Newbould, Investor Relations
Gainsborough Communications 0207 190 1703
Andy Cornelius
Julian Walker
Halfords Group plc
Halfords is the UK's leading auto, leisure and cycling products retailer with
402 stores and nearly 10,000 employees.
The Group sells 11,000 different product lines ranging from car parts and cycles
through to the latest in-car technology, alloy wheels, child seats, roof boxes
and the latest outdoor leisure and camping equipment. Halfords' own brands
include Ripspeed, for car enhancement, and Bikehut, for cycles and cycling
accessories, including the Apollo and Carrera brands. Stores offer a 'We'll Fit
It' service for car parts, child seats, satellite navigation and in-car
technology systems, together with newer concepts such as Kidszone.
Halfords is a FTSE 250 company. It was established in 1892 and was successfully
floated on the London Stock Exchange in June 2004.
www.halfordscompany.com
www.halfords.com
Overview
Halfords is the UK's leading auto, leisure and cycling products retailer, with
402 stores across the UK and the Republic of Ireland. The strong trading
performance in the first six months of the year has been underpinned by the
Company's unique position as a destination retailer, offering niche products
supported by a superior service offering.
Adherence to our growth strategy, with a focus on maximising sales and
increasing cash margin, has generated increases in revenue and gross profit. The
Company's sales mix is changing as Halfords moves into new growth markets, which
has had some adverse impact upon gross profit percent. The Company benefits from
operating margins in the top quartile of the retail sector and its strong cash
generation has enabled a further reduction in bank borrowing.
Summary of Group Results
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Unaudited 26 weeks to
-----------------------------------
30 September 1 October Change
2005 2004
£m £m
-----------------------------------------------------------------
Revenue 337.7 322.7 4.7%
Gross profit 173.8 170.8 1.8%
Gross profit % 51.5% 52.9%
Operating profit 46.0 42.3 8.7%
Profit before tax 40.4 33.5 20.6%
Basic earnings per share 12.1 pence 11.7 pence 3.4%
Financial Review
Income Statement
The unaudited results for the 26 weeks to 30 September 2005 are the first
Halfords has prepared under IFRS. Comparative results disclosed in this report
have been restated and further information regarding the impact of the
transition from UK GAAP to IFRS has been included in the Accounting Policies in
the notes to the interim report and the Appendix.
Halfords' business remains resilient against the backdrop of a challenging
retail environment. Sales during the period rose by 4.7% to £337.7m (2004:
£322.7m) and like-for-like sales increased by 2.6%.
The timing of Easter in the last two years means that in the current financial
year there is no Easter, whereas in the comparable financial year there were two
Easter trading periods. Adjusting for Easter, underlying like-for-like sales
were up 4.1% in the period.
Gross profit for the first half of this financial year at £173.8m (2004:
£170.8m) was 1.8% up on the comparable period last year and gross profit as a
percentage of turnover was 51.5% (2004: 52.9%). There continues to be a change
in sales mix, driven by a strong sales performance from the Car Enhancement and
Cycling categories, where the margins tend to be lower than other product
categories. Whilst the mix factor has resulted in a dilution of gross profit
percent by 140 basis points the overall trading performance has continued to
deliver improvements in both cash generation and gross margin contribution.
During the half year Halfords has kept firm control of costs, with net operating
expenses before exceptional items as a percentage of turnover falling from 38.5%
to 37.8%. Although selling and distribution costs have increased year-on-year by
3.8%, administrative expenses have fallen by 2.7%. Our focus on labour costs and
in-store efficiency has proved successful in driving down the level of store
payroll as a percentage of turnover from 11.7% reported in the first half of
last year to 11.2% in the corresponding period this year. Halfords has continued
to leverage its investment in a series of We'll Fit It training programmes to
ensure our competitive service advantage is maintained. Proactive management of
the property estate has facilitated higher landlord contributions to support
either a store downsize or relocation. This activity is likely to continue and
helps to manage rental costs and support mezzanine installations.
Operating profit for the period has grown by 8.7% to £46.0m.
Net finance costs for the first half of this financial year was £5.6m (2004:
£8.8m). The year-on-year decrease is attributable to the Company's continued
ability to generate a strong cash flow from its operating activities and the
higher levels of debt prior to the IPO in June 2004.
The taxation charge is based on an estimated effective tax rate of 31.7% on
profit for the 52-week period ending 31 March 2006. The tax charge exceeds the
charge based on the statutory rate of UK corporation tax of 30%, principally due
to the non-deductibility of depreciation charged on capital expenditure in
respect of mezzanine floors and other store infrastructure.
Balance Sheet and Cash Flow
Capital additions for the 26 weeks to 30 September 2005 was £13.9m (2004:
£13.8m). The cost of opening new stores and store conversions accounted for
£11.7m (2004: £8.7m), of which £5.2m (2004: £5.1m) was in respect of 20 stores
(2004: 22 stores) converted to the supermezzanine format.
Net cash flow generated from operations was £61.0m (2004: £62.7m). At 30
September 2005 the net value of stock was £149.0m (2004: £116.9m), reflecting
the Company's forward investment in stock levels of high average selling price
products and in-car technology units, where action was taken to secure product
in a market which has seen consumer demand moving ahead of market supply. This
year-on-year increase has substantially reduced since the half year and will
continue to do so ahead of the financial year end. A working capital inflow of
£1.9m was generated during the first half of the financial year, with the
increase in creditors more than offsetting the increase in stock and debtors.
Due to strong cash generation, net debt, excluding finance leases, at the end of
the first half has reduced by £11.6m to £157.5m (2004: £169.1m).
Reclassification of the head office operating lease to a finance lease under
IFRS has added £12.6m to total net debt. At 30 September 2005 total net debt was
£170.7m (2004: £182.4m).
Dividend
In light of the strong half year performance and the Board's confidence for the
second half of the year, an increased interim dividend 4.0 pence per share (3.7
pence per share for the 26 weeks ended 1 October 2004) will be paid on 9 January
2006 to those shareholders on the share register as at 2 December 2005.
Operating Review
The retail environment is currently challenging and, whilst not immune to the
current economic conditions, Halfords continues to demonstrate that it possesses
resilient qualities.
The performance of Car Maintenance has demonstrated the resilient nature of
products within this category, where we have seen further growth in the first
six months of this year. The introduction of quality Far East sourced tools and
storage, together with the introduction of a Trade Card, has enabled Halfords to
maintain its market leading position in this sector.
During the period, launches of a new, upgraded, range of Apollo cycles and a
Bikehut branded range of cycle accessories have both been well received. With
the launch in October of a new premium cycle range under the Carrera brand, the
Company is well placed to optimise performance from the Cycling category in the
second half of the year.
Following the broadening of our child safety range, supported by the free fit
service for child safety seats, Kidszone has benefited from further extending
the range into child strollers, as the Company continues to leverage the brand
into this sector. This is particularly true in supermezzanine format stores
where space is available for improved displays. The growth of ride-on toys has
been encouraging during the period and we anticipate that it will follow the
same trend as last year when sales grew considerably from gift purchases as we
entered the Christmas trading period. Our ranges have been broadened and sourced
directly from the Far East in support of the forecast growth for the year.
The largest growth area within Halfords continues to be in the Car Enhancement
category. This growth has been underpinned by the Ripspeed brand and a strong
sales performance from in-car technology products. Leveraging our brands into
new product categories remains a key element of the Company's strategy to
increase like-for-like sales. Halfords has realigned space in all stores to
reflect the change in consumer demand for in-car technology and has invested
heavily in training colleagues in-store to offer sound advice, product set-up
demonstration and a product fitting service. This strategy of providing a strong
range and service combination has enabled Halfords to establish market
leadership in this sector.
The market for downloading music from the internet into MP3 hardware has been
growing significantly and the Company has identified an opportunity to supply a
solution to the challenge of playing MP3 downloads with quality and safety
in-car. Consequently, from November onwards, Halfords will be marketing a new
range of audio systems, which can connect with MP3 players, such as the iPod,
for in-car use. We will also be introducing a fully fitted iPod connectivity
solution to enable the use of these devices with existing in-car audio units,
further exploiting the competitive advantage of our service proposition.
In July Halfords signed a Memorandum of Understanding with Autobacs Seven of
Japan ('Autobacs') with the intention of seeking opportunities through shared
learning and the joint sourcing of products from the Far East. As part of this
collaborative agreement Halfords has introduced a limited store trial of a
previously unavailable range of Japanese branded car accessories. These
accessories will be introduced into 150 Halfords stores prior to Christmas.
Management will continue to seek areas of synergy with Autobacs which operate to
the mutual benefit of the two companies.
The We'll Fit It service proposition differentiates Halfords from its
competitors and continues to attract new customers to its stores. Colleague
training programmes, both off-site and in-store, continue to support technology
set-up and installation, bike care maintenance and child safety seat fitting, as
well as fitting basic car maintenance consumables. The comprehensive fitting
service is to be further promoted during the second half of the year,
externally, through the launch of a five-point car health check plan and,
internally, by colleagues improving consumer awareness of our fitting service in
car bulbs, wiper blades and batteries.
The Company continues to make progress in increasing the volume of products that
it imports directly, particularly from the Far East. This has reduced cost
prices and has allowed the Company to re-invest some of these savings in lower
retail prices, thereby offering better value to our customers.
Store Portfolio
At 30 September 2005 Halfords was trading from 402 stores. During the period the
company opened seven new stores and closed three, a net increase of four stores.
In addition, a store was relocated and converted from a blue fascia superstore
to the supermezzanine format. Space from new stores contributed 2.1% (2004:
2.1%) to first half sales growth. New and converted stores have added
approximately 100,000 square feet to the portfolio, which now stands at 3.3
million square feet.
The Company converted 31 (2004: 31) stores during the first half of the year, of
which 20 (2004: 22) were stores converted into the supermezzanine format. With
four new store openings and one store relocation the estate now has 82
supermezzanines compared to 57 at the financial year end and 39 at the end of
the equivalent period last year.
Supermezzanine stores that have been converted during the last 12 months account
for 1.6% of the sales growth in the 26 weeks to 30 September 2005. The Company
is pleased by the ongoing performance of the supermezzanine format. Stores that
have reached their conversion anniversary are trading at a small premium to the
rest of the estate, which compares favourably to the supermezzanine investment
case, whereby it was prudently assumed that on its anniversary a converted store
would trade in line with the rest of the estate.
Second Half Outlook and Current Trading
The Christmas period provides Halfords with the opportunity for capitalising on
sales within gift related sectors such as cycles and also within new product
areas such as ride-on toys and in-car technology. The season is therefore an
important period for the Company but not a critical one, with December typically
accounting for approximately one and half times average monthly sales.
In the six weeks since 30 September 2005 Halfords' like-for-like sales
performance has continued to strengthen, particularly within cycling and in-car
technology. This sales growth, combined with like-for-like sales comparatives
reducing from 10.6% in the first half of the year to 7.0% in the second half,
provides an encouraging outlook, which therefore gives us confidence for the
remainder of our financial year.
HALFORDS GROUP PLC
Consolidated Income Statement
26 weeks to 30 September 2005
26 weeks to 26 weeks to 52 weeks to
30 September 2005 1 October 2004 1 April 2005
Unaudited Unaudited Unaudited
Notes £m £m £m
Revenue 337.7 322.7 628.4
Cost of sales (163.9) (151.9) (290.7)
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Gross profit 173.8 170.8 337.7
Operating expenses (127.8) (128.5) (247.1)
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Operating profit 46.0 42.3 90.6
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Operating profit before exceptional items 46.0 46.5 90.8
Exceptional items 2 - (4.2) (0.2)
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Operating profit 46.0 42.3 90.6
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Net finance costs 3 (5.6) (8.8) (15.0)
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Profit before tax 40.4 33.5 75.6
Taxation 4 (12.8) (9.6) (23.2)
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Profit attributable to equity shareholders 27.6 23.9 52.4
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Earnings per share
Basic 6 12.1p 11.7p 24.3p
Diluted 6 12.1p 11.7p 24.3p
Earnings per share before exceptional items
Basic 6 12.1p 12.6p 23.9p
Diluted 6 12.1p 12.6p 23.9p
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The directors have approved an interim dividend of 4.0 pence per share in
respect of the 26 weeks ended 30 September 2005 (3.7 pence per share for the 26
weeks ended 1 October 2004).
HALFORDS GROUP PLC
Balance Sheet
As at 30 September 2005
30 September 1 October 1 April
2005 2004 2005
Unaudited Unaudited Unaudited
£m £m £m
Non-current assets
Goodwill 253.1 253.1 253.1
Intangible assets 6.0 5.8 6.2
Property, plant and 101.3 93.6 97.8
equipment
----------------------------------------------------------------------------
360.4 352.5 357.1
Current assets
Stock 149.0 116.9 112.2
Trade and other 29.5 24.3 23.6
receivables
Derivative financial 1.4 - -
instruments
Cash and cash 4.9 0.9 1.1
equivalents
----------------------------------------------------------------------------
184.8 142.1 136.9
Current liabilities
Borrowings (45.1) (47.1) (53.0)
Derivative financial (3.6) - -
instruments
Trade and other (143.9) (109.9) (99.3)
payables
Current tax liabilities (14.4) (11.4) (13.3)
Provisions (1.4) (1.1) (1.6)
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(208.4) (169.5) (167.2)
Net current liabilities (23.6) (27.4) (30.3)
Non-current liabilities
Borrowings (130.5) (150.2) (130.5)
Deferred tax (4.8) (5.0) (5.1)
liabilities
Other non-current (14.6) (10.9) (11.6)
liabilities
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(149.9) (166.1) (147.2)
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Net assets 186.9 159.0 179.6
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Shareholders' equity
Ordinary shares 2.3 2.3 2.3
Share premium 133.1 132.9 132.9
Fair value and other (0.6) 0.4 1.0
reserves
Retained earnings 52.1 23.4 43.4
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Total equity 186.9 159.0 179.6
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HALFORDS GROUP PLC
Consolidated Statement of Changes in Shareholder Equity
26 weeks to 30 September 2005
Share Share Fair value Retained Total
capital premium and earnings equity
other
reserves
£m £m £m £m £m
-------------------------------------------------------------------------------
Balance at 2 April 2004 - 0.1 - (4.7) (4.6)
Profit for the period - - 23.9 23.9
Shares issued 2.3 134.6 - - 136.9
Bonus issue in respect of - (1.8) - - (1.8)
ordinary shares
Movement arising from the - - - 4.2 4.2
issue of share options
Employee share options - - 0.4 - 0.4
Dividends - - - - -
-------------------------------------------------------------------------------
Balance at 1 October 2004 2.3 132.9 0.4 23.4 159.0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Balance at 2 April 2004 - 0.1 - (4.7) (4.6)
Profit for the period - - - 52.4 52.4
Shares issued 2.3 134.6 - - 136.9
Bonus issue in respect of - (1.8) - - (1.8)
ordinary shares
Movement arising from the - - - 4.2 4.2
issue of share options
Employee share options - - 1.0 - 1.0
Dividends - - - (8.5) (8.5)
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Balance at 1 April 2005 2.3 132.9 1.0 43.4 179.6
-------------------------------------------------------------------------------
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Balance at 1 April 2005 as 2.3 132.9 1.0 43.4 179.6
previously reported
Application of IAS 39
Fair value at opening - - (2.9) - (2.9)
balance sheet
-------------------------------------------------------------------------------
Balance at 1 April 2005 2.3 132.9 (1.9) 43.4 176.7
restated
Profit for the period - - - 27.6 27.6
Shares issued - 0.2 - - 0.2
Cash flow hedges net of - - 0.7 - 0.7
tax
Employee share options 0.6 - 0.6
Dividends - - - (18.9) (18.9)
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Balance at 30 September 2.3 133.1 (0.6) 52.1 186.9
2005
-------------------------------------------------------------------------------
HALFORDS GROUP PLC
Consolidated Cash Flow Statement
26 weeks to 30 September 2005
26 weeks to 26 weeks to 52 weeks to
30 September 1 October 1 April
2005 2004 2005
Unaudited Unaudited Unaudited
Notes £m £m £m
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Cash flows from operating activities
Cash generated from operations 7 61.0 62.7 117.0
Interest received - 0.3 0.4
Interest paid (5.4) (6.7) (12.5)
Taxation paid (11.9) (8.4) (20.1)
-------------------------------------------------------------------------------------------
Net cash from operating activities 43.7 47.9 84.8
-------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant and equipment (12.9) (13.8) (27.6)
-------------------------------------------------------------------------------------------
Net cash used in investing activities (12.9) (13.8) (27.6)
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Cash flows from financing activities
Proceeds from issue of ordinary shares 0.2 135.1 135.1
Repayment of borrowings (26.0) (194.8) (217.6)
Finance lease principal payments (0.1) (0.1) (0.2)
Issue costs of new bank loan - (3.1) -
Dividends paid to shareholders (18.9) - (8.5)
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Net cash used in financing activities (44.8) (62.9) (91.2)
-------------------------------------------------------------------------------------------
Net decrease in cash and bank overdrafts (14.0) (28.8) (34.0)
Cash and bank overdrafts at beginning of period 8 (15.5) 18.5 18.5
-------------------------------------------------------------------------------------------
Cash and bank overdrafts at the end of the period 8 (29.5) (10.3) (15.5)
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These interim statements should be read in conjunction with the following notes.
HALFORDS GROUP PLC
Notes to Interim Report
26 weeks to 30 September 2005
Accounting Policies
Basis of Preparation
The interim financial report and accounts for the 26 weeks to 30 September 2005
and for the comparative 26 weeks to 1 October 2004 are unaudited and do not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985.
From 2 April 2005 Halfords Group plc is required to prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards ('IFRS') endorsed by the European Union. Reconciliations and
descriptions of the effect of the transition from UK GAAP to IFRS on the Group's
equity and its income statement are provided in the Appendix to the interim
report.
The financial information set out in this interim report has been prepared in
accordance with the accounting policies under IFRS published on the Halfords
Group website (www.halfordscompany.com). These policies are expected to be
followed in the full financial statements for the year ended 31 March 2006.
Standards currently in issue and adopted by the EU are subject to interpretation
issued from time to time by the International Financial Reporting
Interpretations Committee ('IFRIC'). Further standards may be issued by the
International Accounting Standards Board that may be adopted for financial years
beginning 2 April 2005. Additionally, IFRS is currently being applied in the
United Kingdom and in a large number of countries simultaneously for the first
time. Furthermore, due to a number of new and revised Standards included within
the body of the Standards that comprise IFRS there is not yet a significant body
of established practice on which to draw in forming options regarding
interpretation and application. Accordingly, practice is continuing to evolve.
At the preliminary stage, therefore, the full financial effect of reporting
under IFRS as it will be applied and reported on in the Company's first IFRS
financial statements for the 52 weeks ending 31 March 2006 may be subject to
change.
The principal adjustments arising from the adoption of IFRS are:
• Goodwill is no longer amortised, but is subject to impairment review, in
line with IFRS 3 ' Business Combinations' and IAS 36 'Impairment of Assets'
• Recognition of the cost of share based payments granted after 7 November
2002, in line with IFRS 2 'Share Based Payments', which had not vested by 2
April 2005
• Dividends are recognised in the period when they are approved, in line
with IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'
• Tax implications, in accordance with IAS 12 'Income Taxes'
• Recognition of holiday pay benefits under IAS 19 'Employee Benefits'
• The recognition of the fair value of derivative financial instruments,
in accordance with IAS 39 'Financial Instruments: Recognition and
Measurement'
UK GAAP to IFRS Reconciliations
---------------------------------------------
26 weeks to 26 weeks to 52 weeks to
30 September 1 October 1 April
2005 2004 2005
£m £m £m
--------------------------------------------------------------------------------
Operating profit under UK GAAP 38.9 34.9 78.3
Goodwill amortisation 6.9 6.9 13.7
Share based payment (0.6) (0.4) (1.0)
Holiday pay 1.3 1.3 -
Reclassification of assets from 0.2 0.2 0.4
operating to finance leases
Lease incentives (0.3) (0.6) (0.8)
Retranslation of trade creditors (0.4) - -
---------------------------------------------
IFRS adjustments 7.1 7.4 12.3
---------------------------------------------
Operating profit under IFRS 46.0 42.3 90.6
--------------------------------------------------------------------------------
---------------------------------------------
30 September 1 October 1 April
2005 2004 2005
£m £m £m
--------------------------------------------------------------------------------
Net assets under UK GAAP 168.0 151.7 156.3
Goodwill amortisation 20.6 6.9 13.7
Holiday pay accrual 0.8 0.8 (0.5)
Reclassification of assets from (0.7) (0.2) (0.5)
operating to finance leases
Lease incentives (6.7) (6.3) (6.4)
Tax on above adjustments (1.6) (2.4) (1.9)
Dividend recognition 9.1 8.5 18.9
Retranslation of trade creditors (0.4) - -
Recognition of foreign exchange 1.4 - -
cash flow hedges
Recognition of interest rate (3.6) - -
swap cash flow hedge
---------------------------------------------
IFRS adjustments 18.9 7.3 23.3
---------------------------------------------
Net assets under IFRS 186.9 159.0 179.6
--------------------------------------------------------------------------------
Further details of the IFRS restatement are given in the Appendix to this report
'Transition to International Financial Reporting Standards'.
HALFORDS GROUP PLC
Notes to Interim Report
26 weeks to 30 September 2005
1. Segmental Reporting
The Group has one main business segment, which is retail, and one main
geographical segment, which is the United Kingdom. The business segment
reporting format reflects the Group's management and internal reporting
structure.
2. Exceptional Items
26 weeks to 26 weeks to 52 weeks to
30 September 1 October 1 April 2005
2005 2004
£m £m £m
Employee share options1 - (4.2) (4.2)
Lease incentive premium2 - - 4.0
---------------------------------------------
- (4.2) (0.2)
---------------------------------------------
Notes:
1. Operating exceptional items in the 26 weeks to 1 October 2004 relate to
a non-cash charge of £4.2m in respect of employee share options, which were
exercised at the time of the IPO.
2. In August 2001 Halfords Limited sold its garaging servicing business to
the AA. Under the terms of the sale 124 garage premises were sublet to GB
Gas Holdings by way of an underlease agreement from Halfords Limited. On
16 November 2004 the Group entered into an agreement with GB Gas Holdings
Limited and the AA, under which the Group received a £4.0m premium in
consideration for providing consent to the assignment of the above
underlease from GB Gas Holdings Limited to the AA and the subsequent
subletting by the AA of 49 premises to Nationwide Autocentres Limited.
The Group's tax charge for the periods to 1 October 2004 and 1 April 2005
include credits of £2.0m and £0.8m respectively for the above exceptional items.
3. Net Finance Costs
26 weeks to 26 weeks to 52 weeks to
30 September 1 October 1 April 2005
2005 2004
Unaudited Unaudited Unaudited
£m £m £m
Finance costs:
Bank borrowings (4.6) (7.3) (12.4)
Premium on deep discounted bond - (1.5) (1.5)
Amortisation of issue costs on loans (0.4) (0.3) (0.8)
and deep discounted bonds
Exceptional amortisation of issue - (1.7) (1.7)
costs on loans and deep discounted
bonds1
Exceptional swap close out2 - 2.2 2.2
Commitment and guarantee fees (0.2) (0.2) (0.4)
Interest payable on finance leases (0.4) (0.4) (0.8)
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Finance costs (5.6) (9.2) (15.4)
-----------------------------------------------------------------------------
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Finance income - 0.4 0.4
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net finance costs (5.6) (8.8) (15.0)
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Notes:
1. At IPO, on 8 June 2004, Halfords Group plc redeemed and replaced all of
its existing borrowings. As a consequence, a charge of £1.7m was made in
respect of accelerated amortisation of the issue costs associated with
these borrowings.
2. On repayment of the existing borrowings the Group hedged its new
borrowing facilities during the 52 weeks ending 1 April 2005 using new
interest rate swaps and received £2.2m of exceptional income on the
termination of its existing interest rate swaps.
4. Taxation
The taxation charge in the 26 weeks to 30 September 2005 is based on an
estimated effective tax rate of 31.7% on profit before tax for the 52-week
period ended 31 March 2006.
The tax charge exceeds the charge based on the statutory rate of UK corporation
tax of 30%, principally due to the non-deductibility of depreciation charged on
capital expenditure in respect of mezzanine floors and other store
infrastructure.
5. Dividends
The directors have approved an interim dividend of 4.0 pence per share (3.7
pence per share for the 26 weeks ended 1 October 2004), which equates to £9.1m
(2004: £8.5m) and will be paid on 9 January 2006 to those shareholders on the
share register at the close of business on 2 December 2005.
6. Earnings Per Share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period.
For diluted earnings per share the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary
shares. These represent share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the 26 weeks to 30 September 2005.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2005 2004 2005
Unaudited Unaudited Unaudited
m m m
Weighted average number of shares in 227.5 204.2 215.6
issue
Weighted average number of dilutive 0.2 - 0.1
shares options
-----------------------------
Total number of shares for calculating 227.7 204.2 215.7
diluted earnings per share
The alternative measure of earnings per share is provided because the directors
believe that it reflects the Group's underlying trading performance by excluding
the effect of exceptional items.
26 weeks 26 weeks 52 weeks
to to to
30 September 1 October 1 April
2005 2004 2005
Unaudited Unaudited Unaudited
£m £m £m
Basic earnings 27.6 23.9 52.4
Exceptional items net of tax:
Operating profit (see note 2) - 2.2 (0.6)
Interest - (0.3) (0.3)
------------------------------------------------------------------------
Underlying earnings before exceptional 27.6 25.8 51.5
items
Diluted earnings 27.6 23.9 52.4
------------------------------------------------------------------------
Underlying diluted earnings before 27.6 25.8 51.5
exceptional items
------------------------------------------------------------------------
7. Cash Generated from Operations
26 weeks to 26 weeks to 52 weeks to
30 September 2005 1 October 2004 1 April 2005
Unaudited Unaudited Unaudited
£m £m £m
Operating profit 46.0 42.3 90.6
Depreciation 9.8 8.8 17.7
Amortisation 0.9 0.4 0.8
Non cash charge for employee share schemes - 4.2 4.2
Share option scheme charges 0.6 0.4 1.0
Loss on sale of property, plant and equipment - - 0.4
Increase in stock (36.8) (9.8) (5.1)
Increase in debtors (5.9) (0.8) (0.1)
Increase in creditors 46.4 17.2 7.5
-------------------------------------------------------------------------------------------
Net cash inflow from operating activities 61.0 62.7 117.0
-------------------------------------------------------------------------------------------
8. Reconciliation of Movement in Net Debt
At 1 April Cash flow Other non At 30
2005 cash changes September 2005
Unaudited Unaudited
£m £m £m £m
Cash in hand and at bank 1.1 3.8 - 4.9
Bank overdraft (16.6) (17.8) - (34.4)
-----------------------------------------------------------------------------------
(15.5) (14.0) - (29.5)
Debt due within one year (35.3) 26.0 (0.4) (9.7)
Debt due after one year (118.3) - - (118.3)
-----------------------------------------------------------------------------------
Total net debt excluding (169.1) 12.0 (0.4) (157.5)
finance leases
Finance leases due within one (1.1) 0.1 (0.1) (1.1)
year
Finance leases due after one (12.2) - 0.1 (12.1)
year
-----------------------------------------------------------------------------------
Total finance leases (13.3) 0.1 - (13.2)
-----------------------------------------------------------------------------------
Total net debt (182.4) 12.1 (0.4) (170.7)
-----------------------------------------------------------------------------------
The total debt cash outflow consists of £26.0m net repayment of borrowings and
£0.1m repayment of finance lease obligations, offset by an increase in
overdrafts of £14.0m.
Non-cash changes relate to the finance costs of £0.4m in relation to the
amortisation of capitalised debt issue costs.
9. Interim Report
Copies of the interim report are available from the registered office of
Halfords Group plc, Icknield Street Drive, Washford West, Redditch
Worcestershire, B98 0DE.
Independent Review Report to Halfords Group plc
26 weeks to 30 September 2005
Introduction
We have been instructed by the Company to review the financial information for
the 26 weeks ended 30 September 2005, which comprises a consolidated income
statement, consolidated balance sheet, consolidated statement of changes in
shareholder equity, consolidated cash flow statement and related notes. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.
As disclosed in the Accounting Policies, Basis of Preparation section of the
interim report, the next annual financial statements of the Group will be
prepared in accordance with accounting standards adopted for use in the European
Union. The interim report has been prepared in accordance with the basis set out
as mentioned.
The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in the Accounting
Policies, Basis of Preparation section of the interim report, there is, however,
a possibility that the directors may determine that some changes are necessary
when preparing the full annual financial statements for the first time in
accordance with accounting standards adopted for use in the European Union. The
IFRS standards and IFRIC interpretations that will be applicable and adopted for
use in the European Union at 31 March 2006 are not known with certainty at the
time of preparing this interim financial information.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information. This report, including the conclusion, has
been prepared for and only for the company for the purpose of the Listing Rules
of the Financial Services Authority and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 26 weeks ended
30 September 2005.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
24 November 2005
Notes:
1. The maintenance and integrity of the Halfords Group website is the
responsibility of the directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the
interim report since it was initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
HALFORDS GROUP PLC
IFRS Restatement information
Appendix to the Interim Report
Transition to International Financial Reporting Standards
Introduction
The Group's financial statements for the 52 weeks ended 31 March 2006 will be
the Group's first annual financial statements prepared in compliance with
International Financial Reporting Standards ('IFRS'). Accordingly, the financial
results for the 26 weeks ended 30 September 2005 have been prepared and reported
under IFRS. In addition, the interim report includes restated comparative
information for the 52 weeks ended 1 April 2005. For the purposes of IFRS the
Group's transition date is 3 April 2004 and the Group's adoption date is 2 April
2005.
This report explains how the Group's financial results as previously reported
under UK GAAP would have been restated under IFRS. It includes:
• The Group's consolidated Income Statements for 26 weeks ended 30
September 2005, 26 weeks ended 1 October 2004 and 52 weeks ended 1 April
2005
• The Group's consolidated Balance Sheets as at 30 September 2005, 1
October 2004 and 1 April 2005
• The Group's opening Balance Sheet, for the comparative period, as at 2
April 2004
The adoption of IFRS is an accounting change and will not change how the Group
is managed or the cash flows of the Group.
Key Impacts
The main impacts of IFRS on the reported results of the Group are listed below
and are described in greater detail in the following sections.
• Goodwill (IFRS 3) - Acquired goodwill should no longer be amortised and
is instead subjected to an annual impairment review. At the date of
transition to IFRS the value of goodwill is frozen.
• Share Based Payments (IFRS 2) - Fair value based charges are required
for all awards made for share schemes on or after 7th November 2002 which
had not vested by 2 April 2005.
• Property Leases (IAS 17) - The building element of the lease relating to
the Group's head office in Redditch has been reclassified as a finance
lease. Lease incentives must now be amortised in the Income Statement over
the lease term not to the date of the first rent review.
• Timing and Recognition of Dividends (IAS 10) - Final dividends declared
after the Balance Sheet date cannot be recognised at the Balance Sheet date
and instead are reported in the period in which they are approved.
• Intangible Assets (IAS 38) - Software costs previously categorised
within tangible fixed assets must now be shown as intangible assets in the
Balance Sheet.
Transitional Arrangements- Application of IFRS 1
IFRS 1 'First Time Adoption of International Financial Reporting Standards' sets
out the procedures that the Group must follow on adoption. The Group is required
to establish its IFRS accounting policies for the year ending 31 March 2006 and
apply these retrospectively to determine the IFRS opening Balance Sheet at the
transition date of 3 April 2004.
The Group has applied the mandatory exemptions and certain of the optional
exemptions from full retrospective application of IFRS. The following is a
summary of the key elections from IFRS 1 that were made by the Group.
• The Group has elected to adopt the IFRS 1 exemption in relation to
business combinations and will only apply IFRS 3 'Business Combinations'
prospectively from 3 April 2004. As a result, the balance of goodwill under
UK GAAP as at 2 April 2004 will be deemed the cost of goodwill at 3 April
2004.
• The Group has elected to apply the share-based payment exemption. It has
applied IFRS 2 from 3 April 2004 to those options that were issued after 7
November 2002 but which had not vested by 2 April 2005.
• The Group has elected to adopt the IFRS 1 exemption in relation to IAS
32 and IAS 39. As a result UK GAAP will be used in the comparative period in
the first IFRS financial statements.
Consolidated Income Statement
UK GAAP to IFRS Interim Results (Unaudited)
UK GAAP IFRS UK GAAP IFRS
Ref 30 Sep 30 Sep Diff 01 Oct 01 Oct Diff
05 05 04 04
£m £m £m £m £m £m
Revenue 337.7 337.7 - 322.7 322.7 -
Cost of 1.1 (163.5) (163.9) (0.4) (151.9) (151.9) -
sales
-------------------------------------------------------------
Gross profit 174.2 173.8 (0.4) 170.8 170.8 -
Operating 1.2 (135.3) (127.8) 7.5 (135.9) (128.5) 7.4
expenses
-------------------------------------------------------------
Operating 38.9 46.0 7.1 34.9 42.3 7.4
profit
-------------------------------------------------------------
Operating 45.8 46.0 0.2 46.0 46.5 0.5
profit
before
exceptional
items and
goodwill
amortisation
Exceptional - - - (4.2) (4.2) -
items
Goodwill (6.9) - 6.9 (6.9) - 6.9
amortisation
-------------------------------------------------------------
Operating 38.9 46.0 7.1 34.9 42.3 7.4
profit
-------------------------------------------------------------
Net finance 1.3 (5.2) (5.6) (0.4) (8.4) (8.8) (0.4)
costs
-------------------------------------------------------------
Profit 33.7 40.4 6.7 26.5 33.5 7.0
before tax
Taxation 1.4 (13.2) (12.8) 0.4 (10.1) (9.6) 0.5
-------------------------------------------------------------
Profit 20.5 27.6 7.1 16.4 23.9 7.5
attributable
to equity
shareholders
-------------------------------------------------------------
Basic EPS 9.0p 12.1p 3.1p 8.0p 11.7p 3.7p
(pence)
Consolidated Income Statement
UK GAAP to IFRS 52 weeks to 1 April 2005 (Unaudited)
UK GAAP IFRS
Ref 01 Apr 01 Apr Diff
05 05
£m £m £m
Revenue 628.4 628.4 -
Cost of 1.1 (290.7) (290.7) -
sales
------------------------------------------
Gross profit 337.7 337.7 -
Operating 1.2 (259.4) (247.1) 12.3
expenses
------------------------------------------
Operating 78.3 90.6 12.3
profit
------------------------------------------
Operating 92.2 90.8 (1.4)
profit
before
exceptional
items and
goodwill
amortisation
Exceptional (0.2) (0.2) -
items
Goodwill (13.7) - 13.7
amortisation
------------------------------------------
Operating 78.3 90.6 12.3
profit
------------------------------------------
Net finance 1.3 (14.2) (15.0) (0.8)
costs
------------------------------------------
Profit 64.1 75.6 11.5
before tax
Taxation 1.4 (24.2) (23.2) 1.0
------------------------------------------
Profit 39.9 52.4 12.5
attributable
to equity
shareholders
------------------------------------------
Basic EPS 18.5p 24.3p 5.8p
(pence)
The effect of adopting IFRS upon the profit attributable to the equity
shareholders was:
Reference 1.1 30 Sep 05 1 Oct 04 1 Apr 05
Cost of sales £m £m £m
-----------------------------------------------------------------------------
IAS 21 'The Effects of Changes in Foreign (0.4) - -
Exchange Rates' requires that foreign currency
creditors are translated at spot rates as
opposed to contract rates. The effect on cost
of sales was as follows:
-----------------------------------------------------------------------------
Reference 1.2 30 Sep 05 1 Oct 04 01 Apr 05
Operating expenses £m £m £m
-----------------------------------------------------------------------------
IFRS 2 'Share Based Payments' requires the (0.6) (0.4) (1.0)
assignment of fair values at the date of grant
to the options granted to employees after 7
November 2002 and not vested by 2 April 2005.
The expense is spread over the vesting period
of these options.
IAS 17 'Leases' results in the reclassification 0.2 0.2 0.4
of the head office building from being held as
an operating lease to a finance lease. The
asset has been depreciated over the useful
economic life and the interest associated with
the lease reclassified from operating expenses
to finance expenses.
IAS 17 'Leases' requires the release of lease (0.3) (0.6) (0.8)
incentives over the life of the lease rather
than over the period ending in the first rent
review. Consequently there has been a reduction
in the release of lease incentives from the
balance sheet.
IAS 19 'Employee Benefits' requires the 1.3 1.3 -
recognition of holiday pay due to and from
employees.
IFRS 3 'Business Combinations' requires the 6.9 6.9 13.7
non-amortisation of goodwill arising on
business combinations. Under UK GAAP goodwill
was amortised over 20 years.
-----------------------------------------------------------------------------
7.5 7.4 12.3
-----------------------------------------------------------------------------
Reference 1.3 30 Sep 05 1 Oct 04 1 Apr 05
Net finance costs £m £m £m
-----------------------------------------------------------------------------
IAS 17 'Leases' resulted in the (0.4) (0.4) (0.8)
reclassification of the head office building
from an operating to a finance lease. The
interest associated with the lease has been
reclassified from operating expenses to finance
expenses.
-----------------------------------------------------------------------------
Reference 1.4 30 Sep 05 1 Oct 04 1 Apr 05
Taxation £m £m £m
-----------------------------------------------------------------------------
IAS 12 'Income Taxes' resulted in the 0.3 0.4 0.8
recognition of a deferred tax liability
regarding assets acquired in prior periods that
did not qualify for capital allowances. This
deferred tax liability has been released as
follows:
IAS 17 'Leases' led to the creation of deferred 0.1 0.2 0.1
tax assets relating to lease premiums that were
not previously accounted for under UK GAAP. The
movement on the deferred tax asset has been as
follows:
IAS 19 'Employee Benefits' led to the (0.1) (0.1) 0.1
recognition of a deferred tax asset for
employee holiday pay.
IFRS 2 'Share Based Payments' led to the 0.1 - -
recognition of a deferred tax asset arising
from the charges for employee options.
-----------------------------------------------------------------------------
0.4 0.5 1.0
-----------------------------------------------------------------------------
Consolidated Balance Sheet
UK GAAP to IFRS Interim Results (Unaudited)
UK GAAP IFRS Diff UK GAAP IFRS Diff
Ref 30 Sep 30 Sep 1 Oct 04 1 Oct
05 05 04
£m £m £m £m £m £m
Non-current
assets
Goodwill 2.1 232.5 253.1 20.6 246.2 253.1 6.9
Intangible 2.2 - 6.0 6.0 - 5.8 5.8
assets
Property, 2.3 95.4 101.3 5.9 86.9 93.6 6.7
plant and
equipment
--------------------------------------------------------------------
327.9 360.4 32.5 333.1 352.5 19.4
Current assets
Stock 149.0 149.0 - 116.9 116.9 -
Trade and 2.4 28.7 29.5 0.8 23.5 24.3 0.8
other
receivables
Derivative 2.5 - 1.4 1.4 - - -
financial
instruments
Cash and cash 4.9 4.9 - 0.9 0.9 -
equivalents
--------------------------------------------------------------------
182.6 184.8 2.2 141.3 142.1 0.8
Current
liabilities
Borrowings 2.6 (44.2) (45.1) (0.9) (46.2) (47.1) (0.9)
Derivative 2.7 - (3.6) (3.6) - - -
financial
instruments
Trade and 2.8 (152.6) (143.9) 8.7 (118.4) (109.9) 8.5
other payables
Current tax (14.4) (14.4) - (11.4) (11.4) -
liabilities
Provisions (1.4) (1.4) - (1.1) (1.1) -
--------------------------------------------------------------------
(212.6) (208.4) 4.2 (177.1) (169.5) 7.6
--------------------------------------------------------------------
Net current (30.0) (23.6) 6.4 (35.8) (27.4) 8.4
liabilities
--------------------------------------------------------------------
Non-current
liabilities
Borrowings 2.9 (118.8) (130.5) (11.7) (138.4) (150.2) (11.8)
Deferred tax 2.10 (3.2) (4.8) (1.6) (2.6) (5.0) (2.4)
liabilities
Other 2.11 (7.9) (14.6) (6.7) (4.6) (10.9) (6.3)
non-current
liabilities
--------------------------------------------------------------------
(129.9) (149.9) (20.0) (145.6) (166.1) (20.5)
--------------------------------------------------------------------
Net assets 168.0 186.9 18.9 151.7 159.0 7.3
--------------------------------------------------------------------
Equity
Ordinary 2.3 2.3 - 2.3 2.3 -
shares
Share premium 133.1 133.1 - 132.9 132.9 -
Fair value and 2.12 - (0.6) (0.6) - 0.4 0.4
other reserves
Retained 2.13 32.6 52.1 19.5 16.5 23.4 6.9
earnings
--------------------------------------------------------------------
Total equity 168.0 186.9 18.9 151.7 159.0 7.3
--------------------------------------------------------------------
Consolidated Balance Sheet
UK GAAP to IFRS Full Year Results (Unaudited)
UK GAAP IFRS Diff UK GAAP IFRS Diff
Ref 1 Apr 1 Apr 2 Apr 2 Apr
05 05 04 04
£m £m £m £m £m £m
Non-current
assets
Goodwill 2.1 239.4 253.1 13.7 253.1 253.1 -
Intangible 2.2 - 6.2 6.2 - 3.0 3.0
assets
Property, plant 2.3 91.8 97.8 6.0 82.5 92.2 9.7
and equipment
--------------------------------------------------------------------
331.2 357.1 25.9 335.6 348.3 12.7
Current assets
Stock 112.2 112.2 - 107.1 107.1 -
Trade and other 2.4 23.6 23.6 - 23.5 23.5 -
receivables
Derivative 2.5 - - - - - -
financial
instruments
Cash and cash 1.1 1.1 - 25.6 25.6 -
equivalents
--------------------------------------------------------------------
136.9 136.9 - 156.2 156.2 -
Current
liabilities
Borrowings 2.6 (52.1) (53.0) (0.9) (189.4) (190.3) (0.9)
Derivative 2.7 - - - - - -
financial
instruments
Trade and other 2.8 (117.7) (99.3) 18.4 (94.3) (94.8) (0.5)
payables
Corporation tax (13.3) (13.3) - (10.1) (10.1) -
liabilities
Provisions for (1.6) (1.6) - (1.0) (1.0) -
other
liabilities
--------------------------------------------------------------------
(184.7) (167.2) 17.5 (294.8) (296.2) (1.4)
--------------------------------------------------------------------
Net current (47.8) (30.3) 17.5 (138.6) (140.0) (1.4)
liabilities
--------------------------------------------------------------------
Non-current
liabilities
Borrowings 2.9 (118.7) (130.5) (11.8) (185.6) (197.4) (11.8)
Deferred tax 2.10 (3.2) (5.1) (1.9) (2.3) (5.2) (2.9)
liabilities
Other 2.11 (5.2) (11.6) (6.4) (4.6) (10.3) (5.7)
non-current
liabilities
--------------------------------------------------------------------
(127.1) (147.2) (20.1) (192.5) (212.9) (20.4)
--------------------------------------------------------------------
Net assets 156.3 179.6 23.3 4.5 (4.6) (9.1)
--------------------------------------------------------------------
Equity
Share capital 2.3 2.3 - - - -
Share premium 132.9 132.9 - 0.1 0.1 -
Fair value and 2.12 - 1.0 1.0 - - -
other reserves
Retained 2.13 21.1 43.4 22.3 4.4 (4.7) (9.1)
earnings
--------------------------------------------------------------------
Total equity 156.3 179.6 23.3 4.5 (4.6) (9.1)
--------------------------------------------------------------------
The effect of adopting IFRS on the Balance Sheet was:
Reference 2.1 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Goodwill £m £m £m £m
---------------------------------------------------------------------------------------
IFRS 3 'Business Combinations' resulted in 20.6 6.9 13.7 -
the write back of goodwill previously
amortised since the transition date, 3 April
2004.
---------------------------------------------------------------------------------------
Reference 2.2 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Intangible assets £m £m £m £m
---------------------------------------------------------------------------------------
IAS 38 'Intangible Assets' requires the 6.0 5.8 6.2 3.0
reclassification of software development costs
from tangible fixed assets (property, plant end
equipment) to intangible fixed assets.
---------------------------------------------------------------------------------------
Reference 2.3 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Property, plant and equipment £m £m £m £m
---------------------------------------------------------------------------------------
IAS 17 'Leases' resulted in the 11.9 12.5 12.2 12.7
reclassification of a building from an
operating lease to a finance lease. The asset
is being depreciated over its useful economic
life.
IAS 38 'Intangible Assets' requires the (6.0) (5.8) (6.2) (3.0)
reclassification of software development costs
from tangible fixed assets (property, plant end
equipment) to intangible fixed assets.
---------------------------------------------------------------------------------------
5.9 6.7 6.0 9.7
---------------------------------------------------------------------------------------
Reference 2.4 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Trade and other receivables £m £m £m £m
---------------------------------------------------------------------------------------
IAS 19 'Employee Benefits' requires the 0.8 0.8 - -
recognition of holiday pay due to and from
employees. A prepayment has been recognised in
the interim statements relating to holidays
taken in advance of the benefit accruing.
---------------------------------------------------------------------------------------
Reference 2.5 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Derivative financial instruments £m £m £m £m
---------------------------------------------------------------------------------------
IAS 39 'Financial Instruments: Recognition and 1.4 - - -
Measurement' resulted in the recognition of the
Group's foreign exchange hedging instruments as
a fair value asset.
---------------------------------------------------------------------------------------
Reference 2.6 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Borrowings £m £m £m £m
---------------------------------------------------------------------------------------
IAS 17 'Leases' results in the reclassification (0.9) (0.9) (0.9) (0.9)
of a lease relating to the head office building
which was formerly held as an operating lease
as a finance lease.
---------------------------------------------------------------------------------------
Reference 2.7 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Derivative financial instruments £m £m £m £m
---------------------------------------------------------------------------------------
IAS 39 'Financial Instruments: Recognition and (3.6) - - -
Measurement' results in the recognition of an
interest rate swap as a fair value liability.
---------------------------------------------------------------------------------------
Reference 2.8 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Trade and other payables £m £m £m £m
---------------------------------------------------------------------------------------
IAS 37 'Provisions, Contingent Liabilities and 9.1 8.5 18.9 -
Contingent Assets' requires that dividends are
recognised in the period in which they are
approved.
IAS 21 'The Effects of Changes in Foreign (0.4) - - -
Exchange Rates' requires that foreign currency
creditors are translated at spot rates as
opposed to contract rates. The effect on net
assets was as follows:
IAS 19 'Employee Benefits' requires the - - (0.5) (0.5)
recognition of holiday pay due to and from
employees. A liability arises at the year-end
due to employees carrying forward accrued
benefits to the following financial year.
---------------------------------------------------------------------------------------
8.7 8.5 18.4 (0.5)
---------------------------------------------------------------------------------------
Reference 2.9 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Borrowings £m £m £m £m
---------------------------------------------------------------------------------------
IAS 17 'Leases' results in the recognition of a (11.7) (11.8) (11.8) (11.8)
building as a finance lease, which was formerly
held as an operating lease (see note 2.6).
---------------------------------------------------------------------------------------
Reference 2.10 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Deferred income tax liabilities £m £m £m £m
---------------------------------------------------------------------------------------
IAS 12 'Income Taxes' results in the (3.7) (4.4) (4.0) (4.8)
recognition of a deferred tax liability
regarding assets acquired in prior periods that
did not qualify for capital allowances.
IAS 17 'Leases' leads to the creation of 2.0 2.0 1.9 1.7
deferred tax assets relating to lease
incentives.
IAS 19 'Employee Benefits' led to the - - 0.2 0.2
recognition of a deferred tax asset for
employee holiday pay.
IFRS 2 'Share Based Payments' led to the 0.1 - - -
recognition of a deferred tax asset arising
from the charges for employee options.
---------------------------------------------------------------------------------------
(1.6) (2.4) (1.9) (2.9)
---------------------------------------------------------------------------------------
Reference 2.11 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Other non-current liabilities £m £m £m £m
---------------------------------------------------------------------------------------
The adoption of IAS 17 'Leases' results in the (3.5) (3.6) (3.6) (3.7)
profit on the sale of a property being
reclassified as deferred income rather than
being recognised in the Income Statement.
The effect on deferred income was:
The adoption of IAS 17 'Leases' requires the (3.2) (2.7) (2.8) (2.0)
release of lease incentives over the life of
the lease rather than over the period ending in
the first rent review. Consequently there has
been a reduction in the release of lease
incentives from the Balance Sheet. The effect
on deferred income was:
---------------------------------------------------------------------------------------
(6.7) (6.3) (6.4) (5.7)
---------------------------------------------------------------------------------------
Reference 2.12 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Fair value and other reserves £m £m £m £m
---------------------------------------------------------------------------------------
Adoption of IFRS 2 'Share Based Payments' 1.6 0.4 1.0 -
requires the assignment of fair values at the
date of grant to the options granted to
employees after 7 November 2002 and not vested
by 2 April 2005. The expense is spread over the
vesting period of these options.
IAS 39 'Financial Instruments: Recognition and (3.6) - - -
Measurement' resulted in the recognition of an
interest rate swap as a fair value liability.
IAS 39 'Financial Instruments: Recognition and 1.4 - - -
Measurement' resulted in the recognition of the
Group's foreign exchange hedging instruments as
a fair value asset.
---------------------------------------------------------------------------------------
(0.6) 0.4 1.0 -
---------------------------------------------------------------------------------------
Reference 2.13 30 Sep 05 1 Oct 04 1 Apr 05 2 Apr 04
Retained earnings £m £m £m £m
---------------------------------------------------------------------------------------
The adoption of IFRS had the following net 19.5 6.9 22.3 (9.1)
impact on retained earnings.
Cumulative total of all adjustments to the
Balance Sheet was:
---------------------------------------------------------------------------------------
Reconciliation of the Consolidated Cash Flow Statements (Unaudited)
The principle difference between UK GAAP and IFRS in the Group's statement of
cash flow is the reconciliation to cash and bank overdrafts rather than net debt
(which includes bank loans and finance lease creditors).
This information is provided by RNS
The company news service from the London Stock Exchange
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