7th Jun 2005 07:02
Quintain Estates & Development PLC07 June 2005 7 June 2005 Quintain Estates and Development PLC Unaudited results for the year ended 31 March 2005under International Financial Reporting Standards ("IFRS") The following statements and accompanying notes restate the Group's 2004/05results prepared under UK GAAP to reflect the adjustments that would be requiredunder IFRS. The document includes an income statement, balance sheet, statementof changes in equity and cash flow statement together with an explanation of theprincipal reconciling items between the two bases of preparation. The information contained in this document has not been audited but complieswith the current versions of the standards and interpretations released to date.As these may change, the figures presented should not be regarded as final.In addition, the statements do not reflect the requirements of IFRS 2,Share-based Payment; IAS 32, Financial Instruments : Disclosure andPresentation; IAS 39, Financial Instruments : Recognition and Measurement andIFRS 5, Non-current Assets Held for Sale and Discontinued Operations, whichapply to accounting periods commencing on or after 1 January 2005.Consequently, the numbers which will form the comparatives for the 2005/06interim and final results could be different to those here presented. This document is not intended in its format or content to constitute apreliminary announcement under IFRS but merely to indicate the impact of the newstandards and interpretations in their current form upon the Group's 2004/05 UKGAAP results. In these statements, the Group has identified certain properties which under UKGAAP were designated as investment properties but were acquired with theintention of development. Under IFRS, these properties have been classified asproperties in the course of development and accounted for under IAS 16,Property, Plant and Equipment at fair value. Changes to fair value arising inconnection with these properties are recognised directly through the revaluationreserve in equity rather than through the income statement. The adjustments which are material in relation to the Group's results relate to: • investment property valuation movements and revaluation deficitson development properties which are reflected in the income statement • the deferred tax on net property revaluation movements which isreflected in the income statement in respect of investment properties andthrough equity for development properties • the proposed final dividend which is not recognised in thefinancial statements until it becomes a legal obligation. The impact of these changes upon the key performance measures and indicatorshave been identified as: UK GAAP IFRS Net rental income £000 27,413 29,797Profit before tax £000 15,763 37,329Equity shareholders' funds £000 638,261 571,304Basic earnings per share p 10.3 32.2Adjusted earnings per share p 10.2 10.0Basic net asset value per share p 495 443Adjusted net asset value per share p 486 492 The main changes to the Group's profit before tax under UK GAAP are as follows: £000 UK GAAP for year ended 31 March 2005 15,763Net revaluation gains on investment properties and deficits on development properties reflected in income statement 25,653Tax on profits from joint ventures and associates (5,055)Other adjustments 968 ______IFRS for year ended 31 March 2005 37,329 ===== The principal adjustments to equity shareholders' funds are as follows: £000 Balance as at 31 March 2005: UK GAAP 638,261Deferred tax on net revaluation gains (75,394)Proposed final dividend 8,700Other adjustments (263) ______Balance as at 31 March 2005 : IFRS 571,304 ====== Quintain Estates and Development PLC Unaudited Consolidated Income Statementfor the year ended 31 March 2005 Notes UK GAAP (*) Adjustments IFRS £000 £000 £000 Gross rental income 2a 36,159 235 36,394Property related costs 2b (8,746) 2,149 (6,597) _______ _______ _______Net rental income 27,413 2,384 29,797 ====== ====== ====== Proceeds from sale of trading properties 3a 25,852 (19,516) 6,336Carrying value of trading properties sold 3b (22,036) 16,914 (5,122) _______ _______ _______Profit from sale of trading properties 3,816 (2,602) 1,214 ====== ====== ====== Income from leisure activities 12,112 - 12,112Outgoings on leisure activities (5,871) - (5,871) _______ _______ _______Profit from leisure activities 6,241 - 6,241 ====== ====== ====== Other income receivable 4,253 - 4,253Outgoings in relation to other income (2,050) - (2,050) _______ _______ _______Profit from other income 2,203 - 2,203 ====== ====== ====== Total turnover 78,376 (19,281) 59,095 Total cost of sales (38,703) 19,063 (19,640) _______ _______ _______Gross profit 39,673 (218) 39,455 Administrative expenses (19,130) - (19,130) _______ _______ _______Operating profit before recognition of resultsfrom investment property sales and revaluation 20,543 (218) 20,325 Profit from sale of investment properties 4 6,286 (709) 5,577Gains on revaluation of investment properties 5 - 23,574 23,574Deficits on revaluation of investment properties 5 - (3,315) (3,315)Deficits on revaluation of development properties 6 - (1,232) (1,232) _______ _______ _______Net operating profit before net finance expenses 26,829 18,100 44,929 Finance income 1,454 - 1,454Finance expenses (17,323) (56) (17,379)Net finance expenses 7 (15,869) (56) (15,925)Share of profit from joint ventures and 8 4,803 3,522 8,325associates _______ _______ _______Profit before tax 15,763 21,566 37,329 Current tax (1,908) (283) (2,191)Deferred tax (446) 7,066 6,620Tax (charge) credit for the year 9 (2,354) 6,783 4,429 _______ _______ _______Profit for the financial year 13,409 28,349 41,758 ====== ====== ======Attributable to : Equity shareholders of the parent 13,376 28,292 41,668Minority interests 33 57 90 _______ _______ _______Profit for the financial year 13,409 28,349 41,758 ====== ====== ====== Earnings per share - basic 10a 10.3p 32.2p ====== ====== - diluted 10a 10.2p 31.6p ====== ====== (*) Reformatted to reflect IFRS reporting requirements Quintain Estates and Development PLC Unaudited Statement of Changes in Equityfor the year ended 31 March 2005 Share Share Convertible Revaluation Other Translation Retained Investment Total capital premium loan reserve capital reserve earnings in own attributable account stock reserves shares to equity shareholders £000 £000 £000 £000 £000 £000 £000 £000 £000Balance as at1 April 2004 : UK 32,323 45,076 - 267,604 112,330 - 66,180 - 523,513GAAP IFRS openingadjustments: Gains on revaluationofinvestment properties - - - (130,911) - - 130,911 - - Deficits onrevaluation ofdevelopment - - - 5,411 - - (5,411) - -properties Deferred tax onrevaluation gains - - - (31,904) - - (26,345) - (58,249) Equity element ofconvertible loan - - 786 - - - - - 786stock Additional interestonconvertible loan - - - - - - (498) - (498)stock Interest capitalisedondevelopment propertyin jointlyadministeredarrangement - - - - - - (223) - (223) 2004 final dividend - - - - - - 7,757 - 7,757 ______ ______ ______ ______ ______ ______ ______ ______ ______Balance as at1 April 2004 : IFRS 32,323 45,076 786 110,200 112,330 - 172,371 - 473,086 ______ ______ ______ ______ ______ ______ ______ ______ ______ Changes in equity forthe income andexpensesrecognised in year: Credit relating toExecutive Directors'Performance Share - - - - - - 380 - 380Plan Credit relating to2004Unapproved Share Plan - - - - - - 232 - 232 Developmentproperties: Tax credit oncapitalised - - - 1,218 - - - - 1,218interest Revaluation gains in - - - 93,261 - - - - 93,261year Deferred tax chargeonrevaluation gains - - - (24,102) - - - - (24,102) Realisation ofrevaluation gains on - - - (355) - - 355 - -sales Revaluation elementofshort leaseholdamortisation - - - (120) - - 120 - - Exchange adjustment - - - - - 127 - - 127 ______ ______ ______ ______ ______ ______ ______ ______ ______Net income recogniseddirectly in equity - - - 69,902 - 127 1,087 - 71,116 Profit for the - - - - - - 41,668 - 41,668financial year ______ ______ ______ ______ ______ ______ ______ ______ ______ Total recognisedincomeand expense for the - - - 69,902 - 127 42,755 - 112,784year Other changes toequity: Issue of shares 81 1,499 - - - - (1,046) - 534 Purchase of ownsharesfor cancellation (106) - - - 106 - (2,243) - (2,243) Investment in own - - - - - - - (1,539) (1,539)shares Purchase of minorityinterest - - - - - - - - - Dividends paid - - - - - - (11,318) - (11,318) ______ ______ ______ _______ _______ ______ _______ ______ _______Balance as at31 March 2005 : IFRS 32,298 46,575 786 180,102 112,436 127 200,519 (1,539) 571,304 ===== ===== ===== ====== ====== ===== ====== ===== ====== Unaudited Statement of Changes in Equityfor the year ended 31 March 2005 (continued) Total Minority Total attributable shareholders equity to equity shareholders £000 £000 £000Balance as at1 April 2004 : UK GAAP 523,513 1,446 524,959 IFRS openingadjustments: Gains on revaluationofinvestment properties - - - Deficits onrevaluation ofdevelopment properties - - - Deferred tax onrevaluation gains (58,249) - (58,249) Equity element ofconvertible loan stock 786 - 786 Additional interest onconvertible loan stock (498) - (498) Interest capitalisedondevelopment propertyin jointlyadministeredarrangement (223) - (223) 2004 final dividend 7,757 - 7,757 ______ ______ ______Balance as at1 April 2004 : IFRS 473,086 1,446 474,532 ______ ______ ______ Changes in equity forthe income andexpensesrecognised in year: Credit relating toExecutive Directors'Performance Share Plan 380 - 380 Credit relating to2004Unapproved Share Plan 232 - 232 Developmentproperties: Tax credit on 1,218 - 1,218capitalised interest Revaluation gains in 93,261 - 93,261year Deferred tax charge onrevaluation gains (24,102) - (24,102) Realisation ofrevaluation gains on - - -sales Revaluation element ofshort leaseholdamortisation - - - Exchange adjustment 127 - 127 ______ ______ ______Net income recogniseddirectly in equity 71,116 - 71,116 Profit for the 41,668 90 41,758financial year ______ ______ ______ Total recognisedincomeand expense for the 112,784 90 112,874year Other changes toequity: Issue of shares 534 - 534 Purchase of own sharesfor cancellation (2,243) - (2,243) Investment in own (1,539) - (1,539)shares Purchase of minorityinterest - (1,296) (1,296) Dividends paid (11,318) - (11,318) _______ ______ _______Balance as at31 March 2005 : IFRS 571,304 240 571,544 ====== ===== ====== Quintain Estates and Development PLC Unaudited Consolidated Balance Sheetas at 31 March 2005 Notes UK GAAP (*) Adjustments IFRS £000 £000 £000Non-current assets Investment properties 11 742,876 (452,674) 290,202Development properties 11 - 463,893 463,893Owner occupied properties, plant and equipment 12 9,215 1,201 10,416Investment in joint ventures 13 62,023 8,209 70,232Investment in associates 1,800 - 1,800Other investments 188 - 188 _______ _______ _______Total non-current assets 816,102 20,629 836,731 ====== ====== ======Current assets Trading properties 13 17,487 (12,763) 4,724Trade and other receivables 11/13 31,920 (2,649) 29,271Short term investments 19 - 19Cash and cash equivalents 13 11,744 (654) 11,090 _______ _______ _______Total current assets 61,170 (16,066) 45,104 ====== ====== ====== Total assets 877,272 4,563 881,835 ====== ====== ======Current liabilities Bank loans 14 (88) - (88)Trade and other payables 13/15 (35,913) 9,685 (26,228)Tax liabilities (11,294) (24) (11,318) _______ _______ _______Total current liabilities (47,295) 9,661 (37,634) ====== ====== ======Non-current liabilities Bank loans 14 (173,815) 6,795 (167,020)Other borrowings 16 (7,870) 203 (7,667)Deferred tax liability 17 (5,117) (75,429) (80,546)Obligations under finance leases 18 - (12,750) (12,750)Other payables (4,674) - (4,674) _______ _______ _______Total non-current liabilities (191,476) (81,181) (272,657) ====== ====== ====== Total liabilities (238,771) (71,520) (310,291) _______ _______ _______Net assets 638,501 (66,957) 571,544 ====== ====== ======Equity Issued capital 32,298 - 32,298Share premium account 46,575 - 46,575Convertible loan stock (equity element) 16 - 786 786Revaluation reserve 311,606 (131,504) 180,102Other capital reserves 112,436 - 112,436Translation reserve 19 - 127 127Retained earnings 136,885 63,634 200,519Investment in own shares (1,539) - (1,539) _______ _______ _______Equity attributable to equity shareholders of the parent 20 638,261 (66,957) 571,304 Minority interest 240 - 240 _______ _______ _______Total equity 638,501 (66,957) 571,544 ====== ====== ====== Net asset value per share - basic 10b 495p 443p ====== ====== - diluted 10b 486p 436p ====== ====== (*) Reformatted to reflect IFRS reporting requirements Quintain Estates and Development PLC Unaudited Consolidated Cash Flow Statementfor the year ended 31 March 2005 UK GAAP (*) Adjustments IFRS £000 £000 £000Operating activitiesProfit before tax 15,763 21,566 37,329 Adjustments for :Depreciation 1,088 (61) 1,027Costs relating to share plans 612 - 612Net finance expenses 15,869 56 15,925Unrealised net revaluation gains on investment properties - (20,259) (20,259)Deficits on revaluation of development properties - 1,232 1,232Share of the profit from joint ventures and associates (4,803) (3,522) (8,325)Profit on sale of investment properties (6,286) 709 (5,577)Impairment of investment property 425 (425) - _______ _______ _______Operating profit before changes in working capital 22,668 (704) 21,964 Decrease in trade and other receivables 4,147 (97) 4,050Decrease in trade and other payables (7,569) 2,846 (4,723)Decrease (increase) in trading properties 2,814 (5,776) (2,962) _______ _______ _______Cash generated from operations 22,060 (3,731) 18,329 Interest paid (19,245) (492) (19,737)Profit on termination of hedging arrangement 722 - 722Interest received 1,127 (21) 1,106Tax paid (1,561) 1,460 (101) _______ _______ _______Cash flows from operating activities 3,103 (2,784) 319 _______ _______ _______Investing activitiesPurchase and development of property assets (110,615) - (110,615)Purchase of property, plant and equipment (9,007) - (9,007)Proceeds from property sales 287,486 - 287,486Tax paid on property sales - (1,460) (1,460)Acquisition of subsidiary companies (15,153) - (15,153)Loans to joint ventures and associates (20,860) 2,212 (18,648)Distributions received from joint ventures and associates 2,165 - 2,165 _______ _______ _______Cash flows from investing activities 134,016 752 134,768 _______ _______ _______Financing activitiesIssue of shares 534 - 534Purchase of own shares for cancellation (2,243) - (2,243)Investment in own shares (1,539) - (1,539)Decrease in borrowings (152,316) 3,323 (148,993)Payment of loan issue costs (2,858) - (2,858)Payment of finance lease liabilities - (1,663) (1,663)Equity dividends paid (11,318) - (11,318) _______ _______ _______Cash flows from financing activities (169,740) 1,660 (168,080) _______ _______ _______ Net decrease in cash and cash equivalents (32,621) (372) (32,993) Cash and cash equivalents as at 1 April 2004 44,187 (282) 43,905Effect of exchange rate fluctuations on cash held 197 - 197 _______ _______ _______Cash and cash equivalents as at 31 March 2005 11,763 (654) 11,109 ====== ====== ====== (*) Reformatted to reflect IFRS reporting requirements Quintain Estates and Development PLC Notes to the unaudited financial statementsfor the year ended 31 March 2005 1. Basis of preparation The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards and interpretations adopted by theInternational Accounting Standards Board. The consolidated financial statements are prepared on a historical cost basisexcept for investment and development properties which are carried at fairvalue. 2. Property related income a Gross rental income Under IFRS, rent free periods are allocated over the whole lease term or to atenant break option if appropriate, rather than the period to the first rentreview as is the case under UK GAAP. £000 _______ UK GAAP for the year ended 31 March 2005 36,159Reallocation of rent smoothing adjustment 235 _______IFRS for the year ended 31 March 2005 36,394 ====== b Property related costs Notes £000 _______ _______ UK GAAP for the year ended 31 March 2005 8,746Treatment of leasehold interests as finance leases i (1,663)Reversal of short leasehold amortisation on investment properties ii (61)Reversal of impairment on investment property iii (425) ______IFRS for the year ended 31 March 2005 6,597 ===== Notes : i Under IFRS, leasehold property interests held as investment property at fairvalue are accounted for as finance leases. The liability under these leases isrecognised as the present value of the minimum lease payments at the date ofinception or acquisition of the lease. A finance charge is shown in these IFRSaccounts based on the discount rate used in the present value calculations. ii Under IFRS, revaluation surpluses and deficits on investment properties arerecognised in the income statement, thus measuring the amortisation in the valueof the Group's short leasehold investment properties. iii As revaluation deficits on investment properties are included in the IFRSincome statement, these deficits would also reflect any impairment chargepreviously recognised in property related costs under UK GAAP. 3. Profit from sale of trading properties Under UK GAAP, the results of a jointly administered arrangement, CountrysideProperties (Merton Abbey Mills) Limited, is accounted for on a proportionalbasis. Under IFRS, these results are equity accounted in the same way as thoseof the Group's other joint ventures. a Proceeds from sale of trading properties £000 _______ UK GAAP for the year ended 31 March 2005 25,852Reclassification of sales revenue to share of profit from joint ventures and associates (19,516) _______IFRS for the year ended 31 March 2005 6,336 ====== b. Carrying value of trading properties sold £000 _______ UK GAAP for the year ended 31 March 2005 22,036Reclassification of cost of sales to share of profit from joint ventures and associates (16,914) ______IFRS for the year ended 31 March 2005 5,122 ====== 4. Profit from sale of investment properties Under UK GAAP, the profit from the sale of investment properties arising injoint ventures and associates is shown together with the profit from this sourcearising directly within the Group. Under IFRS, this is included as part of theresult from joint ventures and associates in the income statement. 5. Gains (deficits) on revaluation of investment properties Under IFRS, changes in the fair value of investment properties are recognisedseparately in the income statement. Under UK GAAP, such revaluation surplusesor temporary deficits are recognised as a net movement within equity. 6. Deficits on revaluation of development properties Under IAS 16, Property, Plant and Equipment, when the carrying amount of adevelopment property is decreased as a result of a revaluation, the decreaseshould be recognised as an expense. However, a revaluation decrease is chargeddirectly against any related revaluation surplus to the extent that the decreasedoes not exceed the amount held in the revaluation surplus in respect of thesame asset. 7. Net finance expenses Notes £000 ______ ______ UK GAAP for the year ended 31 March 2005 15,869Net interest incurred by joint ventures and associates i (1,689)Interest payable on finance leases 2bi 1,147Interest payable on convertible loan stock ii 85Reversal of interest capitalised on development property in joint iii 492arrangementReclassification of joint venture interest iv 21 ______IFRS for the year ended 31 March 2005 15,925 ===== Notes : i Under UK GAAP, interest expense arising within joint ventures and associatesis included with the Group's directly incurred finance costs. Under IFRS, thisis netted off against the operating results from such arrangements. ii Under UK GAAP, the Group's convertible loan stock is included underliabilities. Under IFRS, the present value of the liability is estimated at thedate of issue using an appropriate rate of discount and this amount is reflectedin the balance sheet under liabilities with the equity element included withinthe equity section. Interest is charged at this rate to the income statementduring the life of the obligation. iii Under UK GAAP, the Group accounts for jointly administered arrangements on aproportional basis and capitalises interest on its share of the cost ofproperties in the course of development. Under IFRS, all such arrangements withthird parties are included in the financial statements on an equity accountedbasis. As a result, the interest previously capitalised on such developmentexpenditure has been reversed. iv Under UK GAAP, the joint arrangement with Countryside Properties is accountedfor on a proportional basis and interest incurred or received within the Companyshown as part of the Group's finance charge for the year. Under IFRS, thisinterest is included in the income statement within the share of profit fromother joint ventures and associates. 8. Share of profit from joint ventures and associates Notes £000 ______ ______UK GAAP for the year ended 31 March 2005 : share of operating profit from joint ventures 4,608 share of operating profit from associates 195 ______ 4,803 Reclassification of share of profit in Countryside Properties (Merton i 2,623Abbey Mills) LimitedCost of sales adjustment in respect of capitalised interest ii 308Profit from sale of investment properties arising within joint ventures iii 709and associatesNet interest incurred by joint ventures and associates 7i (1,689)Share of revaluation gains in year iv 6,626Current year tax on share of profit v (935)Deferred tax on revaluation gains in year vi (4,120) ______IFRS for the year ended 31 March 2005 8,325 ===== Notes : i Under IFRS, the Group's joint arrangement, Countryside Properties (MertonAbbey Mills) Limited is accounted for on an equity basis rather than on aproportional basis. The entries required to arrive at this adjustment are asfollows: £000 _______ Proceeds from sale of trading properties (19,516)Carrying value of trading properties sold 16,914Financial income (21)Reclassification of share of profit in Countryside Properties (Merton Abbey Mills) Limited 2,623 _______ - ====== ii Under IFRS, as Countryside Properties (Merton Abbey Mills) Limited, isreclassified as a joint venture, interest previously capitalised on developmentexpenditure under the proportional basis of accounting has been reversed. iii Under UK GAAP, the profit arising from the sale of investment propertieswithin joint ventures and associates is included together with the Group's ownprofit from such sales. Under IFRS, this profit is shown in the incomestatement as part of the result from joint ventures and associates. iv Under UK GAAP, gains on revaluation of investment properties in jointventures and associates are accounted for through equity. Under IFRS, movementsin revaluation are included within the share of profit from joint ventures andassociates in the income statement. v Under UK GAAP, the current year tax charge on the share of profit from jointventures and associates is shown as part of the Group's tax charge. Under IFRS,this element of the current year charge is included within the results fromjoint ventures and associates. vi Under UK GAAP, deferred tax on revaluation gains is shown by way of a note tothe accounts. Under IFRS, deferred tax on such gains is included as part of theshare of profit from joint ventures and associates in income statement. 9 Taxation a. Tax (charge) credit for the year Current Deferred Total UK Overseas Total tax corporation tax tax £000 £000 £000 £000 £000 ______ _______ ________ __________ _______ UK GAAP for the year ended 31 March 2005 1,822 86 1,908 446 2,354Adjustments 283 - 283 (7,066) (6,783) ______ _______ ________ __________ _______IFRS for the year ended 31 March 2005 2,105 86 2,191 (6,620) (4,429) ===== ====== ======= ========= ====== The deferred tax release relates to the use of prior year tax losses and surplusACT, which has offset the charge on the net revaluation gains reflected in theincome statement. b Reconciliation of tax charge £000 _______ Profit before tax 37,329 Add : tax deducted from share of profit from joint ventures and associates 5,055 _______ 42,384 Tax @ 30% 12,715 Adjustments :ACT offset against chargeable gains (9,498)Locked-in capital allowances (3,801)Prior year tax movements 320Tax charges taken to share of profit from joint ventures and associates (5,055)Indexation allowance (1,607)Overseas tax rates 351Use of losses (797)Other movements 2,943 _______ (4,429) ====== c Deferred tax UK GAAP IFRS 1 April Recognised Recognised 31 March 2004 in income in equity 2005 £000 £000 £000 £000 ______ _______ ________ _______ Short term timing differences 4,671 481 - 5,152Gains on revaluation of properties - 18,151 57,243 75,394 ______ _______ ________ _______ 4,671 18,632 57,243 80,546 ===== ====== ======= ====== 10. Earnings per share and net asset value per share a Earnings per share UK GAAP UK UK IFRS IFRS IFRS GAAP GAAP Profit Average Earnings Profit Average Earnings for the weighted per share for the weighted per share financial number financial number year of shares year of shares £000 000 pence £000 000 pence ________ ________ _______ ________ ________ _______ Basic 13,376 129,349 10.3 41,668 129,349 32.2 Adjustments: In respect of 8% convertible loan stock 168 2,000 228 2,000In respect of employee share option arrangements - 1,031 - 1,031 ________ ________ ________ ________Diluted 13,544 132,380 10.2 41,896 132,380 31.6 Adjustments: Net gains on revaluation of investment and development properties in income statement - - (25,653) - Deferred tax on net revaluation gains - - (2,946) - ________ ________ ________ _______Adjusted 13,544 132,380 10.2 13,297 132,380 10.0 ======= ====== ====== ======= ====== ====== b Net asset value per share UK GAAP UK UK IFRS IFRS IFRS GAAP GAAP Net assets Number Net asset Net Number Net asset of shares value assets of shares value per share per share £000 000 pence £000 000 pence ________ ________ _______ ________ _______ _______ Basic 638,261 128,891 495 571,304 128,891 443 Adjustments: In respect of 8% convertible loan stock 3,000 2,000 2,797 2,000In respect of employee share option 9,310 2,919 9,310 2,919arrangements ________ _______ ________ _______Diluted 650,571 133,810 486 583,411 133,810 436 Adjustments: Deferred tax on net revaluation gains - - 75,394 - ________ ________ _______ _______ Adjusted 650,571 133,810 486 658,805 133,810 492 ======= ======= ====== ======= ====== ====== 11. Investment and development properties Investment Development Notes properties properties £000 £000 _____ _______ _______ Balance as at 31 March 2005 : UK GAAP 742,876 -Transfer to development properties i (453,817) 453,817Recalculation of rent free periods ii (330) -Gross-up of book value of leasehold property interests iii 1,473 10,076 _______ _______Balance as at 31 March 2005 : IFRS 290,202 463,893 ====== ====== Notes : i Under IFRS, investment properties, mainly comprising land holdings,acquired with the intention of development have been redesignated properties inthe course of development and are accounted for under IAS 16, Property, Plantand Equipment at fair value. Movements in the valuation of these properties arerecognised not in the income statement but directly in the revaluation reservein equity. ii Under IFRS, rent free periods are allocated over the whole lease term orto a tenant break option if appropriate. Under UK GAAP, rent free periods areallocated usually over the period to the first review. The correspondingadjustment is shown in Trade and other receivables. iii Under IFRS, the obligation to the lessor at the inception or acquisitionof a lease is recognised as a separate liability. Under UK GAAP, this liabilityis included within the property valuation. Accordingly, the amount shown undernon-current assets under IFRS has been grossed-up to reflect this adjustment. iv Investment and development properties have been valued as at 31 March 2005at fair value by professionally qualified external valuers in accordance withthe Appraisal and Valuation Standards of the Royal Institution of CharteredSurveyors. 12. Owner occupied property, plant and equipment Notes £000 _____ ______ Balance as at 31 March 2005 : UK GAAP 9,215Gross-up of carrying value of leasehold property interests i 1,201 ______Balance as at 31 March 2005 : IFRS 10,416 ===== Notes : i. Under IFRS, the obligation to the lessor at the inception oracquisition of a lease is recognised as a separate liability. Under UK GAAP, this liability is included within the carrying value of the property.Accordingly, the amount shown under Owner occupied property, plant and equipmentunder IFRS in respect of long leasehold and short leasehold properties has beengrossed-up to reflect this adjustment. The Group continues to show assets held under this heading at net book cost. 13. Investment in joint ventures Notes £000 _____ ______ Balance as at 31 March 2005 : UK GAAP 62,023Restatement of investment in Countryside Properties (Merton Abbey Mills) i 8,616LimitedAdjustment in respect of capitalised interest included in carrying value of ii (407)property asset ______Balance as at 31 March 2005 : IFRS 70,232 ===== Notes: i. Under UK GAAP, the results of a jointly administered arrangement,Countryside Properties (Merton Abbey Mills) Limited, is accounted for on a proportional basis. Under IFRS, these results are equityaccounted in the same way as those of the Group's other joint ventures. Theentries required to arrive at this adjustment are as follows: £000 ______ Trading properties (12,763)Trade and other receivables (2,979)Cash and cash equivalents (654)Trade and other payables 985Non-current liabilities : Bank loans 6,795Restatement of investment in Countryside Properties (Merton Abbey Mills) Limited 8,616 ______ - ===== ii As Countryside Properties (Merton Abbey Mills) Limited is now accountedfor on an equity basis, interest previously capitalised on developmentexpenditure has been reversed. 14. Borrowings As a result of the transitional arrangements under IAS 39, Financial Instruments: Recognition and Measurement, which applies to accounting periods commencing onor after 1 January 2005, borrowings as at 31 March 2005 remain unchanged. With effect from 1 April 2005, the Group's interest rate swaps will be includedin the balance sheet at fair value with changes in fair value being recognisedthrough equity in the case of effective cash flow hedges and through the incomestatement in the case of ineffective hedges and the ineffective portions ofother hedges. The IFRS balance sheet as at 31 March 2005 will be restated forthe adoption of IAS 39 by including interest rate swaps with a negative value of£8,651,000 together with a tax credit of £2,595,000, reducing net assets as atthat date by £6,056,000. 15. Trade and other payablesRelated Shares:
Quadrise