25th Jan 2005 14:27
British Land Co PLC25 January 2005 25th January 2005 INTERNATIONAL ACCOUNTING STANDARDS The British Land Company PLC is today hosting a Workshop to brief analysts,investors and lenders on the impact of the move from UK Generally AcceptedAccounting Practice (UK GAAP) to International Accounting Standards (IAS) on theCompany. British Land will begin reporting under IAS in the financial yearstarting1 April 2005. The underlying performance of the business, its cash flows and dividend policywill be unaffected by the introduction of IAS. As outlined in the InterimStatement dated 23 November 2004, the new standards represent a major change inaccounting and reporting but have no economic effect on the business. The most significant changes relate to the treatment of property valuationmovements and contingent tax • Property valuation movements will be recorded in the profit and loss account, now to be known as the income statement under IAS. Under UK GAAP these movements are accounted through reserves. This will introduce volatility to the income statement, which previously affected the balance sheet only. • Contingent tax will be recognised in full on property valuations under IAS, without regard to whether the tax is expected to crystallize. At present, under UK GAAP treatment, this tax is only accounted for if it is actually incurred, with the unprovided contingent tax being disclosed in a note to the accounts. Comparing IAS to UK GAAP for the six months ended 30 September 2004 Earnings (diluted) Earnings per share would be restated upwards under IAS by approximately 59 penceto 72 pence per share, mainly because of the inclusion in the income statementof revaluation surpluses. Adjusted IAS Earnings, being earnings before gains from asset revaluations anddisposals, would remain broadly unchanged from the underlying adjusted earningsreported under UK GAAP of 12.1 pence per share. This adjusted IAS earningsmeasure will continue to be disclosed in the future. Net Assets (diluted) As at 30 September 2004, adjusted IAS net assets would be approximately 12 pencehigher at 1061 pence than adjusted net assets as reported under UK GAAP. Bothmeasures exclude the contingent taxation (see "methodology" paragraph below). IAS net assets would amount to some 878 pence per share, 35 pence per sharehigher than the "triple net asset value" calculated from the balance sheet underUK GAAP of 843 pence per share. Triple net asset value is calculated afterdeducting contingent tax and the market value of debt and other financialinstruments. Under IAS the majority of debt will not be carried at market value. The above figures are proforma at 30 September 2004 and do not reflect theproposed refinancing of Broadgate announced last week, which if concluded atmarket prices prevailing on 19 January 2005 would reduce net assets under bothIAS and UK GAAP by approximately 24 pence per share. Triple net assets would beunaffected by the refinancing. There are other less significant differences between IAS and UK GAAP, details ofwhich will be covered in the presentation available on the website http://www.britishland.com later this afternoon. A webcast of the presentation will beavailable tomorrow. Methodology Adjusted IAS net assets is stated after adding back contingent tax, the capitalallowance effects of FRS 19, the market value of interest rate swaps andincluding the valuation surplus on trading properties. Adjusted UK GAAP netassets is stated after adding back the valuation surplus on trading anddevelopment properties and excluding the capital allowance effects of FRS 19. Italready excludes contingent taxes and the market value of interest rate swaps. Important notice The workshop and accompanying presentation have been written in general termsand are based on a current interpretation of IAS. All numbers are estimates, andare rounded to the nearest £5 million and are included only for illustrativepurposes. They are subject to change and should not be considered definitive. Contacts The British Land Company PLC: Graham Roberts, Finance Director tel: 020 7467 2948Amanda Jones, Head of Investor Relations tel: 020 7467 2946 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
British Land