15th Jun 2005 09:00
Schroders PLC15 June 2005 Schroders plc 15 June 2005 Transition to International Financial Reporting Standards Schroders plc has been preparing for the adoption of International FinancialReporting Standards (IFRS) as the basis for the preparation of its consolidatedfinancial statements for the year ended 31 December 2005. This announcementexplains how the changes in accounting treatment under IFRS impact on theGroup's previously reported UK Generally Accepted Accounting Principles (UKGAAP) financial performance in relation to: • The Group's consolidated income statement for the year ended 31 December 2004 • The Group's consolidated balance sheet at 1 January 2004, being the Group's date of transition to IFRS • The Group's consolidated balance sheet at 31 December 2004 • The Group's consolidated cash flow statement for the year ended 31 December 2004 • The Group's consolidated statement of recognised income and expense for the year ended 31 December 2004 Reconciliations to assist in the understanding of the nature and quantum ofdifferences between UK GAAP and IFRS for the financial information above arecontained in Appendix 1 to this announcement. All references to specificfinancial statements in the remainder of this announcement refer to the Group'sconsolidated results and balances. A copy of the Group's accounting policies under IFRS is included for referencein Appendix 2. This announcement also includes an indication of the main adjustments requiredto the Group's balance sheet at 1 January 2005 to comply with InternationalAccounting Standard 32 'Financial Instruments: Disclosure and Presentation' (IAS32) and IAS 39 'Financial Instruments: Recognition and Measurement'. The information in this announcement has been prepared on the basis of the IFRSeffective as at the date of this announcement and the Group's currentunderstanding of how these standards should be applied. The standards in issueare subject to ongoing review and endorsement by the European Union (EU), whilstapplication of the standards continues to be subject to review by theInternational Financial Reporting Interpretations Committee (IFRIC). Basis of preparation Starting from the year ending 31 December 2005, the Group will be required toprepare its financial statements in accordance with IFRS as adopted by the EU.The Group's first IFRS results, the Q1 2005 trading update, were published on 17May 2005. The Group's first Annual Financial Statements under IFRS will be forthe year ending 31 December 2005. The date of transition to IFRS is 1 January2004, being the start of the earliest period of comparative information. The financial information contained in Appendix 1 to this announcement has beenpresented in accordance with policies consistent with IFRS. This format andpresentation may require modification in the event that further guidance isissued and as practice develops. These statements have been prepared inaccordance with standards and interpretations approved by the InternationalAccounting Standards Board and its predecessors, all of which have been approvedby the European Commission, with the exception of the amendments to IAS 19'Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures',where it is assumed that the standard will be endorsed without amendment. TheGroup will adopt the requirements of IAS 32 and IAS 39 with effect from 1January 2005. The Group's income statement for the year to 31 December 2004, balance sheet at1 January 2004, balance sheet at 31 December 2004, statement of recognisedincome and expense for the year to 31 December 2004 and cash flow statement forthe year to 31 December 2004, have been audited by PricewaterhouseCoopers LLPand their special purpose audit report is set out in Appendix 3 to thisannouncement. Summary of main changes affecting the Group A summary of the impact on the Group of the transition to IFRS is provided inthe table below: IFRS UK GAAP £mn £mn--------------------------------------------------------------------------------Profit before tax - 31 December 2004 211.6 191.0 --------------------------Total equity - 1 January 2004 1,029.0 1,029.2 --------------------------Total equity - 31 December 2004 1,147.4 1,114.1--------------------------------------------------------------------------------Basic earnings per share - 31 December 2004 53.5p 46.0p Estimated total equity - 1 January 2005 (unaudited) 1,193 As highlighted in our previous announcement of 14 December 2004 ('Preparationfor IFRS'), the most significant changes are: • The inclusion of a fair value charge in respect of outstanding employee share options granted after 7 November 2002 (IFRS 2). • The replacement of existing charges for awards under the employee Equity Compensation Plan (the details of which are provided on page 13 of our Annual Report & Accounts for 2004), with fair value charges spread over revised time periods (IFRS 2). • The cessation of goodwill amortisation (IFRS 3). • The amortisation of leasehold incentives received by the Group over the full term of the leases rather than over shorter periods (IAS 17). • The inclusion in the balance sheet of all employee benefit liabilities (largely the net pensions deficit) (IAS 19). • The capitalisation of certain software expenditure as intangible assets where the expenditure meets the criteria for capitalisation (IAS 38). There are no material differences between the impact of the above changes on theGroup's opening balance sheet equity as at 1 January 2004 and the figuresdisclosed in the announcement of 14 December 2004. Since 14 December 2004, the following additional changes have been identified asa result of further clarification of accounting treatments: • Seed capital investments in investment funds, where the fund is controlled by the Group, but is being actively marketed to allow seed capital redemption within one year, are treated as 'Held for Sale' (IFRS 5). • Some investment management fees, previously recognised on initiation of the contract, are now recognised over the life of the contract (IAS 18). The significant change to the cash flow statement at 31 December 2004 is: • Change in the definition of cash to comprise cash and cash equivalents (IAS 7). The significant change to the balance sheet at 1 January 2005 is: • The inclusion of Private Equity investments at fair value (IAS 39) and the classification of most investments as 'Available-for-Sale', with unrealised gains and losses taken to equity and only recognised through the income statement on sale or impairment of the relevant asset (IAS 39). Transitional arrangements IFRS 1 'First-time Adoption of International Financial Reporting Standards' setsout how a company should apply IFRS at transition. The standard requires acompany to use accounting policies that comply with each IFRS effective at thereporting date for its first IFRS financial statements and apply those policiesretrospectively to all periods presented in those statements. The standard does,however, allow a number of exemptions to this general principle to assist thetransition and the Group has taken advantage of these exemptions whereappropriate. Impact analysis The analysis below sets out the most significant adjustments arising from thetransition to IFRS: IFRS 2 Share-based Payment The Group recognises a charge to the income statement for the fair value ofoutstanding share options granted to employees after 7 November 2002. The chargeis calculated using a stochastic option valuation model and is charged over therelevant option vesting periods, adjusted to reflect actual and expected levelsof vesting. The levels of vesting are dependent on forfeit rates and performanceconditions. Under UK GAAP there was no charge to the income statement inrelation to share options granted to employees. In addition, the Group adjusts the charge made in the income statement forawards made under the Equity Compensation Plan and its equivalents to recognisethe fair value of the awards granted to employees. The fair value of an award iscalculated as the value of the shares on the date of grant, including anyapplicable uplifts, discounted for the dividends forgone over the averageholding period of the award. The fair value charges, adjusted to reflect actualand expected levels of vesting, are spread over the performance year and vestingperiod of the awards. Under UK GAAP the undiscounted value of an award at thedate of grant was charged in the performance year to which it related, with theundiscounted value of any uplift in the award spread over the vesting period;awards that lapsed were credited to the income statement in the year in whichthey lapsed. The overall impact of these changes is to increase opening balance sheet equityas at 1 January 2004 by £14.8 million. The effect for the year ended 31 December2004 is to reduce the post tax charge in the income statement by £7.5 millionand to increase balance sheet equity by £23.9 million. Net income of £16.4million has been recognised directly in equity. IFRS 3 Business Combinations In accordance with the transitional provisions of IFRS 1, the Group has chosento apply IFRS 3 prospectively from the date of transition. This results in thevalue of goodwill arising from previous acquisitions being frozen at the valueheld on the Group balance sheet as at 1 January 2004 and the reversal of anyamortisation charged in the year ended 31 December 2004. From 1 January 2004goodwill is subject to an annual impairment review in accordance with thestandard and will be impaired where there are indications that the carryingvalue may not be recoverable. The change results in the reversal of £9.9 million previously charged to theincome statement under UK GAAP for the year ended 31 December 2004. Closingbalance sheet equity as at 31 December 2004 is therefore also increased by £9.9million. IAS 10 Events After the Balance Sheet Date The Group recognises dividends declared after the balance sheet date in thereporting period in which they are declared, as they represent non-adjustingevents after the balance sheet date under IFRS. The change results in an increase in opening balance sheet equity as at 1January 2004 of £37.6 million. The effect for the year ended 31 December 2004 isto decrease the dividend recorded in the year by £1.4 million and to increaseclosing balance sheet equity by £1.4 million as at 31 December 2004. IAS 17 Leases The Group amortises leasehold inducements received on entering into leases foroffice space over the term of the lease. Under UK GAAP the inducement wasamortised over the period to the first rental review. The change reduces opening balance sheet equity as at 1 January 2004 by £13.2million. The effect for the year ended 31 December 2004 is to reduce the posttax charge for operating leases in the income statement by £0.6 million and toincrease balance sheet equity by £0.6 million. IAS 19 Employee Benefits The Group recognises the net liability on defined benefit schemes in the balancesheet and takes all actuarial gains and losses to the statement of recognisedincome and expense, in accordance with the permitted methods of recognition onearly adoption of the amendment to IAS 19, issued in December 2004. Under UKGAAP the Group accounted for defined benefit schemes in accordance with SSAP 24'Accounting for pension costs'. These changes reduce opening balance sheet equity as at 1 January 2004 by £38.3million. The effect for the year ended 31 December 2004 is to reduce the posttax charge in the income statement by £7.5 million and to increase balance sheetequity by £1.5 million. A net charge of £6.0 million has been recogniseddirectly in equity. IAS 38 Intangible Assets The Group capitalises certain software expenditure as intangible assets wherethe expenditure meet the criteria for capitalisation set out in the standard.Under UK GAAP the Group wrote off software expenditure as incurred. The change increases opening balance sheet equity as at 1 January 2004 by £10.5million. The effect for the year ended 31 December 2004 is to increase the posttax charge to the income statement by £2.4 million and to decrease balance sheetequity by £2.4 million. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations The Group classifies certain 'seed capital' in funds where the investment iscontrolled by the Group as non-current assets 'Held for Sale'. In accordance with IFRS 5, this classification is only made where each fund isactively marketed and the investment is expected to be redeemed within one yearor, where the period is greater than one year, the investment meets the criteriain the standard to extend the period required to make a sale. Where suchinvestments do not satisfy these criteria they are consolidated. The standard is applicable for annual periods beginning on or after 1 January2005, and the Group has elected to adopt IFRS 5 from the date of transition.This results in investments being held at the lower of carrying value and fairvalue less costs to sell, where carrying value is either fair value on the dateof transition or the cost of the investment, if the investment is made after thedate of transition. Such investments were previously held at fair value under UKGAAP and classified as current asset investments. These changes have no impact on the opening balance sheet equity as at 1 January2004. The effect for the year ended 31 December 2004 is to reduce the gain oninvestments in the income statement by £3.6 million and to reduce closingbalance sheet equity as at 31 December 2004 by £3.6 million. IAS 18 Revenue Under IAS 18, when the outcome of a transaction involving the rendering ofservices can be estimated reliably, revenue associated with the transactionshould be recognised by reference to the stage of completion of the transactionat the balance sheet date. The guidance issued in the appendix to IAS 18 on theapplication of this principle states that revenues earned on investmentmanagement contracts, and related incremental costs associated with securingsuch contracts, should be recognised over the life of the contract. In line with standard industry practice, the Group has previously recognisedsome revenue streams and associated costs on the initiation of the contract.This is no longer allowable under the guidance issued in the appendix to IAS 18.Such revenues and associated costs have therefore been spread over the fixedperiod of the contract where applicable, or in the case of open ended contractsover the estimated average life of the contract. These changes reduce opening balance sheet equity as at 1 January 2004 by £11.3million. The effect on the year ended 31 December 2004 is to increase the posttax profit in the income statement by £2.2 million and to increase balance sheetequity by £2.2 million. IAS 39 Financial Instruments The Group has opted not to apply the requirements of IAS 39 in respect ofcomparative information. The Group will therefore follow the requirements ofIFRS 1 and disclose the nature of the main adjustments required for thecomparative information to comply with IAS 39 in the Group's first interimaccounts under IFRS. The main impact of the adjustments required by the Group under IAS 39 relates tothe Private Equity portfolio of investments where the portfolio will be includedin the balance sheet at fair value. This will have the effect of increasingopening balance sheet equity as at 1 January 2005 by approximately £46 million,largely due to the fair value ascribed to carried interests held in theunderlying funds, previously not recognised in the balance sheet under UK GAAP. The Group will adopt a policy of designating material Private Equity investmentsas 'Available-for-Sale' (AFS), where any profit or loss on such investments willbe recognised on realisation, whilst any unrealised gain or loss will be takento equity. The most significant impact of this approach is that gains and losseson investments previously classified as current assets under UK GAAP, butclassified in 2005 as AFS under IFRS, will no longer be marked to market throughthe income statement. The impact if this approach had been applied to the yearended 31 December 2004 would have been to reduce the gain on investments byapproximately £5 million. IAS 7 Cash Flow Statements The Group has prepared its cash flow statement in accordance with IAS 7. UnderIAS 7, the cash flow statement shows the movement in cash and cash equivalents,being defined as cash on hand, demand deposits and short term highly liquidinvestments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value. Under UK GAAP, the Group'scash flow statement showed the movement in cash repayable on demand only and inparticular excluded short term highly liquid investments. This change reduces the cash inflow by £101.3 million resulting in a net outflowof £3.0 million for the year ended 31 December 2004. All other adjustments madeby the Group to the cash flow statement represent reclassifications between lineitems and have not impacted actual cash flows. Further Communication The Group's first quarter trading update was published on 17 May 2005. Thechanges in accounting policies applied to that update are consistent with thoseset out in this announcement. The Group will publish its interim results in August 2005. The Interim Reportwill include a description of the nature and effect of all accounting policychanges on transition, reconciliations of the Group's financial informationincluded in this announcement from UK GAAP to IFRS for the 6 months ended 30June 2004, together with notes sufficient to give an understanding of the 6month period to 30 June 2005. Further copies of this announcement are available from the Company Secretary at31 Gresham Street, London, EC2V 7QA (email: [email protected]: 020 7658 3646) and will be available on the Group's website atwww.schroders.com together with further information about the Group's transitionto IFRS. Contacts: Schroders Jonathan Asquith Chief Financial Officer +44 (0) 20 7658 6565Chris Coombe Group Financial Controller +44 (0) 20 7658 6600Don Cathcart Head of Group Reporting +44 (0) 20 7658 2835Richard King Corporate Communications +44 (0) 20 7658 6522 The Maitland Consultancy Fiona Piper +44 (0) 20 7379 5151 The information in this announcement does not comprise statutory accounts withinthe meaning of section 240 of the Companies Act 1985 (the 'Act'). Statutoryaccounts for the year ended 31 December 2004 have been delivered to theRegistrar of Companies in accordance with Section 242 of the Act. Forward-looking statements This announcement contains certain forward-looking statements and forecasts withrespect to the financial condition, results of operations and businesses ofSchroders plc and its subsidiaries. These statements and forecasts involve riskand uncertainty because they relate to events and depend upon circumstances thatwill occur in the future. There are a number of factors that could cause actualresults or developments to differ materially from those expressed or implied bythese forward-looking statements and forecasts. Nothing in this announcementshould be construed as a profit forecast. Appendix 1 1 IFRS Primary Statements 1a Income Statement for the year ended 31 December 2004 1b Balance Sheet as at 31 December 2004 and 1 January 2004 1c Cash Flow Statement for the year ended 31 December 2004 1d Statement of Recognised Income and Expense for the year ended 31 December 2004 2 Reconciliations to Primary Statements 2a Income Statement for the year ended 31 December 2004 - Effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances 2b Income Statement for the year ended 31 December 2004 - Effect of other standards 2c Balance Sheet as at 1 January 2004 (Opening Balance Sheet) - Effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances 2d Balance Sheet as at 1 January 2004 (Opening Balance Sheet) - Effect of other standards 2e Balance Sheet as at 31 December 2004 - Effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances 2f Balance Sheet as at 31 December 2004 - Effect of other standards 2g Cash Flow Statement for the year ended 31 December 2004 - Effect of IFRS on UK GAAP Cash Flow 2h Statement of Recognised Income and Expense for the year ended 31 December 2004 - Effect of IFRS on UK GAAP balances 1a INCOME STATEMENT for the year ended 31 December 2004 IFRS 2004--------------------------------------------------- £mn Revenue 625.5Profit on disposal of non-current 47.8asset investments ------------Total revenue 673.3 Cost of sales (86.7) ------------Gross profit 586.6 Administrative expenses (396.2)Depreciation (12.4) ------------Operating profit 178.0 Share of operating profit of 6.0associatesInterest receivable and similar 28.3incomeInterest payable and similar charges (0.7) ------------Profit before tax 211.6 Tax (40.3) ------------Profit after tax 171.3 ------------ Profit attributable to minority 15.6interestsProfit attributable to equity 155.7shareholders ------------ 171.3 ------------ Memo - dividends (56.4) 1b BALANCE SHEET as at 31 December 2004 IFRS IFRS 31 Dec 1 Jan 2004 2004----------------------------------------------------------------------- £mn £mnNon-current assetsIntangible assets 35.8 39.2Property, plant & equipment 7.5 10.7Associates 54.9 49.9Other investments 64.9 66.7Deferred tax 54.1 60.0Current tax 0.8 -Trade and other receivables 211.3 243.8 -------- -------- 429.3 470.3Current assetsTrade and other receivables 489.1 487.7Current tax 2.0 3.0Investments 1,346.6 1,263.7Cash and cash equivalents 432.1 438.5 -------- -------- 2,269.8 2,192.9 Non-current assets held for sale 31.2 5.7 -------- --------Total assets 2,730.3 2,668.9 -------- -------- EquityCalled up share capital 297.0 296.3Share premium account 26.7 22.0Shares to be issued - 4.9Capital reserves 160.5 130.8Own shares held (30.1) (35.1)Retained profits 681.9 610.1 -------- -------- Equity attributable to equity holders of 1,136.0 1,029.0the parent Minority interests 11.4 - -------- --------Total equity 1,147.4 1,029.0 Non-current liabilitiesDebt securities in issue - 44.6Trade and other payables 226.9 233.1Current tax 5.2 5.5Provisions 6.9 4.5Deferred tax 4.2 3.4 -------- -------- 243.2 291.1Current liabilitiesDebt securities in issue 34.3 4.3Trade and other payables 1,263.0 1,303.3Current tax 30.4 19.7Provisions 12.0 21.5 -------- -------- 1,339.7 1,348.8 -------- --------Total equity and liabilities 2,730.3 2,668.9 -------- -------- 1c CASH FLOW STATEMENT for the year ended 31 December 2004 IFRS 2004------------------------------------------------------ £mnOperating activitiesOperating profit 178.0Depreciation of property, plant & equipment 12.4(Increase)/decrease in debtors 35.0(Decrease)/increase in creditors and (20.3)other provisionsNet increase in debt securities in issue (6.4)Profit on disposal of business (2.6)Profit on disposal of non-current asset (47.8)investmentsReversal of impairment of non-current asset (1.3)investmentsProvision for liabilities and charges 2.2(Gains)/losses on current asset (16.0)investmentsShare based payments expensed (9.3)Other non-cash movements 14.8United Kingdom corporation tax (paid)/ (1.5)receivedOverseas tax paid (17.0)Interest paid (0.7)Net decrease in current asset (113.2)investments ------------Net cash from operating activities 6.3 Investing activitiesProceeds from disposal of subsidiaries /business 2.8Purchase of intangible assets (3.8)Purchase of property, plant & equipment (3.4)Purchase of non current asset investments (59.4)Proceeds from sale of property, plant & equipment 1.0Proceeds from sale of non current 57.2asset investmentsNet purchase of current asset investments (5.8)Interest received 29.4Dividends/capital distributions received from 0.2associates & joint venturesExceptional items - disposal of 42.2non-current asset investments ------------Net cash from investing activities 60.4 Financing activitiesProceeds from issue of share capital 0.6Acquisition of own shares (8.9)Redemption of ordinary share capital (0.6)Distributions made to minority interests (4.4)Dividends paid (56.4) ------------Net cash used in financing (69.7) ------------Net decrease in cash and cash (3.0)equivalents ------------ Opening cash and cash equivalents 438.5Net decrease in cash and cash equivalents (3.0)Effect of exchange rate changes (3.4) ------------Closing cash and cash equivalents 432.1 ------------ 1d STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 31 December2004 IFRS 2004---------------------------------------------------- £mn Exchange differences on translation of (8.0)foreign operationsActuarial losses on defined benefit (8.4)pension schemesShare based payments 14.5Tax on items taken directly to equity 4.3 ----------Net income recognised directly in equity 2.4 Profit for the year 171.3 ----------Total recognised income and expense for 173.7the year ----------Attributable to:Minority interests 15.6Equity shareholders 158.1 ---------- 173.7 ---------- 2a INCOME STATEMENT for the year ended 31 December 2004 (a) Effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances -------------------------------------------------------------------------------------------------------------------UK GAAP balances in UK GAAP format IFRS adjustments UK GAAP balances in IFRS format Amortisation of Revenues goodwill-------------------------------------------------------------------------------------------------------------------- £mn £mn £mn £mnNet revenues 515.8 (515.8) - 624.0 - 624.0 Revenue 47.8 - 47.8 Profit on disposal of --------- non-current asset investments 671.8 Total revenue (84.7) - (84.7) Cost of sales --------- 587.1 Gross profitGains on current asset 19.6 (19.6) -investmentsAdministrative expenses (415.2) - (9.9) (425.1) Administrative expensesDepreciation (4.6) - - (4.6) DepreciationAmortisation of goodwill (9.9) - 9.9 ---------- ---------- ---------- ---------Group operating profit 105.7 51.7 - 157.4 Operating profitShare of operating profit 6.0 - - 6.0 Share of operating profit ofof associates ---------- ---------- ---------- --------- associatesTotal operating profit 111.7 51.7 - 163.4Profit on disposal of 2.6 (2.6) -businessProfit on disposal of fixed 47.8 (47.8) -asset investmentsInterest receivable and 28.3 - - 28.3 Interest receivable and similarsimilar income incomeAmounts written back to 1.3 (1.3) -fixed asset investmentsInterest payable and (0.7) - - (0.7) Interest payable and similarsimilar charges ---------- ---------- ---------- --------- chargesProfit on ordinary 191.0 - - 191.0 Profit before taxactivities before taxTax charge on profit on (41.4) - - (41.4) Taxordinary activities ---------- ---------- ---------- ---------Profit on ordinary 149.6 - - 149.6 Profit after taxactivities after tax ---------- ---------- ---------- ---------Minority interests 15.6 - - 15.6 Profit attributable to minority interestsProfit attributable to 134.0 - - 134.0 Profit attributable to equityshareholders ---------- ---------- ---------- --------- shareholders 149.6 - - 149.6 ---------- ---------- ---------- ---------Dividends (57.8) - - (57.8) Memo - dividends 2b INCOME STATEMENT for the year ended 31 December 2004 (a) Effect of other standards ------------------------------------------------------------------------------------------------------------------UK GAAP balances in IFRS format IFRS adjustments IFRS Intang- Share-based Good- Divid- Leases Employ- ible 'Held Total payment will ends ee assets for IFRS benefits Sale' Revenue adjust- IFRS 2 IFRS 3 IAS 10 IAS 17 IAS 19 IAS 38 IFRS 5 IAS 18 Other ments ------------------------------------------------------------------------------------------------------------------ £mn £mn £mn £mn £mn £mn £mn £mn £mn £mn £mn £mn Revenue 624.0 - - - - - - (3.6) 5.1 - 1.5 625.5 Profit on disposal of 47.8 - - - - - - - - - - 47.8 non-current asset investments ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Total revenue 671.8 - - - - - - (3.6) 5.1 - 1.5 673.3 Cost of sales (84.7) - - - - - - - (2.0) - (2.0) (86.7) ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Gross profit 587.1 - - - - - - (3.6) 3.1 - (0.5) 586.6 Administrative (425.1) 9.3 9.9 - 1.2 4.7 3.8 - 0.1 (0.1) 28.9 (396.2)expenses Depreciation (4.6) - - - (0.6) - (7.2) - - - (7.8) (12.4) ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Operating profit 157.4 9.3 9.9 - 0.6 4.7 (3.4) (3.6) 3.2 (0.1) 20.6 178.0 Share of operating 6.0 - - - - - - - - - - 6.0 profit of associates Interest receivable and 28.3 - - - - - - - - - - 28.3 similar income Interest payable and (0.7) - - - - - - - - - - (0.7) similar charges ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Profit before tax 191.0 9.3 9.9 - 0.6 4.7 (3.4) (3.6) 3.2 (0.1) 20.6 211.6 Tax (41.4) (1.8) - - - 2.8 1.0 - (1.0) 0.1 1.1 (40.3) ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ ------- Profit after tax 149.6 7.5 9.9 - 0.6 7.5 (2.4) (3.6) 2.2 - 21.7 171.3 ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Profit attributable to 15.6 - - - - - - - - - - 15.6 minority interests Profit attributable to 134.0 7.5 9.9 - 0.6 7.5 (2.4) (3.6) 2.2 - 21.7 155.7 equity shareholders ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ ------- 149.6 7.5 9.9 - 0.6 7.5 (2.4) (3.6) 2.2 - 21.7 171.3 ------ ------ ------ ------- ------ ------- ------ ------- ------ ------ ------ -------Memo - dividends (57.8) - - 1.4 - - - - - - 1.4 (56.4) 2c BALANCE SHEET as at 1 January 2004 (Opening Balance Sheet) (a) Effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances -----------------------------------------------------------------------------------------------------------------------UK GAAP balances in UK GAAP IFRS adjustments UK GAAP balances in IFRS format format Own Investments Debtors Creditors Provisions Shares------------------------------------------------------------------------------------------------------------------------ £mn £mn £mn £mn £mn £mn £mnFixed assets Non-current assetsIntangible assets - 24.5 - - - - - 24.5 Intangible goodwill assetsTangible assets 10.1 - - - - - 10.1 Property, plant & equipmentAssociates 49.9 - - - - - 49.9 AssociatesOther investments 66.7 - - - - - 66.7 Other investments - 53.6 - - - 53.6 Deferred tax - 223.5 - - - 223.5 Trade and other receivables ---------- ------ ------ ------ ------ ------ ------ 151.2 - 277.1 - - - 428.3 ---------- ------ ------ ------ ------ ------ ------Current assets Current assetsDebtors due after 266.2 - (266.2) - - -more than one yearDebtors due within 499.9 - (13.9) - - - 486.0 Trade and one year other receivables - 3.0 - - - 3.0 Current taxInvestments 1,245.0 18.7 - - - - 1,263.7 InvestmentsCash and balances 462.9 (24.4) - - - - 438.5 Cash and with banks cash equivalents ---------- ------ ------ ------ ------ ------ ------ 2,474.0 (5.7) (277.1) - - - 2,191.2 ---------- ------ ------ ------ ------ ------ ------ 5.7 - - - - 5.7 Non-current assets held for sale ---------- ------ ------ ------ ------ ------ ------ Total assets 2,625.2 - - - - - 2,625.2 Total assets ---------- ------ ------ ------ ------ ------ ------Capital and EquityreservesCalled up share 296.3 - - - - - 296.3 Called up capital share capitalShare premium 22.0 - - - - - 22.0 Share account premium accountShares to be issued 4.9 - - - - - 4.9 Shares to be issuedCapital reserves 130.8 - - - - - 130.8 Capital reserves - - - - (35.1) (35.1) Own shares heldProfit and loss 575.2 - - - - 35.1 610.3 Retained account profits ---------- ------ ------ ------ ------ ------ ------Equity shareholders' 1,029.2 - - - - - 1,029.2 Equity funds attributable to equity holders of the parentMinority interests - - - - - - - Minority interests ---------- ------ ------ ------ ------ ------ ------Total equity 1,029.2 - - - - - 1,029.2 Total shareholders' funds equity ---------- ------ ------ ------ ------ ------ ------Creditors Non-current liabilitiesAmounts falling due 213.0 - - (213.0) - - after more than oneyear - - 44.6 - - 44.6 Debt securities in issue - - 162.9 - - 162.9 Trade and other payables - - 5.5 - - 5.5 Current tax - - - 4.4 - 4.4 Provisions - - - 6.2 - 6.2 Deferred tax ---------- ------ ------ ------ ------ ------ ------ 213.0 - - - 10.6 - 223.6 ---------- ------ ------ ------ ------ ------ ------Creditors 1,350.6 - - (1,350.6) - - Current liabilitiesAmounts falling duewithin one year - - 4.3 - - 4.3 Debt securities in issue - - 1,326.6 - - 1,326.6 Trade and other payables - - 19.7 - - 19.7 Current tax - - - 21.8 - 21.8 Provisions Provisions for 32.4 - - - (32.4) -liabilities and charges ---------- ------ ------ ------ ------ ------ ------ 1,383.0 - - - (10.6) - 1,372.4 ---------- ------ ------ ------ ------ ------ ------Total equity and 2,625.2 - - - - - 2,625.2 Total liabilities equity and liabilities ---------- ------ ------ ------ ------ ------ ------ 2d BALANCE SHEET as at 1 January 2004 (Opening Balance Sheet)(b) Effect of other standards ---------------------------------------------------------------------------------------------------------------------- UK GAAP balances in IFRS Adjustments IFRS IFRS format Share- based Employee Intangible payment Dividends Leases benefits assets Revenue Other Total IFRS IFRS 2 IAS 10 IAS 17 IAS 19 IAS 38 IAS 18 Adjustments---------------------------------------------------------------------------------------------------------------------- £mn £mn £mn £mn £mn £mn £mn £mn £mn £mnNon-currentassetsIntangible 24.5 - - - - 14.7 - - 14.7 39.2assetsProperty, 10.1 - - 0.6 - - - - 0.6 10.7plant &equipmentAssociates 49.9 - - - - - - - - 49.9Other 66.7 - - - - - - - - 66.7investmentsDeferred tax 53.6 (1.4) - 0.1 5.6 (2.4) 4.7 (0.2) 6.4 60.0Trade and 223.5 - - 0.3 - - 20.0 - 20.3 243.8otherreceivables ------- ---------------------------------------------------------------------------------- ------- 428.3 (1.4) - 1.0 5.6 12.3 24.7 (0.2) 42.0 470.3 ------- ---------------------------------------------------------------------------------- -------Current assetsTrade and 486.0 - - 0.2 (15.6) - 17.1 - 1.7 487.7otherreceivablesCurrent tax 3.0 - - - - - - - - 3.0Investments 1,263.7 - - - - - - - - 1,263.7Cash and cash 438.5 - - - - - - - - 438.5equivalents ------- ---------------------------------------------------------------------------------- ------- 2,191.2 - - 0.2 (15.6) - 17.1 - 1.7 2,192.9 ------- ---------------------------------------------------------------------------------- -------Non-current 5.7 - - - - - - - - 5.7assets heldfor sale ------- ---------------------------------------------------------------------------------- -------Total assets 2,625.2 (1.4) - 1.2 (10.0) 12.3 41.8 (0.2) 43.7 2,668.9 ------- ---------------------------------------------------------------------------------- -------EquityCalled up 296.3 - - - - - - - - 296.3share capitalShare premium 22.0 - - - - - - - - 22.0accountShares to be 4.9 - - - - - - - - 4.9issuedCapital 130.8 - - - - - - - - 130.8reservesOwn shares (35.1) - - - - - - - - (35.1)heldRetained 610.3 14.8 37.6 (13.2) (38.3) 10.5 (11.3) (0.3) (0.2) 610.1profits ------- ---------------------------------------------------------------------------------- -------Equity 1,029.2 14.8 37.6 (13.2) (38.3) 10.5 (11.3) (0.3) (0.2) 1,029.0attributableto equityholders ofthe parent ------- ---------------------------------------------------------------------------------- -------Non-currentliabilitiesDebt 44.6 - - - - - - - - 44.6securities inissueTrade and 162.9 - - 12.9 32.2 - 25.1 - 70.2 233.1other payablesCurrent tax 5.5 - - - - - - - - 5.5Provisions 4.4 - - 0.1 - - - - 0.1 4.5Deferred tax 6.2 0.1 - (0.1) (4.7) 1.8 - 0.1 (2.8) 3.4 ------- ---------------------------------------------------------------------------------- ------- 223.6 0.1 - 12.9 27.5 1.8 25.1 0.1 67.5 291.1 ------- ---------------------------------------------------------------------------------- -------CurrentliabilitiesDebt 4.3 - - - - - - - - 4.3securities inissueTrade and 1,326.6 (16.3) (37.6) 1.8 0.8 - 28.0 - (23.3) 1,303.3other payablesCurrent tax 19.7 - - - - - - - - 19.7Provisions 21.8 - - (0.3) - - - - (0.3) 21.5 ------- ---------------------------------------------------------------------------------- ------- 1,372.4 (16.3) (37.6) 1.5 0.8 - 28.0 - (23.6) 1,348.8 ------- ---------------------------------------------------------------------------------- -------Total equity 2,625.2 (1.4) - 1.2 (10.0) 12.3 41.8 (0.2) 43.7 2,668.9andliabilitiesRelated Shares:
Schroders