30th Nov 2005 09:23
Redrow PLC30 November 2005 30 November 2005 Redrow plc The announcement with RNS Number 8568U issued by Redrow at 7.00 am this morningappeared under the incorrect headline of "Final Results" instead of "IFRSRestatement". The attached text, which is unchanged from that released thismorning, replaces that announcement and deals with the Group's Transition toIFRS. Transition to International Financial Reporting Standards Redrow plc, in preparation for the adoption of International Financial ReportingStandards (IFRS) for the year ended 30 June 2006, is today holding a meetingwith analysts to present its restated financial statements for the year ended 30June 2005 and the six months ended 31 December 2004. Redrow plc's first published financial statements under IFRS will be in respectof the six months ending 31 December 2005 with the first Annual Report andAccounts prepared on this basis being available for the year ending 30 June2006. Key Points No impact upon the Group's strategy or its capability to deliver shareholdervalue into the future Cashflows unaffected Reported revenue unchanged Profit before tax for the year ended 30 June 2005 restated to £139.0m (ReportedUK GAAP: £141.1m) Basic earnings per share restated to 60.7p (Reported UK GAAP: 62.1p) Reporting Timetable: H1 2005/06 Trading Update - 5 January 20062005/06 Interim Results Announcement - - 7 March 2006Full year 2005/06 Trading Update - 6 July 20062005/06 Preliminary Announcement - 12 September 2006 Enquiries: Redrow plc David Arnold, Group Finance Director 01244 520044 Brunswick Nina Coad 020 7404 5959 Redrow plc Preliminary information in respect of the transition to International FinancialReporting Standards Contents Page Introduction 3Executive Summary 4Transitional Arrangements 5Summary of the Principal Impacts 6 - 8Accounting Policies 9 - 12Consolidated Income Statement 13Consolidated Statement of Recognised Income and Expense 14Consolidated Balance Sheet 15Consolidated Cash Flow Statement 16Appendices 17 - 22 Introduction For all accounting periods up to and including the year ended 30 June 2005,Redrow plc has prepared its financial statements in accordance with UK GenerallyAccepted Accounting Principles (UK GAAP). For accounting periods commencing on or after 1 January 2005, all listedcompanies throughout the European Union (EU) are required to prepareconsolidated financial statements in accordance with International FinancialReporting Standards (IFRS). As a result, Redrow plc's first published financial statements under IFRS willbe in respect of the six months ending 31 December 2005, with the first AnnualReport and Accounts prepared on this basis being available for the year ending30 June 2006. As comparative figures are required to be provided, the effective date oftransition to IFRS is 1 July 2004, and hence the balance sheet as at 1 July 2004has been restated to form the opening balance sheet under IFRS. This document provides an analysis of the effects on Redrow plc's consolidatedfinancial statements of the transition from UK GAAP to IFRS, together withpreviously published UK GAAP information for the year ended 30 June 2005 and thesix months ended 31 December 2004 restated on an IFRS basis. The Group'sstatutory financial statements for the year ended 30 June 2005, prepared underUK GAAP, have been filed with the Registrar of Companies. The report of theauditors on these financial statements was unqualified and did not contain aStatement under either section 237(2) or section 237(3) of the Companies Act1985. The restated information has been prepared in accordance with IFRS that areeither endorsed by the EU and effective, or are expected to be endorsed andeffective at 30 June 2006, the Group's first annual reporting date at which itis required to use IFRS. However, these, and best practice regarding theinterpretation and application of IFRS, are subject to ongoing review, andtherefore the information contained within this document may be subject tochange prior to the publication of the Annual Report and Accounts for the yearending 30 June 2006. Executive Summary It is important to note that for Redrow plc, the move to IFRS: • will not impact its strategy or its capability to deliver shareholder value into the future • will leave cashflows unaffected • will not impact the ability of Redrow plc to pay dividends or adversely impact its dividend policy Redrow did not carry any goodwill in its balance sheet at 1 July 2004 or 30 June2005 and therefore Redrow is unaffected by the impact of IFRS 3: BusinessCombinations in respect of the need to test goodwill for impairment at eachreporting date. The adoption of IFRS has the following impact on the key reported results forthe year ended 30 June 2005: Reported UK GAAP IFRS Change £m £m £mGroup revenue 780.4 780.4 -Profit before taxation 141.1 139.0 -2.1Profit after taxation 98.7 96.5 -2.2Net Assets/Total Equity 459.0 452.5 -6.5 Earnings per share (basic) 62.1p 60.7p -1.4pEarnings per share (diluted) 61.9p 60.5p -1.4p Appendices A to F provide reconciliations of the differences between thereported results under UK GAAP and IFRS. Transitional Arrangements IFRS 1 'First-time Adoption of International Financial Reporting Standards' isthe standard outlining the rules for first-time adoption of IFRS. IFRS 1 requires a company to adopt accounting policies which comply with theIFRS effective at the closing balance sheet date for its first consolidatedfinancial statements prepared under IFRS. The adopted accounting policies arethen applied retrospectively in order to determine its opening balance sheetunder IFRS at the date of transition. IFRS 1 does however permit a number ofexemptions from full retrospective application to assist the transition to IFRS.Redrow plc intends to apply the following exemptions: IAS 19: 'Employee Benefits' Redrow plc intends to take advantage of the option to recognise all cumulativeactuarial gains and losses arising in its pension scheme in full in its balancesheet at 1 July 2004, the effective date of transition to IFRS. From 1 July 2004, as permitted under the revised IAS 19 issued in December 2004,it is intended to recognise actuarial gains and losses in full in the period inwhich they are incurred in reserves via the statement of recognised income andexpense. IFRS 2: Share-based Payment Redrow plc intends to take advantage of the transitional provisions allowing theapplication of IFRS 2 to grants of share options that took place after 7November 2002 which had not vested at the effective date of transition to IFRS. IFRS 3: Business Combinations Redrow plc intends to apply IFRS 3 prospectively from 1 July 2004, the effectivedate of transition to IFRS. IFRS 1: Revaluation as Deemed Cost At 1 July 2004, as permitted under UK GAAP FRS 15 transitional arrangements,Redrow plc carried a freehold property at its revalued amount less accumulateddepreciation. This revaluation was undertaken at 30 June 1989 on an open marketbasis. An IFRS 1 exemption allows the use of this fair value as deemed cost atthe effective date of transition to IFRS and Redrow plc intends to adopt thistreatment. IAS 39: Financial Instruments: Recognition and Measurement Redrow plc intends to adopt IAS 39 with effect from 1 July 2004, its effectivedate of transition to IFRS. Summary of the Principal Impacts The principal impacts in respect of the transition to IFRS upon the previouslyreported UK GAAP financial statements of Redrow plc are: 1. IAS 19 : Employee Benefits2. IAS 2 : Inventories3. IAS 39 : Financial Instruments4. IFRS 2 : Share-based Payment5. IAS 10 : Events after the Balance Sheet Date6. IAS 38 : Intangible Assets7. IAS 31 : Interests in Joint Ventures 1. IAS 19: Employee Benefits Defined contribution pension schemes are unaffected by IAS 19. In respect of its defined benefit pension scheme, Redrow plc is required underIAS 19 to recognise the net surplus or deficit in the scheme on its balancesheet. IAS 19 also requires that a provision be made in respect of holiday paydue to employees, where the holiday year-end does not coincide with that of thefinancial year-end. The impact on the opening balance sheet at 1 July 2004 is to recognise a netdeficit of £6.1m representing a gross deficit of £7.9m in respect of the pensiondeficit, a £0.8m provision in respect of holiday pay and a deferred tax asset of£2.6m. The principal components of the defined benefit pensions charge to theconsolidated income statement are the current service cost and finance costs.Current service cost has been included in administrative expenses to the extentthat it exceeds the UK GAAP charge, resulting in an increase in administrativeexpenses of £0.4m and an increase in finance costs of £0.3m in the year ended 30June 2005. Actuarial gains of £0.7m in the year ended 30 June 2005 have been taken directlyto reserves as permitted under IAS 19 (December 2004 amendment) via thestatement of recognised income and expense. At 30 June 2005, the restated IFRS balance sheet recognised a net deficit of£6.1m with both pension deficit and holiday pay provisions unchanged. 2. IAS 2: Inventories In accordance with IAS 2, all marketing and selling costs are excluded from thecost of inventories and are expensed as incurred. Under UK GAAP, Redrow plc included certain direct selling costs in arriving atthe cost of work in progress, as permitted under SSAP 9. The impact of thischange on the opening balance sheet at 1 July 2004 is to reduce work in progressby £9.6m and create a deferred tax asset of £2.9m. The overall impact on netassets is a reduction of £6.7m. The adoption of IFRS will generally lead to earlier recognition of directselling costs than was the case under UK GAAP. This arises because previously,direct selling costs were reflected within the reported gross profit of eachhome as it legally completed. Since selling costs are usually borne prior tolegal completion, recognition of these costs as incurred will be reflectedearlier. There was a £0.9m impact on the reported cost of sales for the year ended 30June 2005 as a result of the adoption of IAS 2. Due to the product mix andnumber of new developments being marketed in the financial year ending June2006, the implementation of IAS 2 is likely to have a slightly greater impactupon the gross margin than in the previous year. At 30 June 2005, the restated IFRS balance sheet showed a £10.5m reduction inwork in progress partly offset by the creation of a £3.2m deferred tax assetresulting in a £7.3m reduction in net assets. 3. IAS 39: Financial Instruments: Recognition and Measurement i) Land Creditors In accordance with IAS 39, the deferred payments arising from land creditors areto be held at discounted present value, hence recognising a financing element onthe deferred settlement terms. The liability is then increased to thesettlement value over the period of the deferral. The value of the discount isexpensed through net financing costs in the consolidated income statement. The impact on the opening balance sheet at 1 July 2004 was to reduce landcreditors by £3.2m, reduce the land balance by £8.4m, recognise a deferred taxasset of £1.6m and reduce opening reserves by £3.6m. The IFRS treatment of land creditors has an impact on the timing of the costscharged to the income statement. This will generally result in the financeelement in respect of the land creditor being expensed in advance of thecompensating improvement in gross profit as a result of legal completionsgenerally continuing beyond the settlement date of the land creditor for themajority of projects. Cost of sales for the year ended 30 June 2005 reduced by £1.2m with netfinancing costs increasing by £2.5m as a result of the timing of the value ofdiscount being expensed. At 30 June 2005, the revised IFRS balance sheet had a reduction in landcreditors of £5.5m, a decrease in the value of land held in stock of £12.0m, adeferred tax asset of £1.9m and a reduction in reserves of £4.6m. ii) Financial Instruments and Trade Receivables Under IAS 39, the fair value of the Group's cashflow hedging arrangements mustbe recognised in the balance sheet. Any gains or losses on the fair value ofthe cashflow hedging arrangements are taken to reserves until they are realised.Long term trade debtors are to be held at discounted present value, hencerecognising a financing element. The debtor is then increased to settlementvalue over the period of the deferred terms. The impact on the opening balance sheet at 1 July 2004 was to recognise a £1.4masset in respect of derivative financial instruments, a £0.4m deferred taxliability and a £1.0m hedge reserve. Trade receivables reduce by £0.2m with anassociated £0.1m deferred tax asset and a £0.1m reduction in retained earnings. At 30 June 2005, the IFRS revised balance sheet impact was a £0.2m reduction innet assets following a net £1.1m charge direct to the hedge reserve via thestatement of recognised income and expense. 4. IFRS 2: Share-based Payment In accordance with IFRS 2, a charge has been recognised for share optionsgranted on or after 7 November 2002. The charge is spread over the vestingperiod, with adjustments made to reflect the actual and expected number ofshares vesting at the year-end. The Black Scholes option pricing model has beenused to determine the extent of the charge. The impact on the opening balance sheet as at 1 July 2004 was a £0.1m increasein deferred tax assets. The impact on the income statement for the year ended 30 June 2005 was anincrease in administrative expenses of £0.2m. At 30 June 2005, the IFRS revised balance sheet impact was a £0.2m increase indeferred tax assets. 5. IAS 10: Events After the Balance Sheet Date Under IAS 10, the declaration of a dividend after the reporting date is nolonger an adjusting post balance sheet event as it was under UK GAAP.Accordingly, the final dividends for the years ended 30 June 2004 and 30 June2005 do not constitute a liability at the respective balance sheet dates underIAS 10. The impact on the opening balance sheet as at 1 July 2004 was a £9.5m increasein net assets. The impact on the balance sheet at 30 June 2005 was an increase in net assets of£11.5m. 6. IAS 38: Intangible Assets Under IAS 38, eligible software development costs that were previously heldwithin tangible fixed assets under UK GAAP must now be classified as intangiblefixed assets. As this is a balance sheet re-categorisation, with no change indepreciation rates, there is no impact on the income statement. The impact on the opening balance sheet as at 1 July 2004 was a reduction of£0.4m of plant, property and equipment with a corresponding £0.4m increase inintangible assets. The impact on the balance sheet as at 30 June 2005 was a reduction of £0.2m ofplant, property and equipment with a corresponding increase of £0.2m inintangible assets. 7. IAS 31: Interests in Joint Ventures Redrow intends to account for jointly-controlled entities using the equitymethod of accounting. Under IAS 31, such an approach requires the results ofjointly-controlled entities to be reflected as a separate item on a post taxbasis and disclosed immediately before profit before tax. This contrasts with UKGAAP, where the results are disclosed at an operating profit level with thejointly-controlled entities' financing costs and tax charges included within thecorresponding headings for the Group income statements. Appendix A sets out thepresentational impact upon the UK GAAP reported results of the adjustmentsrequired under IAS 31 for the six months ended 31 December 2004 and twelvemonths ended 30 June 2005. Accounting Policies This section outlines the more important accounting policies which have beenapplied in the preparation of the consolidated financial statements presented inthis document: Basis of Consolidation The consolidated financial statements incorporate the financial statements ofRedrow plc and all its subsidiaries, together with the Group's share of theresults and share of net assets of jointly-controlled entities made up to 30 June each year, i.e. the financialstatements of Redrow plc and entities controlled by Redrow plc (and itssubsidiaries). Control is achieved where Redrow plc has the power to govern thefinancial and operating policies of an entity. a) Subsidiaries The results of subsidiaries acquired or disposed of during the yearare included in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal. The purchase method ofaccounting is used to account for the acquisition of subsidiaries by the Group.Identifiable assets acquired and liabilities and contingent liabilities assumedin a business combination are measured at their fair value at the date ofacquisition. Any excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets represents goodwill. Goodwill issubject to an annual impairment review, with any reduction in value being takenstraight to the income statement. Adjustments are made as necessary to the financial statements ofsubsidiaries to ensure consistency with the policies adopted by the Group. All significant inter-company transactions and balances betweenGroup companies are eliminated on consolidation. b) Interests in Joint Ventures A joint venture is a contractual arrangement whereby the Group and otherparties undertake an economic activity which is subject to joint control. Jointventure arrangements which involve the establishment of a separate entity inwhich each venturer has an interest are referred to as jointly-controlledentities. The Group reports its interests in jointly-controlled entities usingthe equity method of accounting - the Group's share of profit after tax is shownseparately on the face of the income statement and its share of net assets isincluded within non-current assets in the balance sheet as an investment. When the Group transacts with its jointly-controlled entities, unrealisedprofits and losses are eliminated to the extent of the Group's interest in thejoint venture, except where unrealised losses provide evidence of impairment ofthe asset transferred. Where joint venture arrangements are undertakendirectly, the Group's share of jointly-controlled assets and liabilities arerecognised in the relevant subsidiary company and classified according to theirnature. Revenue and Profit Recognition Revenue represents the fair value received and receivable in respect of the saleof residential housing and commercial land and developments net of value addedtax and discounts. This is recognised on legal completion. Profit is recognised on legal completion. Net Finance Costs Interest income is recognised on a time-apportioned basis by reference to theprincipal outstanding and the applicable interest rate. Borrowing costs arerecognised in the income statement on an accruals basis in the period in whichthey are incurred. Income Tax Income tax comprises current tax and deferred tax. Current tax is based on taxable profits for the year and any appropriateadjustment to tax payable in respect of prior years. Taxable profit differs fromprofit before taxation per the income statement as it excludes income orexpenditure items which are never chargeable or allowable for tax or which arechargeable or deductible in other accounting periods. Deferred tax is provided in full, using the balance sheet liability method, ontemporary differences arising between the carrying amounts of assets andliabilities in the consolidated financial statements and the corresponding taxbases used in the calculation of taxable profit. Deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Deferred tax liabilities are recognised for all temporarydifferences. Deferred tax is calculated at the rates expected to apply when theasset or liability is settled. Deferred tax is credited or charged in the Income Statement unless it relates toitems credited or charged through the Statement of Recognised Income and Expensewhen it is also credited or charged through that statement. Intangible Assets - Computer Software Acquired computer software licences are capitalised on the basis of costsincurred to bring to use the specific software and are amortised over theirestimated useful lives of three years. Property, Plant and Equipment Freehold property comprises offices or other buildings held for administrativepurposes. Freehold property is shown at cost (or deemed cost at opening balancesheet date under the IFRS 1 transitional rules) less the subsequent depreciation of buildings. Longleasehold property comprises offices. The building element of the lease isaccounted for as a finance lease and the land element of the lease is accountedfor as an operating lease. All other property, plant and equipment is stated at historic cost lessdepreciation. Historic cost includes any costs directly attributable tobringing the assets to the location and condition necessary for them to becapable of operating in the manner intended by management. Land is not depreciated. Depreciation on other assets, excluding assets in thecourse of construction, is charged so as to write off the cost of assets totheir residual values over their estimated useful lives, on a straight linebasis as follows: Buildings 50 years Plant & machinery 5 - 10 years Fixtures & fittings 3 - 5 years The gain or loss arising on the disposal of an asset represents the differencebetween the sales proceeds and the carrying amount of the asset and isrecognised in the income statement. In the parent company books, the investment in its subsidiaries is held at cost. Leases Leases in which substantially all of the risks and rewards of ownership areretained by the lessor are classified as operating leases. Rentals payableunder operating leases are charged to work in progress or income on a straightline basis over the term of the relevant lease. Leases classified as financeleases are those where substantially all of the risks and rewards of ownershippass to the lessee. Assets held under finance leases are recognised as assetsof the Group at their fair value at the date of acquisition or the present valueof monthly lease payments if lower. The corresponding liability to the lessoris included in the balance sheet as a finance lease obligation. Inventories Inventories are stated at the lower of cost and net realisable value less cashon account. Cost comprises land and associated acquisition costs, direct materials andsub-contract work, other direct costs and those overheads (based on normaloperating capacity) that have been incurred in bringing the inventories to theirpresent location and condition. Net realisable value represents the estimatedselling price in the normal course of business less relevant variable marketing,selling and distribution expenses. Employee Benefits a) Pension Obligation The Group operates a contributory pension scheme for all its staff.The scheme is externally invested and comprises two sections: a defined benefitsection and a defined contribution section. A defined benefit plan is a pensionplan which defines an amount of pension benefit that an employee will receive onretirement. It is funded through payments to trustee-administered funds,determined by actuarial valuations carried out on at least a triennial basis. Adefined contribution plan is a pension plan under which the Group pays agreedcontributions into a separate fund for each employee and any subsequent pensionpayable to a specific employee is determined by the amount accumulated in theirindividual fund. The liability recognised in the balance sheet in respect of thedefined benefit section of the scheme is the present value of the definedbenefit obligation at the balance sheet date, less the fair value of planassets. The defined benefit obligation is determined using the projected unitcredit method on an annual basis by an independent scheme actuary. Under IAS 19, revised December 2004, actuarial gains and lossesarising from experience adjustments and changes in actuarial assumptions arecharged or credited to equity as they arise in full via the statement ofrecognised income and expenses. Scheme service costs are charged to gross contribution andadministrative expenses as appropriate and scheme finance costs are included innet financing costs. Past service costs are recognised immediately to the extent that thebenefits are already vested, or otherwise amortised on a straight line basisover the vesting period, if they are conditional on the employees remaining inservice for a further period. In respect of the defined contribution section of the scheme,contributions are recognised as an employee benefit expense when they are due.The Group has no further payment obligations in respect of the definedcontribution section of the Scheme once the contributions have been paid. b) Bonus Plans The Group recognises a liability and an expense for bonuses wherecontractually obliged. Derivative Financial Instruments Derivative financial instruments are initially recorded at cost and arere-measured to fair value at each reporting date. The effective portion of changes in the fair value of derivative financialinstruments which are designated and which qualify as cashflow hedges arerecognised directly in equity in a hedge reserve. The gains or losses relatingto the ineffective portion are recognised in the income statement immediatelythey arise. Dividend Distribution Dividend distribution to the Company's shareholders is recognised as a liabilityin the Group's financial statements in the period in which the dividends aredeclared and appropriately authorised. Consolidated Income Statement Unaudited Unaudited Year Ended Six Months Ended 30 June 2005 31 December 2004 £m £mContinuing operationsRevenue 780.4 373.8Cost of sales (583.7) (278.0)Gross profit 196.7 95.8 Administrative expenses (42.7) (21.2)Operating profit before financing costs 154.0 74.6 Financial income 0.8 0.4Financial expenses (13.4) (6.3)Net financing costs (12.6) (5.9) Share of loss of joint ventures after interest and taxation (2.4) (0.4) Profit before tax 139.0 68.3 Income tax expense (42.5) (20.6) Profit for the period 96.5 47.7 Earnings per shareBasic earnings per share 60.7p 30.0pDiluted earnings per share 60.5p 29.9p Consolidated Statement of Recognised Income and Expense Unaudited Unaudited Year Ended Six Months Ended 30 June 2005 31 December 2004 £m £m Effective portion of changes in fair value of interest rate cash (1.6) (0.8)flow hedgesDeferred tax on change in fair value of interest rate cash flow 0.5 0.2hedgesShare-based payment recognised in the income statement 0.2 -Deferred tax on share-based payment recognised in the income (0.1) -statementActuarial gains on defined benefit pension scheme 0.7 1.5Deferred tax on actuarial gains taken directly to equity (0.2) (0.5)Net expense recognised directly in equity (0.5) 0.4Profit for the period 96.5 47.7 Total recognised income and expense for the period 96.0 48.1 Consolidated Balance Sheet Unaudited Unaudited As at As at 30 June 2005 31 December 2004 £m £mAssets Plant, property and equipment 24.1 22.6Intangible assets 0.2 0.3Investments 2.6 1.9Deferred tax assets 8.1 6.9Trade and other receivables 0.5 0.5Total non-current assets 35.5 32.2 Inventories 761.0 730.8Trade and other receivables 12.2 15.5Derivative financial instruments 0.3 0.6Cash and cash equivalents 23.7 0.4Total current assets 797.2 747.3 Total assets 832.7 779.5 Equity Issued capital 15.9 15.9Share premium 54.2 53.5Hedge reserve (0.1) 0.4Other reserves 7.9 8.2Retained earnings 374.6 331.3Total equity 452.5 409.3 Liabilities Bank overdrafts and loans 103.8 108.8Trade and other payables 47.2 27.4Deferred tax liabilities 1.8 1.9Retirement benefit obligations 7.9 6.7Long-term provisions 2.1 2.1Total non-current liabilities 162.8 146.9 Bank overdrafts and loans 23.1 43.7Trade and other payables 170.1 155.9Derivative financial instruments 0.5 -Tax liabilities 23.7 23.7Total current liabilities 217.4 223.3 Total liabilities 380.2 370.2 Total equity and liabilities 832.7 779.5 Consolidated Cash Flow Statement Unaudited Unaudited Year Ended Six Months Ended 30 June 2005 31 December 2004 £m £mCash flow from operating activities Profit for the period 154.0 74.6Depreciation 2.2 0.8Adjustment for non-cash items (3.4) (0.9)Operating profit before changes in working capital and 152.8 74.5provisions Increase in trade and other receivables (1.3) (21.3)Increase in inventories (65.8) (35.3)Increase/(decrease) in trade and other payables 13.8 (4.1)(Decrease) in provisions and employee benefits - (1.2)Cash generated from operations 99.5 12.6 Interest paid (10.6) (4.2)Tax paid (39.8) (18.2) Net cash from operating activities 49.1 (9.8) Cash flows from investing activities Acquisition of property, plant and equipment (5.4) (1.2)Proceeds from sale of plant and equipment 1.4 -Interest received 0.8 -Purchase of own shares (0.7) (0.2)Payments to joint ventures (3.1) (0.5)Net cash from investing activities (7.0) (1.9) Cash flows from financing activities (Repayment of) / increase in bank borrowings (0.5) 4.5Issue costs of bank borrowings (0.8) (0.8)Dividends paid (15.2) (9.5)Proceeds from issue of share capital 1.0 0.2Net cash from financing activities (15.5) (5.6) Net increase/ (decrease) in cash and cash equivalents 26.6 (17.3) Cash and cash equivalents at the beginning of the period (26.0) (26.0)Cash and cash equivalents at the end of the period 0.6 (43.3) Adjustment of UK GAAP profit to reflect Joint Venture treatment required underIFRS APPENDIX A See Summary of Principal Impacts Paragraph 7 Unaudited Unaudited Unaudited Unaudited Year Ended Year Ended Six Months Six Months 30 June 30 June Ended Ended 2005 2005 31 December 31 December £m £m 2004 2004 £m £m Operating Profit including share of losses of joint ventures per UK GAAP statutory accounts 151.0 73.6 Add back share of losses of joint ventures 3.3 0.6 UK GAAP Operating Profit pre joint ventures 154.3 74.2 Interest payable per UK GAAP statutory accounts (9.9) (4.5) Add back share of interest from joint ventures 0.1 - UK GAAP Interest payable pre joint ventures (9.8) (4.5) (2.4) (0.4)Less share of joint ventures after interest and taxationProfit before taxation 142.1 69.3 Tax on profit on ordinary activities per UK GAAP statutory accounts (42.4) (20.7) Less tax credit arising on losses of joint ventures (1.0) (0.2) Revised income tax expense (43.4) (20.9) Profit on ordinary activities after taxation 98.7 (48.4) Reconciliation of Equity (Unaudited) APPENDIX BAs at 1 July 2004 Previously IAS 19 IAS 2 IAS 39 IAS 39 IFRS 2 Reported Employee Inventories Land Financial Share-based Under Benefits Creditors Instruments Payment UK GAAPSummary of Principal 1 2 3i 3ii 4Impacts paragraph £m £m £m £m £m £m AssetsPlant, property andequipment 22.5Intangible assets -Investments 1.8Deferred tax assets - 2.6 2.9 1.6 0.1 0.1Derivative financialinstruments - 0.5Trade and otherreceivables 0.5 (0.2)Total non-currentassets 24.8 2.6 2.9 1.6 0.4 0.1 Inventories 713.4 (9.6) (8.4)Trade and otherreceivables 11.1Derivative financialinstruments - 0.9Cash and cash equivalents 1.2Total current assets 725.7 - (9.6) (8.4) 0.9 - Total assets 750.5 2.6 (6.7) (6.8) 1.3 0.1 EquityIssued capital 15.9Share premium 53.2Hedge reserve - 1.0Other reserves 8.2Retained earnings 299.3 (6.1) (6.7) (3.6) (0.1) 0.1Total equity 376.6 (6.1) (6.7) (3.6) 0.9 0.1 LiabilitiesBank overdrafts andloans 104.7Trade and other payables 29.7 (2.6)Deferred tax liabilities 1.7 0.4Retirement benefitobligations - 7.9Long-term provisions 2.2Total non-currentliabilities 138.3 7.9 - (2.6) 0.4 - Bank overdrafts andloans 27.2Trade and other payables 187.2 0.8 (0.6)Tax liabilities 21.2Total currentliabilities 235.6 0.8 - (0.6) - - Total liabilities 373.9 8.7 - (3.2) 0.4 - Total equity andliabilities 750.5 2.6 (6.7) (6.8) 1.3 0.1Net Assets 376.6 (6.1) (6.7) (3.6) 0.9 0.1 Reconciliation of Equity (Unaudited) APPENDIX BAs at 1 July 2004 IAS 10 IAS 38 Effect of Restated Dividend Intangible Transition Under Assets To IFRS IFRSSummary of Principal 5 6Impacts paragraph £m £m £m £m AssetsPlant, property and equipment (0.4) (0.4) 22.1Intangible assets 0.4 0.4 0.4Investments - 1.8Deferred tax assets 7.3 7.3Derivative financial instruments 0.5 0.5Trade and other receivables (0.2) 0.3Total non-current assets - - 7.6 32.4 Inventories (18.0) 695.4Trade and other receivables - 11.1Derivative financial instruments 0.9 0.9Cash and cash equivalents - 1.2Total current assets - - (17.1) 708.6 Total assets - - (9.5) 741.0 EquityIssued capital - 15.9Share premium - 53.2Hedge reserve 1.0 1.0Other reserves - 8.2Retained earnings 9.5 (6.9) 292.4Total equity 9.5 - (5.9) 370.7 LiabilitiesBank overdrafts and loans - 104.7Trade and other payables (2.6) 27.1Deferred tax liabilities 0.4 2.1Retirement benefit obligations 7.9 7.9Long-term provisions - 2.2Total non-current liabilities - - 5.7 144.0 Bank overdrafts and loans - 27.2Trade and other payables (9.5) (9.3) 177.9Tax liabilities - 21.2Total current liabilities (9.5) - (9.3) 226.3 Total liabilities (9.5) - (3.6) 370.3 Total equity and liabilities - - (9.5) 741.0Net Assets 9.5 - (5.9) 370.7 Reconciliation of Profit (Unaudited) APPENDIX C 6 months to 31 December 2004 Previously IAS 19 IAS 2 IAS 39 IFRS 2 Effect of Restated Reported Employee Inventories Land Share-based Transition Under Under Benefits Creditors Payment To IFRS IFRS UK GAAPSummary of Principal Impacts paragraph 1 2 3i 4 £m £m £m £m £m £m £m Continuing OperationsRevenue 373.8 - 373.8Cost of Sales (278.7) 0.1 0.6 0.7 (278.0)Gross Profit 95.1 - 0.1 0.6 - 0.7 95.8 Administrative expenses (20.9) (0.2) (0.1) (0.3) (21.2) Operating Profit before financing 74.2 (0.2) 0.1 0.6 (0.1) 0.4 74.6costs Financial income 0.4 - 0.4Financial expenses (4.9) (0.1) (1.3) (1.4) (6.3) Net Financing Costs (4.5) (0.1) - (1.3) - (1.4) (5.9) Share of loss of joint ventures after interest and taxation (0.4) - (0.4) Profit Before Tax 69.3 (0.3) 0.1 (0.7) (0.1) (1.0) 68.3 Income tax expense (20.9) 0.1 - 0.2 - 0.3 (20.6) Profit for the Period 48.4 (0.2) 0.1 (0.5) (0.1) (0.7) 47.7 Earnings per share (basic) 30.5p 30.0p Earnings per share (diluted) 30.4p 29.9p Reconciliation of Equity (Unaudited) APPENDIX DAs at 31 December 2004 Previously IAS 19 IAS 2 IAS 39 IAS 39 Reported Employee Inventories Land Financial Under Benefits Creditors Instruments UK GAAPSummary of Principal 1 2 3i 3iiImpacts paragraph £m £m £m £m £m AssetsPlant, propertyand equipment 22.9 Intangible assets - Investments 1.9Deferred tax assets - 2.2 2.9 1.7 0.1Derivative financial instruments -Trade and otherreceivables 0.7 (0.2)Total non-current assets 25.5 2.2 2.9 1.7 (0.1) Inventories 749.2 (9.5) (8.9)Trade and otherreceivables 15.5Derivative financial instruments - 0.6Cash and cashequivalents 0.4Total current assets 765.1 - (9.5) (8.9) 0.6 Total assets 790.6 2.2 (6.6) (7.2) 0.5 EquityIssued capital 15.9Share premium 53.5Hedge reserve - 0.4Other reserves 8.2Retained earnings 341.7 (5.3) (6.6) (4.1) (0.1) Total equity 419.3 (5.3) (6.6) (4.1) 0.3 LiabilitiesBank overdrafts and loans 108.8Trade and other payables 29.9 (2.5)Deferred tax liabilities 1.7 0.2Retirement benefit obligations - 6.7Long-term provisions 2.1Total non-current liabilities 142.5 6.7 - (2.5) 0.2 Bank overdrafts and loans 43.7Trade and other payables 161.4 0.8 (0.6)Tax liabilities 23.7Total current liabilities 228.8 0.8 - (0.6) - Total liabilities 371.3 7.5 - (3.1) 0.2 Total equity andliabilities 790.6 2.2 (6.6) (7.2) 0.5Net Assets 419.3 (5.3) (6.6) (4.1) 0.3 Reconciliation of Equity (Unaudited) APPENDIX DAs at 31 December 2004 IAS 10 IAS 38 Effect of Restated Dividend Intangible Transition Under Assets To IFRS IFRS Summary of Principal Impactsparagraph 5 6 £m £m £m £mAssetsPlant, property and equipment (0.3) (0.3) 22.6Intangible assets 0.3 0.3 0.3Investments - 1.9Deferred tax assets 6.9 6.9Derivative financial - -instrumentsTrade and other receivables (0.2) 0.5Total non-current assets - - 6.7 32.2 Inventories (18.4) 730.8Trade and other receivables - 15.5Derivative financialinstruments 0.6 0.6Cash and cash equivalents - 0.4Total current assets - - (17.8) 747.3 Total assets - - (11.1) 779.5 EquityIssued capital - 15.9Share premium - 53.5Hedge reserve 0.4 0.4Other reserves - 8.2Retained earnings 5.7 (10.4) 331.3Total equity 5.7 - (10.0) 409.3 LiabilitiesBank overdrafts and loans - 108.8Trade and other payables (2.5) 27.4Deferred tax liabilities 0.2 1.9Retirement benefit obligations 6.7 6.7Long-term provisions - 2.1Total non-current liabilities - - 4.4 146.9 Bank overdrafts and loans - 43.7Trade and other payables (5.7) (5.5) 155.9Tax liabilities - 23.7Total current liabilities (5.7) - (5.5) 223.3 Total liabilities (5.7) - (1.1) 370.2 Total equity and liabilities - - (11.1) 779.5Net Assets 5.7 - (10.0) 409.3 Reconciliation of Profit (Unaudited) APPENDIX E 12 months to 30 June 2005 Previously IAS 19 IAS 2 IAS 39 IFRS 2 Effect of Restated Reported Employee Inventories Land Share-based Transition Under Under Benefits Creditors Payment To IFRS IFRS UK GAAPSummary of Principal 1 2 3i 4Impacts paragraph £m £m £m £m £m £m £m Continuing OperationsRevenueCost of Sales 780.4 - 780.4 (584.0) (0.9) 1.2 0.3 (583.7)Gross Profit 196.4 - (0.9) 1.2 - 0.3 196.7 Administrative expenses (42.1) (0.4) (0.2) (0.6) (42.7) Operating Profit beforefinancing costs 154.3 (0.4) (0.9) 1.2 (0.2) (0.3) 154.0 Financial income 0.8 - 0.8Financial expenses (10.6) (0.3) (2.5) (2.8) (13.4) Net Financing Costs (9.8) (0.3) - (2.5) - (2.8) (12.6) Share of loss of jointventures after interest and taxation (2.4) - (2.4) Profit Before Tax 142.1 (0.7) (0.9) (1.3) (0.2) (3.1) 139.0 Income tax expense (43.4) 0.2 0.3 0.3 0.1 0.9 (42.5) Profit for the Period 98.7 (0.5) (0.6) (1.0) (0.1) (2.2) 96.5 Earnings per share (basic 62.1p 60.7p Earnings per share (diluted) 61.9p 60.5p Reconciliation of Equity (Unaudited) APPENDIX FAs at 30 June 2005 Previously IAS 19 IAS 2 IAS 39 IAS 39 IFRS 2 Reported Employee Inventories Land Financial Share-based Under Benefits Creditors Instruments Payment UK GAAPSummary of Principal 1 2 3i 3ii 4Impacts paragraph £m £m £m £m £m £m ASSETSNon-current assetsPlant, property andequipment 24.3Intangible assets -Investments 2.6Deferred tax assets - 2.6 3.2 1.9 0.2 0.2Derivative financial -instrumentsTrade and otherreceivables 0.7 (0.2) 27.6 2.6 3.2 1.9 - 0.2Current assetsInventories 783.5 (10.5) (12.0)Trade and otherreceivables 12.2Derivative financialinstruments - 0.3Cash and cash equivalents 23.7 819.4 - (10.5) (12.0) 0.3 -Total assets 847.0 2.6 (7.3) (10.1) 0.3 0.2 EquityIssued capital 15.9Share premium 54.2Hedge reserve - (0.1)Other reserves 7.9Retained earnings 381.0 (6.1) (7.3) (4.6) (0.1) 0.2Total equity 459.0 (6.1) (7.3) (4.6) (0.2) 0.2 LiabilitiesNon-current liabilitiesBank overdrafts andloans 103.8Trade and other payables 52.4 (5.2)Deferred tax liabilities 1.8Retirement benefitobligations - 7.9Long-term provisions 2.1 160.1 7.9 - (5.2) - -Current liabilitiesBank overdrafts andloans 23.1Trade and other payables 181.1 0.8 (0.3)Derivative financialinstruments - 0.5Tax liabilities 23.7 227.9 0.8 - (0.3) 0.5 -Total liabilities 388.0 8.7 - (5.5) 0.5 -Total equity andliabilities 847.0 2.6 (7.3) (10.1) 0.3 0.2Net Assets 459.0 (6.1) (7.3) (4.6) (0.2) 0.2 Reconciliation of Equity (Unaudited) APPENDIX FAs at 30 June 2005 IAS 10 IAS 38 Effect of Restated Dividend Intangible Transition Under Assets To IFRS IFRS Summary of Principal Impactsparagraph 5 6 £m £m £m £m ASSETSNon-current assetsPlant, property and equipment (0.2) (0.2) 24.1Intangible assets 0.2 0.2 0.2Investments - 2.6Deferred tax assets 8.1 8.1Derivative financial - -instrumentsTrade and other receivables (0.2) 0.5 - - 7.9 35.5Current assetsInventories (22.5) 761.0Trade and other receivables - 12.2Derivative financialinstruments 0.3 0.3Cash and cash equivalents - 23.7 - - (22.2) 797.2Total assets - - (14.3) 832.7 EquityIssued capital - 15.9Share premium - 54.2Hedge reserve (0.1) (0.1)Other reserves - 7.9Retained earnings 11.5 (6.4) 374.6Total equity 11.5 - (6.5) 452.5 LiabilitiesNon-current liabilitiesBank overdrafts and loans - 103.8Trade and other payables (5.2) 47.2Deferred tax liabilities - 1.8Retirement benefit obligations 7.9 7.9Long-term provisions - 2.1 - - 2.7 162.8Current liabilitiesBank overdrafts and loans - 23.1Trade and other payables (11.5) (11.0) 170.1Derivative financialinstruments 0.5 0.5Tax liabilities - 23.7 (11.5) - (10.5) 217.4Total liabilities (11.5) - (7.8) 380.2Total equity and liabilities - - (14.3) 832.7Net Assets 11.5 - (6.5) 452.5 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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