24th May 2005 07:00
Persimmon PLC24 May 2005 Persimmon plc Restatement of financial information for 2004 under International FinancialReporting Standards (IFRS) Persimmon is today presenting its financial statements prepared in accordancewith IFRS for the year ended 31 December 2004 and the six months ended 30 June2004. The transition to IFRS has not had a material effect on the consolidatedfinancial results of Persimmon plc but will include some enhanced disclosurerequirements. These disclosures will be included in the financial statements forthe year ended 31 December 2005. The transition to IFRS will leave: • Cash flows unaffected • Dividend policy and ability to pay dividends unaffected • Banking arrangements unaffected • Effective tax rate (pre goodwill charges) undisturbed Key changes in accounting policy for Persimmon will be: • Goodwill frozen and subject to an annual impairment review (IFRS 3) • Pension scheme deficit included on balance sheet (IAS 19) • Recognition of imputed interest on land creditors (IAS 2) • Recognition of deferred tax asset on pension scheme deficit and assets/ liabilities disclosed gross (IAS 12) • Recognition of fair value of financial instruments relating to interest rate and principle currency swaps (IAS 39) • Recognition of a charge for share based payment (IFRS 2) • Final dividend not recognised until declared at the Annual General Meeting (IAS 10) Reporting timetable: • 27 June 2005 Trading update • 30 June 2005 Half year end • 23 August 2005 Interim results reported under IFRS • 22 December 2005 Trading update • 31 December 2005 Year end • 27 February 2006 Annual results reported under IFRS Enquiries:Persimmon plc Finsbury GroupMike Killoran, Group Finance Director Faeth BirchTel: 01904 642 199 Kirsty Flockhart Tel: 020 7251 3801 Persimmon plc Restatement of financial information for 2004 under International FinancialReporting Standards Introduction For all accounting periods up to and including the year ended 31 December 2004Persimmon has prepared its financial statements under UK Generally AcceptedAccounting Principles (UK GAAP). For accounting periods from 1 January 2005, theGroup is required to prepare its consolidated financial statements in accordancewith International Financial Reporting Standards (IFRS) as adopted by theEuropean Union. Persimmon's first results under this basis will be its interim results for thesix months ended 30 June 2005. The Group's first annual report under IFRS willbe for the year ended 31 December 2005. As comparative figures are provided, theeffective date for transition to IFRS is 1 January 2004. This summary provides an analysis of the effects of the change from UK GAAP toIFRS on Persimmon's financial statements, including: • Summary of the basis of preparation of the IFRS information• Summary of the impact of IFRS adoption on Persimmon• Summary of the significant changes in accounting policies• Accounting policies revised under IFRS (Appendix 1)• Restated primary statements for the 6 months ended 30 June 2004 and the year ended 31 December 2004 (Appendix 2)• Reconciliations of profit and equity for those periods (Appendix 3)• Special Purpose Audit Report of KPMG Audit plc to Persimmon plc (Appendix 4) The transition to IFRS will leave: • Cash flows unaffected• Dividend policy and ability to pay dividends unaffected• Banking arrangements unaffected• Effective tax rate (pre goodwill charges) undisturbed Basis of preparation of IFRS information This financial information has been prepared in accordance with IFRS publishedby 31 December 2004 as endorsed by the EU, with the exception of IAS 19, andapplying to periods beginning on or after 1 January 2005. The Group has adoptedearly the amendment to IAS 19 (Employee Benefits) published in December 2004.These amendments, if endorsed by the EU, will be effective for accountingperiods commencing on or after 1 January 2006, with earlier adoption encouragedby the IASB. A summary of the Group's accounting policies is detailed in Appendix 1. Transitional arrangements The rules for first time adoption of IFRS are set out in IFRS 1 'First TimeAdoption of International Financial Reporting Standards'. In general a companyis required to define its IFRS accounting policies and apply theseretrospectively to determine its opening balance sheet under IFRS. The standardallows a number of exceptions to this general principle to assist companies asthey transition to reporting under IFRS. Where the Group has taken advantage ofthese exemptions they are noted within the accounting policies section. No adjustments have been made for any changes in estimates made at the time ofapproval of the UK GAAP financial statements on which the preliminary IFRSfinancial statements are based, as required by IFRS 1. The financial information for the year ended 31 December 2004, as prepared onthe above basis, has been audited by KPMG Audit Plc. Their Special Purpose AuditReport to Persimmon plc is set out in Appendix 4. The half year information isunaudited. Subject to EU endorsement of IAS 19 (revised) and no further changes from theIASB or changes in the interpretation of those standards, this information isexpected to form the basis for comparatives when reporting financial results for2005, and for subsequent reporting periods. Summary of the impact of IFRS adoption on Persimmon Based on the accounting policies detailed in Appendix 1, the impact of thetransition on the key performance indicators is as follows: 31 December 2004 30 June 2004 UK GAAP IFRS UK GAAP IFRS (restated) £m £m £m £mOperating profit(before goodwill 496.8 498.0 235.0 236.1charges)Net profit (beforegoodwill 325.3 324.3 152.5 152.3charges)Basic eps 110.1p 113.5p 51.7p 53.5pBasic eps (beforegoodwill 113.9p n/a 53.6p n/acharges)Net assets 1387.3 1,405.6 1267.0 1,264.6 The detailed reconciliations of the movements for the Income Statement andBalance Sheet are given in Appendix 3. The changes in policies, which have the most significant effects on the restatednumbers for the year ended 31 December 2004, are: • The cessation of goodwill amortisation• The recognition of the pension scheme deficit on the Balance Sheet• Deferred payments for land held at discounted present value, with a notional interest charge being applied over the deferral period• The recognition of deferred tax assets as a result of the above adjustments• The inclusion of financial instruments at fair value• The inclusion of a charge for existing share options and SAYE schemes• The recognition of dividends only once declared or paid Significant changes in accounting policies and impact on the financialstatements for the year ended 31 December 2004 The following narrative covers the year to 31 December 2004 illustrating thenature of the changes and providing an analysis of their magnitude. Theappendices give full and detailed reconciliations for the six months to 30 June2004 and the year ended 31 December 2004. Glossary of terms This narrative includes the following terms: Opening Balance Sheet - the balance sheet as at 1 January 2004 being theeffective date of transition to IFRS.IAS 36 Cash Generating Unit - the smallest identifiable group of assetsgenerating cash inflows largely independent of the cash inflows of other assetsor groups of assets.IAS 19 Current Service Cost - the increase in the present value of the definedbenefit obligation resulting from employee service in the current period.IAS 19 Interest Cost - the increase during a period in the present value of adefined benefit obligation which arises because the benefits are one periodcloser to settlement.IAS 19 Actuarial Gains and Losses - these comprise the effects of differencesbetween the previous actuarial assumptions and what has actually occurred andthe effects of actuarial assumption changes. Business Combinations - IFRS 3 IFRS 3 requires that goodwill be capitalised at cost and then be subject to anannual impairment review. Amortisation of goodwill is prohibited. The goodwill carried by Persimmon principally relates to the acquisition ofBeazer Group plc in March 2001. Persimmon has chosen the option to apply IFRS 3 prospectively from thetransition date, rather than restate previous business combinations. Goodwillhas therefore been frozen at net book value on 1 January 2004, and goodwill,which was amortised in 2004 under UK GAAP, has been written back. The operating profit impact for 2004 is the elimination of the amortisationcharge of £10.8m with a corresponding increase in net assets. There is noassociated tax impact. In accordance with IAS 36 (Impairment of Assets) the principal components ofgoodwill have been allocated to the following Cash Generating Units; firstly tothe Charles Church business acquired with the Beazer Group and secondly to thestrategic land portfolio acquired with Beazer. There is no impairment charge for2004. Employee Benefits - IAS 19 The Group wishes to take advantage of the additional option provided by IAS 19as amended in December 2004, (which as noted above has yet to be endorsed by theEU) to account for variations in actuarial gains and losses in full immediatelyin the statement of recognised income and expense. The principal components ofthe pension charge are the Current Service Cost and the Interest Cost, whichhave been recognised in operating expenses. Defined contribution schemes areunaffected by IAS 19. The effect on operating profit for the year ended 31 December 2004 is areduction of £0.5m. The values of the scheme assets are marked to market at theend of the accounting period, reflecting the expected future return from therelevant assets held. The scheme liabilities, representing the pension benefitsof the scheme members, are calculated based on assumptions on general payincreases, inflation, pension increases and an appropriate discount rate. The standard permits a number of options for the recognition of Actuarial Gainsand Losses. Persimmon's policy is to recognise any variations in full, via theStatement of Recognised Income and Expense, as would have been required underFRS 17. The option to account for Actuarial Gains and Losses in this way is partof an amendment to IAS 19. The amendment is effective from 1 January 2006, withearlier adoption encouraged by the IASB. Assuming the EU endorses the proposals,Persimmon's policy will be to apply the revised standard voluntarily from thedate of transition. The impact on the Opening Balance Sheet is to recognise a net deficit of £38.0m,being a gross deficit of £54.3m offset by a deferred tax asset of £16.3m. Inaddition, the prepayment of £3.7m which arose following the specialcontributions made in 2002 is released. At 31 December 2004 a net pensiondeficit of £46.4m is recognised, comprising a gross deficit of £66.3m and adeferred tax asset of £19.9m. An actuarial loss of £11.1m is taken to reserves. Inventories - IAS 2 In accordance with IAS 2, deferred payments (including the Group's landcreditors) are to be held at discounted present value, thereby recognising afinancing element on the deferred settlement terms. The liability is thenincreased to the settlement value over the period of deferral, with this valuebeing charged as notional interest through the income statement. The effect on the Opening Balance Sheet was to reduce the land creditor by£4.5m, reduce the land balance by £5.6m, recognise a deferred tax asset of £0.3mand reduce opening reserves by £0.8m. For the year ended 31 December 2004, theadoption of IAS 2 resulted in an increase in operating profit of £1.4m and theinclusion of notional interest of £3.6m together with a related tax credit of£0.7m. The land creditor is reduced by £7.8m and the land balance by £11.1m. Income Taxes - IAS 12 IAS 12 requires that full provision be made for temporary differences betweenthe carrying amount and tax bases of assets and liabilities. In additiondeferred tax assets and liabilities must be disclosed separately on the BalanceSheet. There is no material impact on the effective tax rate. The Opening Balance Sheetincludes an additional deferred tax asset of £16.3m in relation to the pensionfund deficit, £0.3m relating to share based payments and £0.3m relating to thetax asset on deferred land payments. A net liability of £1.7m relating to theseitems is reclassified which was previously included as a deferred tax liability.At 31 December 2004 the corresponding values are £19.9m, £1.2m, £1.0m and £0.3mrespectively. The Opening Balance Sheet also includes a deferred tax liabilityin respect of IAS 39, further details are given in the note below. Financial instruments: Recognition and Measurement - IAS 39 IAS 39 addresses the accounting for financial instruments. The Group hasretrospectively adopted the standard. As at 1 January 2004 the only materialdifference between the book value and fair value of the financial instrumentsheld by the Group related to the US Private Placement loans (USPP). The USPPwere entered into to provide long term finance to the Group. To eliminate allforward foreign exchange risk in relation to the loan capital values all USPPDollar capital cash flows were swapped into sterling cash flows on issue. Inaddition, these swap arrangements hedge the fixed US Dollar interest rate cashflows into a mix of fixed and floating UK Sterling interest rate cash flows. Persimmon has designated these derivatives as hedges of exposure to variabilityin cash flows associated with a liability arising from highly probable forecasttransactions (cash flow hedges). The USPP loans are accounted for on anamortised cost basis and retranslated at the spot exchange rate at each periodend. The impact of adopting IAS 39 on the Opening Balance Sheet as at 1 January 2004is to revalue the USPP at the year end exchange rate, thereby reducingborrowings by £31.2m. A cash flow hedge liability of £14.9m is also recognisedin respect of the hedging swaps relating to these loans, giving rise to anunrealised hedge reserve of £16.3m and a related deferred tax liability of£4.9m. IAS 39 has no impact on the net profit of the Group for the year ended 31December 2004. The fair value of the USPP as at 31 December 2004 results in areduction in the loan liabilities by £44.8m. The fair value of the cash flowhedge is a liability of £37.4m, giving rise to an unrealised hedge reserve of£7.4m and related deferred tax liability of £2.2m. Share-based Payment - IFRS 2 In accordance with IFRS 2, Persimmon has recognised a charge for the SAYE schemeand employee share options granted after 7 November 2002. The fair value hasbeen calculated using the binomial option-pricing model. A fair value chargecontinues to be made for the LTIP scheme. The charge is spread over the vestingperiod and is adjusted to reflect the actual and expected level of vesting. The operating profit impact for 2004 is a credit of £0.3m. Employee services relating to share options are expensed and their accountingcarrying value is therefore nil at the end of a reporting period. An estimate ofthe tax base at the end of the period is determined by multiplying an option'sintrinsic value (the difference between the market value of the related shareand the exercise price at the reporting date) by the vesting period that haslapsed. The deductible temporary difference results in the recognition of adeferred tax asset. The deferred tax asset at 31 December 2004 is £1.2m. The excess of the total expected tax benefit over the cumulative share-basedpayment expense at the current corporation tax rate of £0.4m is recognised inequity with the balance of £0.4m recognised in the income statement. Events After the Balance Sheet Date - IAS 10 Under IAS 10 only dividends declared before the Balance Sheet date can be shownas a liability. Persimmon's final dividend is declared at the Annual GeneralMeeting. Consequently, there is a requirement to remove the liability for thefinal dividends for the years ended 31 December 2003 and 2004. The impacttherefore, is to increase the net assets of the opening Balance Sheet by £32.1mand the net assets as at 31 December 2004 by £53.1m. Conclusion The transition to IFRS has not had a material effect on the consolidatedfinancial results of Persimmon plc but will include some enhanced disclosurerequirements. These disclosures will be included in the financial statements forthe year ended 31 December 2005. There is no material impact on Persimmon's cash flows, effective tax rate (pregoodwill charges) and ability to pay dividends. Persimmon's banking arrangementsare unaffected. Appendix 1 Appendix 1 provides a summary of Persimmon's new accounting policies under IFRS. Accounting Policies The consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards asendorsed by the European Union, with the exception of IAS 19, andapplying to periods beginning on or after 1 January 2005. A summaryof the more important Group accounting policies is set out below. Basis of accounting The financial statements are prepared in accordance with thehistorical cost and fair value conventions modified by therevaluation of certain fixed assets. Changes in accounting policy On 1 January 2005 the Company adopted International FinancialReporting Standards (IFRS). These accounts have been prepared on aconsistent basis under applicable IFRS and the effects of thistransition reported in accordance with IFRS 1 (First-time Adoption ofIFRSs). Basis of consolidation The Group's financial statements consolidate the financial statementsof the Company and its subsidiary undertakings. The results of anysubsidiaries sold or acquired are included in the Group incomestatement up to, or from, the date control passes. Intra-group salesand profits are eliminated fully on consolidation. On acquisition of a subsidiary, all of the subsidiary's separable,identifiable assets and liabilities existing at the date ofacquisition are recorded at their fair values reflecting theircondition at that date. All changes to those assets and liabilities,and the resulting gains and losses, that arise after the Group hasgained control of the subsidiary are charged to the post acquisitionincome statement. Joint arrangements The Group's share of profits and losses from its investments in jointarrangements is accounted for on a direct basis and is included inthe consolidated income statement. The Group's share of itsinvestments' assets and liabilities is accounted for on a directlyproportional basis in the consolidated balance sheet. Goodwill Goodwill arising on consolidation represents the excess of the fairvalue of the consideration given over the fair value of the separableidentifiable net assets acquired. Goodwill arising on acquisition ofsubsidiaries and businesses is capitalised as an asset. In accordance with IFRS 3, goodwill has been frozen at its net bookvalue as at 1 January 2004 and will not be amortised. Instead, itwill be subject to an annual impairment review, with any impairmentlosses being recognised immediately in the income statement. Goodwill arising prior to 31 December 1997 of £32.7m and previouslywritten off against reserves, has not been reinstated. Property, plant and equipment Depreciation on property, plant and equipment is provided using thestraight line method to write off the cost or valuation lessestimated residual value, over the following number of years: Plant, fixtures and fittings - 3 to 5 years.Freehold buildings - 50 years.No depreciation is provided on freehold land. Leases Assets financed by means of a finance lease are treated as if theyhad been purchased outright and the corresponding liability to theleasing company is included as an obligation under finance leases.Depreciation on such assets is charged to the income statement inaccordance with the accounting policy above, over the shorter of thelease term and the asset life. The interest element of payments to leasing companies is calculatedon a straight line basis over the lease term and charged to theincome statement. Amounts payable under operating leases are charged to work inprogress or net operating expenses on a straight line basis over thelease term. Inventories Inventories are stated at the lower of cost and net realisable value(excluding capitalised interest) after deducting deposits received.Land includes undeveloped land and land under development butexcludes land being developed under licence agreements and landoption payments (see below). Work in progress comprises directmaterials, labour costs, site overheads, associated professionalcharges and other attributable overheads. Licenced land prepayments The Group makes payments when entering into licence agreements forthe right to build and sell houses on land owned by third parties.Upon legal completion, the house purchaser makes a land payment tothe third party and the balance of the sales proceeds is paid to theGroup. In some instances the Group has guaranteed certain payments atappropriate dates. Where there are timing differences between thecontracted payment terms and the profile of legal completions theseare shown within current assets and liabilities. Land options Payments made to secure purchase option agreements over land areshown as a current asset prepayment within receivables and are statedat the lower of cost and net realisable value. Upon exercise, inaccordance with the option agreement, the amounts are transferredinto inventories. Revenue recognition Revenue represents the total sales value of legally completedproperties, excluding land sales and part exchange properties (whichare included within operating expenses). Revenue and profit on salesare recognised upon legal completion of the legal transfer of titleto the customer. Dividends Dividends are recorded in the group's financial statements in theperiod in which they are declared or paid. Net operating expenses Net operating expenses represent administration costs incurred by thebusiness, which are written off to the income statement asincurred. Cash and cash equivalents Cash and cash equivalents are defined as cash balances in hand and inthe bank, including bank overdrafts repayable within one year. Offsetarrangements across group businesses have been applied to arrive atthe net overdraft figure. Borrowing costs and interest income Interest is recognised in the income statement as incurred. Taxation Provision is made for current tax on taxable profits for the year. Full provision is made for deferred tax on temporary differences inline with IAS 12 (Income Taxes). Retirement benefit costs The Group operates a defined benefit pension scheme, and also makespayments into defined contribution schemes for employees. The liability in respect of the defined benefit plan is the presentvalue of the defined benefit obligation at the balance sheet date,less the fair value of the plan assets, together with adjustments foractuarial gains/losses. In accordance with IFRS 1, the Group has recognised the pensionliability in full as at 1 January 2004. The Group has applied the requirements of IAS 19 (revised) for theyear ended 31 December 2004 recognising expected scheme gains andlosses via the income statement and actuarial gains and losses viareserves. This policy is subject to the endorsement of IAS 19(revised) by the EU. Payments to the defined contribution schemes are accounted for on anaccruals basis. Once the payments have been made the Group has nofurther obligation. Financial instruments The Group uses currency swaps and interest rate swaps to managefinancial risk. Interest charges and financial liabilities are statedafter taking account of these swaps. The Group has also entered into cash flow hedges to mitigate exposureto both foreign currency and interest rates on these loans. Cash flowhedges are held at fair value in the balance sheet. Gains/losses onthese instruments are taken to reserves until realised. Onrealisation such gains are reported in the income statement net ofrelated charges. Share-based Payment Charges for employee services received in exchange for share-basedpayment have been made for all schemes granted after 7 November 2002in accordance with IFRS 2. The fair value of such options has been calculated using a binomialoption-pricing model, based upon publicly available market data atthe point of grant. Appendix 2 Consolidated Income Statement Six months to Year to 30 June 31 December 2004 2004 (unaudited) (audited) (restated) (restated) £m £m Revenue 1,036.4 2,131.3Cost of sales (760.4) (1,549.4) __________ __________Gross profit 276.0 581.9Net operating expenses (39.9) (83.9) __________ __________Profit from operations 236.1 498.0Finance costs - net (16.5) (30.0) __________ __________Profit before tax 219.6 468.0 Income tax expense (67.3) (143.7) __________ __________Profit after tax 152.3 324.3 __________ __________Earnings per shareBasic 53.5p 113.5pDiluted 53.0p 112.8p Consolidated Balance Sheet 30 June 31 December 2004 2004 (unaudited) (audited) (restated) (restated) £m £mASSETS Non-current assetsIntangible assets 182.0 182.0Property, plant and equipment 26.7 28.2Deferred tax assets 16.0 22.4 __________ __________ 224.7 232.6Current assetsInventories 1,852.6 1,992.8Trade and other receivables 109.4 98.7Cash and cash equivalents 24.7 84.6 __________ __________ 1,986.7 2,176.1 __________ __________Total assets 2,211.4 2,408.7 __________ __________ LIABILITIES Non-current liabilities Interest bearing loans and borrowings (246.6) (223.7)Forward currency swaps (21.9) (35.2)Deferred tax liabilities (3.6) (2.2)Retirement benefit obligation (54.3) (66.3)Other liabilities (62.2) (61.1) __________ __________ (388.6) (388.5)Current liabilities Trade and other payables (472.0) (511.5)Current tax liabilities (74.1) (81.2)Forward currency swaps (0.2) (2.2)Interest bearing loans andliabilities (11.9) (19.7) __________ __________ (558.2) (614.6) __________ __________Total liabilities (946.8) (1,003.1) __________ __________ __________ __________Net assets 1,264.6 1,405.6 ========== ==========SHAREHOLDERS' EQUITY Ordinary share capital issued 28.7 28.9Share premium 217.9 221.2Own shares (3.2) (3.2)Hedge reserve 8.4 5.2Merger reserve 281.4 281.4Other reserve 1.2 1.2Retained earnings 730.2 870.9 __________ __________Total shareholders' equity 1,264.6 1,405.6 ========== ========== Consolidated Cash Flow Statement Six months to Year to 30 June 31 December 2004 2004 (unaudited) (audited) (restated) (restated) £m £m Cash flows from operating activities:Net profit after income taxes 152.3 324.3 Adjustments for:Tax 67.3 143.7Pensions charge - 0.9Depreciation charge 3.4 7.0(Profit) / loss on disposal of property, plant and equipment (0.1) 0.1Net interest expenses 16.5 30.0Share based payment charge 0.9 2.1 __________ __________Operating profit before working capital charges 240.3 508.1 Changes in working capital (excluding the effects of acquisition and disposal of subsidiaries) Increase in inventories (197.0) (337.2)(Increase) / decrease in trade and other receivables (0.7) 10.0Increase in trade and other payables 98.0 134.2 __________ __________Cash generated from operations 140.6 315.1 Interest paid (14.9) (26.4) __________ __________Tax paid (55.5) (127.6)Net cash from operating activities 70.2 161.1 Cash flows from investing activities:Purchases of property, plant and equipment (6.1) (12.9)Proceeds from sale of property, plant and equipment 0.6 2.5Interest received 0.3 0.6 __________ __________Net cash used in investing activities (5.2) (9.8) Cash flows from financing activities:Repayments of borrowings (16.6) (16.6)Finance lease principal payments (0.4) (0.9)Exercise of share options 2.6 6.0Dividends paid to group shareholders (18.2) (43.1) __________ __________Net cash used in financing activities (32.6) (54.6) __________ __________Net increase in cash and cash equivalents 32.4 96.7 Cash and cash equivalents at beginning of period (17.3) (17.3) __________ __________Cash and cash equivalents at end of period 15.1 79.4 ========== ========== Consolidated Statement of Recognised Income andExpense Six months to Year to 30 June 31 December 2004 2004 (unaudited) (audited) (restated) (restated) £m £m Losses on cash flow hedges (4.3) (8.9) Actuarial losses on defined benefit schemes - (11.1) Taxation on items taken directly to equity 1.3 6.0 Net expense recognised directly in equity (3.0) (14.0) Profit for the period 152.3 324.3 __________ __________Total recognised income for the period 149.3 310.3 ========== ========== Appendix 3 Reconciliation of Profit 6 months to 30 June 2004 Previously reported IFRS 2 IFRS 3 IAS 19 Effect of Restated under Share-based Business IAS 2 Employee transition under UK GAAP Payment Combinations Inventories Benefits to IFRS IFRS £m £m £m £m £m £m £m Revenue 1,036.4 - - - - - 1,036.4 Cost of sales (761.1) - - 0.7 - 0.7 (760.4) ______________________________________________________________________________________Gross profit 275.3 - - 0.7 - 0.7 276.0 Net operating expenses (45.7) 0.2 5.4 - 0.2 5.8 (39.9) ______________________________________________________________________________________Profit from operations 229.6 0.2 5.4 0.7 0.2 6.5 236.1 Finance costs - net (14.7) - - (1.8) - (1.8) (16.5) ______________________________________________________________________________________Profit before tax 214.9 0.2 5.4 (1.1) 0.2 4.7 219.6Income tax expense (67.8) 0.2 - 0.3 - 0.5 (67.3) ______________________________________________________________________________________Profit from ordinary activities after tax 147.1 0.4 5.4 (0.8) 0.2 5.2 152.3 ======================================================================================Earnings per shareBasic 51.7p 0.1p 1.9p (0.3)p 0.1p 1.8p 53.5pDiluted 51.2p 0.1p 1.9p (0.3)p 0.1p 1.8p 53.0p Reconciliation of Profit 12 months to 31 December 2004 Previously reported IFRS 2 IFRS 3 IAS 19 Effect of Restated under Share-based Business IAS 2 Employee transition under UK GAAP Payment Combinations Inventories Benefits to IFRS IFRS £m £m £m £m £m £m £mRevenue 2,131.3 - - - - - 2,131.3 Cost of sales (1,550.8) - - 1.4 - 1.4 (1,549.4) ______________________________________________________________________________________Gross profit 580.5 - - 1.4 - 1.4 581.9 Net operating expenses (94.5) 0.3 10.8 - (0.5) 10.6 (83.9) ______________________________________________________________________________________Profit from operations 486.0 0.3 10.8 1.4 (0.5) 12.0 498.0 Finance costs - net (26.4) - - (3.6) - (3.6) (30.0) ______________________________________________________________________________________Profit before tax 459.6 0.3 10.8 (2.2) (0.5) 8.4 468.0Income tax expense (145.1) 0.4 - 0.7 0.3 1.4 (143.7) ______________________________________________________________________________________Profit from ordinary activities after tax 314.5 0.7 10.8 (1.5) (0.2) 9.8 324.3 ====================================================================================== Earnings per shareBasic 110.1p 0.2p 3.8p (0.5)p (0.1)p 3.4p 113.5pDiluted 109.4p 0.2p 3.8p (0.5)p (0.1)p 3.4p 112.8p Reconciliation of Equity As at 1 January 2004 Previously IFRS 2 reported IAS 19 Share- IAS 39 Effect of Restated under Employee based Financial Dividend IAS 2 Reclass transition under UK GAAP Benefits Payment Instruments adjustment Inventories -ification to IFRS IFRS £m £m £m £m £m £m £m £m £m ASSETSNon-current assetsIntangible assets 182.0 - - - - - - - 182.0Property, plant and equipment 24.1 - - - - - - - 24.1Deferred tax assets - 16.3 0.3 - - 0.3 (1.7) 15.2 15.2 __________________________________________________________________________________________________ 206.1 16.3 0.3 - - 0.3 (1.7) 15.2 221.3Current asseInventories 1,661.2 - - - - (5.6) - (5.6) 1,655.6Trade and other receivables 112.4 (3.7) - - - - - (3.7) 108.7Cash and cash equivalents 0.8 - - - - - - - 0.8 __________________________________________________________________________________________________ 1,774.4 (3.7) - - - (5.6) - (9.3) 1,765.1 __________________________________________________________________________________________________Total assets 1,980.5 12.6 0.3 - - (5.3) (1.7) 5.9 1,986.4 __________________________________________________________________________________________________ LIABILITIESNon-current liabilitiesInterest bearing loansand liabilities (295.6) - - 31.0 - - (1.4) 29.6 (266.0)Forward currency swaps - - - (14.7) - - - (14.7) (14.7)Deferred tax liabilities - - - (4.9) - - - (4.9) (4.9)Retirement benefitobligation - (54.3) - - - - - (54.3) (54.3)Other liabilities (37.8) - - - - 2.1 1.4 3.5 (34.3) __________________________________________________________________________________________________ (333.4) (54.3) - 11.4 - 2.1 - (40.8) (374.2)Current liabilitiesTrade and other payables (439.4) - - - 32.1 2.4 2.7 37.2 (402.2)Current tax liabilities (61.7) - - - - - - - (61.7)Forward currency swaps - - - (0.2) - - - (0.2) (0.2)Interest bearing loansand liabilities (19.7) - - 0.2 - - (1.0) (0.8) (20.5) __________________________________________________________________________________________________ (520.8) - - - 32.1 2.4 1.7 36.2 (484.6) __________________________________________________________________________________________________Total liabilities (854.2) (54.3) - 11.4 32.1 4.5 1.7 (4.6) (858.8) __________________________________________________________________________________________________ __________________________________________________________________________________________________Net assets 1,126.3 (41.7) 0.3 11.4 32.1 (0.8) - 1.3 1,127.6 ================================================================================================== SHAREHOLDERS' EQUITYOrdinary share capitalissued 28.4 - - - - - - - 28.4Share premium 214.2 - - - - - - - 214.2Own shares (5.5) - - - - - - - (5.5)Hedge reserve - - - 11.4 - - - 11.4 11.4Merger reserve 281.4 - - - - - - - 281.4Other reserve 1.2 - - - - - - - 1.2Retained earnings 606.6 (41.7) 0.3 - 32.1 (0.8) - (10.1) 596.5 __________________________________________________________________________________________________Total shareholders' equity 1,126.3 (41.7) 0.3 11.4 32.1 (0.8) - 1.3 1,127.6 ================================================================================================== Reconciliation of Equity As at 30 June 2004 Previously reported Opening IFRS 2 IAS 39 IFRS 3 under balance IAS 19 Share- Financial Dividend Business IAS 2 Effect of Restated UK GAAP sheet Employee based Instr adjust combin Invent Reclass transition under (restated) adjustment Benefits Payment -uments -ment -ations -ories -ification to IFRS IFRS £m £m £m £m £m £m £m £m £m £m £mASSETSNon-current assetsIntangible assets 176.6 - - - - - 5.4 - - 5.4 182.0Property, plant and equipment 26.7 - - - - - - - - - 26.7Deferred taxassets - 15.2 - 0.4 - - - 0.4 - 16.0 16.0 ___________________________________________________________________________________________________________ 203.3 15.2 - 0.4 - - 5.4 0.4 - 21.4 224.7Current assetsInventories 1,861.2 (5.6) - - - - - (3.0) - (8.6) 1,852.6Trade and otherreceivables 112.9 (3.7) 0.2 - - - - - - (3.5) 109.4Cash and cashequivalents 24.7 - - - - - - - - - 24.7 ___________________________________________________________________________________________________________ 1,998.8 (9.3) 0.2 - - - - (3.0) - (12.1) 1,986.7 ___________________________________________________________________________________________________________Total assets 2,202.1 5.9 0.2 0.4 - - 5.4 (2.6) - 9.3 2,211.4 ___________________________________________________________________________________________________________ LIABILITIESNon-current liabilitiesInterest bearing loans andliabilities (280.4) 29.6 - - 2.8 - - - 1.4 33.8 (246.6)Forward currency swaps - (14.7) - - (7.2) - - - - (21.9) (21.9)Deferred tax liabilities (1.6) (4.9) - - 1.3 - - - 1.6 (2.0) (3.6)Retirement benefitobligation - (54.3) - - - - - - - (54.3) (54.3)Other liabilities (65.2) 3.5 - - - - - 0.9 (1.4) 3.0 (62.2) ___________________________________________________________________________________________________________ (347.2) (40.8) - - (3.1) - - 0.9 1.6 (41.4) (388.6)Current liabilitiesTrade and other payables (501.6) 37.2 - - - (5.9) - 0.9 (2.6) 29.6 (472.0)Current taxliabilities (74.1) - - - - - - - - - (74.1)Forward currency swaps - (0.2) - - - - - - - (0.2) (0.2Interest bearing loans andliabilities (12.2) (0.8) - - 0.1 - - - 1.0 0.3 (11.9) ___________________________________________________________________________________________________________ (587.9) 36.2 - - 0.1 (5.9) - 0.9 (1.6) 29.7 (558.2) ___________________________________________________________________________________________________________Total liabilities (935.1) (4.6) - - (3.0) (5.9) - 1.8 - (11.7) (946.8) ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________Net assets 1,267.0 1.3 0.2 0.4 (3.0) (5.9) 5.4 (0.8) - (2.4) 1,264.6 =========================================================================================================== SHAREHOLDERS' EQUITYOrdinary share capital issued 28.7 - - - - - - - - - 28.7Share 217.9 - - - - - - - - - 217.9premiumOwn shares (3.2) - - - - - - - - (3.2)Hedge reserve - 11.4 - - (3.0) - - - - 8.4 8.4Merger reserve 281.4 - - - - - - - - - 281.4Other reserve 1.2 - - - - - - - - - 1.2Retained earnings 741.0 (10.1) 0.2 0.4 - (5.9) 5.4 (0.8) - (10.8) 730.2 ___________________________________________________________________________________________________________Totalshareholders'equity 1,267.0 1.3 0.2 0.4 (3.0) (5.9) 5.4 (0.8) - (2.4) 1,264.6 =========================================================================================================== Comparative figures as at 30 June 2004 have been restated from those previouslypublished to reflect the adoption of UITF 38 (Accounting for ESOP trusts) at 31December 2004. Reconciliation of EquityAs at 31 December 2004 Previously Opening IFRS 2 IAS 39 IFRS 3 reported balance IAS 19 Share- Financial Dividend Business IAS 2 Effect of Restated under sheet Employee based Instr adjust combin Invent Reclass transition under UK GAAP adjustment Benefits Payment -uments -ment -ations -ories -ification to IFRS IFRS £m £m £m £m £m £m £m £m £m £m £m ASSETS Non-currentassetsIntangibleassets 171.2 - - - - - 10.8 - 10.8 182.0Property,plant andequipment 28.2 - - - - - - - - - 28.2Deferred taxassets - 15.2 3.6 0.9 - - - 0.7 2.0 22.4 22.4 ___________________________________________________________________________________________________________ 199.4 15.2 3.6 0.9 - - 10.8 0.7 2.0 33.2 232.6Current assetsInventories 2,003.9 (5.6) - - - - - (5.5) - (11.1) 1,992.8Trade andotherreceivables 102.3 (3.7) 0.4 - - - - (0.3) (3.6) 98.7 Cash and cashequivalents 84.6 - - - - - - - - - 84.6 ___________________________________________________________________________________________________________ 2,190.8 (9.3) 0.4 - - - - (5.5) (0.3) (14.7) 2,176.1 ___________________________________________________________________________________________________________Total assets 2,390.2 5.9 4.0 0.9 - - 10.8 (4.8) 1.7 18.5 2,408.7 ___________________________________________________________________________________________________________ LIABILITIESNon-current liabilitiesInterestbearing loansandliabilities (264.2) 29.6 - - 10.8 - - - 0.1 40.5 (223.7)Forward currency swaps - (14.7) - - (20.5) - - - - (35.2) (35.2)Deferred taxliabilities - (4.9) - - 2.7 - - - - (2.2) (2.2)Retirementbenefitobligation - (54.3) (12.0) - - - - - - (66.3) (66.3)Other liabilities (66.2) 3.5 - - - - - 1.7 (0.1) 5.1 (61.1) ___________________________________________________________________________________________________________ (330.4) (40.8) (12.0) - (7.0) - - 1.7 - (58.1) (388.5)Current liabilitiesTrade andother payables (569.7) 37.2 - - - 21.0 - 1.6 (1.6) 58.2 (511.5)Current taxliabilities (81.2) - - - - - - - - - (81.2)Forwardcurrency swaps - (0.2) - - (2.0) - - - - (2.2) (2.2)Interestbearing loansand liabilities (21.6) (0.8) - - 2.8 - - - (0.1) 1.9 (19.7) ___________________________________________________________________________________________________________ (672.5) 36.2 - - 0.8 21.0 - 1.6 (1.7) 57.9 (614.6) ___________________________________________________________________________________________________________Total liabilities (1,002.9) (4.6) (12.0) - (6.2) 21.0 - 3.3 (1.7) (0.2)(1,003.1) ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________Net assets 1,387.3 1.3 (8.0) 0.9 (6.2) 21.0 10.8 (1.5) - 18.3 1,405.6 =========================================================================================================== SHAREHOLDERS' EQUITYOrdinary share capital issued 28.9 - - - - - - - - - 28.9Share 221.2 - - - - - - - - - 221.2premiumOwn shares (3.2) - - - - - - - - - (3.2)Related Shares:
Persimmon