28th Sep 2005 10:59
HMV Group PLC28 September 2005 Restatement of Financial Information under International Financial Reporting Standards 28 September 2005 CONTENTS Page 1. Introduction 3 2. Summary of Impact 3 3. Basis of Restatement 4 - Transitional Arrangements 4 4. Explanation of Significant Adjustments 5 - Leases 5 - Share based payment 5 - Employee benefits 5 - Other adjustments 6 5. Summary of Significant Accounting Policies 7 Independent Auditors' Report 10 Restated Financial Information Consolidated Income Statement 12Consolidated Balance Sheet 13 Appendices I Reconciliation of net assets at 24 April 2004 14 II Reconciliation of profit for the 26 weeks ended 23 October 2004 15 III Reconciliation of net assets at 23 October 2004 16 IV Reconciliation of profit for the 53 weeks ended 30 April 2005 17 V Reconciliation of net assets at 30 April 2005 18 VI Segmental analysis of operating profit 19 1. Introduction HMV Group plc and its subsidiary companies ('the Group') previously preparedconsolidated financial statements in accordance with UK Generally AcceptedAccounting Practice ('UK GAAP'). From 2005, the Group is required to prepare itsconsolidated financial statements under International Accounting Standards andInternational Financial Reporting Standards (collectively 'IFRS') as adopted bythe European Union ('EU'). The Group's first annual report under IFRS will be for the 52 weeks ending 29April 2006, and its first interim IFRS results will be for the 26 weeks ending 2October 2005. The Group's date of transition to IFRS is 25 April 2004, being thestart of the previous period, which will be presented as comparativeinformation. 2. Summary of Impact 26 weeks to 23 October 2004 53 weeks to 30 April 2005 UK GAAP IFRS UK GAAP IFRS £m £m £m £m Unaudited Unaudited Operating profit 18.4 15.7 144.4 139.1 Profit before tax 13.3 10.5 133.5 128.0 Profit after tax 9.3 7.2 96.4 91.7 Basic earnings per share 2.3p 1.8p 23.9p 22.7p Net liabilities (67.4) (85.4) (4.6) (14.4) The adoption of IFRS represents an accounting change only and does not affectthe operations or cash flows of the Group. The effect of the accounting changeon the result of HMV Group plc is to reduce operating profit and profit beforetax for the 53 weeks ended 30 April 2005 by £5.3m and £5.5m respectively. Thechange to reported operating profit is shown by business segment in Appendix VI. The accounting policy changes that have the most significant impact on restatedfigures are as follows, and are explained in further detail below: • The recognition in the income statement of operating lease incentivesand capital contributions from landlords over the full life of the lease ratherthan a shorter period to the first rent review. This is therefore a timingdifference that will reverse over the period of the lease; • The recognition of a fair value charge for share based payments overthe three year vesting period of share options; • The inclusion on the balance sheet of the net deficit of the definedbenefit section of the UK and Ireland pension plans; • The timing of the recognition of dividends; • Related tax adjustments that increased the effective tax rate for the53 weeks ended 30 April 2005 from 27.8% to 28.4%. Due to the timing of the Group's transition to IFRS, the charge for share basedpayments included in the 53 weeks ended 30 April 2005 (£1.6m) represents onlytwo years of share option grants. In the 52 weeks ended 29 April 2006, therewill therefore be a one-off increase in the charge to include a third year'sgrant since the Group's share option schemes operate over a three year vestingperiod (see section 4.2). 3. Basis of Restatement The financial information in this document has been prepared in accordance withthe accounting policies set out in section 5 below. The accounting policies are based on current IFRS, International FinancialReporting Interpretation Committee ('IFRIC') interpretations, and currentInternational Accounting Standards Board ('IASB') exposure drafts that areexpected to be issued as final standards and adopted by the EU such that theyare effective for the 52 weeks ended 29 April 2006. In particular, it has beenassumed that the EU will endorse the amendment to IAS 19 Employee Benefits.These standards are subject to ongoing review and endorsement by the EU andfurther IFRIC interpretations, and may therefore be subject to change. TheGroup's first IFRS financial statements may consequently be prepared on thebasis of accounting policies or presentations, which are different to those, setout in this restatement document. In accordance with IFRS 1 First Time Adoption of International FinancialReporting Standards, the Group has elected not to restate comparativeinformation for the impact of IAS 32 Financial Instruments: Disclosure andPresentation and IAS 39 Financial Instruments: Recognition and Measurement. Theopening balance sheet for the 52 week period commencing 1 May 2005 will berestated in accordance with the requirements of these standards, although thisadjustment is not expected to be material. The UK GAAP financial information contained in this document does not constitutefull accounts within the meaning of Section 240 of the Companies Act 1985. Fullaccounts for the 53 weeks ended 30 April 2005, incorporating an unqualifiedaudit report, will be delivered to the Registrar of Companies followingshareholder approval at the AGM on 28 September 2005. Transitional Arrangements (IFRS 1) In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1, which in general requires IFRS accounting policies to be fullyapplied retrospectively in deriving the opening balance sheet at the date oftransition. However, IFRS 1 contains certain mandatory exceptions and some optionalexemptions to this principle of retrospective application. Significantaccounting policy changes, together with the relevant transitional provisions,are set out in Section 4 below. 4. Explanation of Significant Adjustments 4.1 Leases (IAS 17) Under UK GAAP, operating lease incentives (capital contributions and rent freeperiods) were recognised in the profit and loss account over the period to thefirst rent review. In accordance with IAS 17, as amended by SIC 15, leaseincentives will now be recognised in the income statement over the full term ofthe lease. This change is therefore a timing difference that will reverse overthe term of each lease. 4.2 Share based payment (IFRS 2) Under IFRS 2, the charge recognised in the income statement for share options,long-term incentive plans and other share based payments will be based on the 'fair value' of the awards at the date of grant, calculated using an optionpricing model. This contrasts to UK GAAP, where the charge recognised was basedon the 'intrinsic value' of awards, being the difference between the marketvalue of the shares at the date of the award and the option exercise price. In accordance with the transitional provisions of IFRS 2, the Group has appliedthe fair value model to all grants of equity instruments after 7 November 2002that had not vested as at 1 January 2005. For share based payments, the fair value determined at the date of grant isexpensed through the income statement on a straight line basis over the vestingperiod (usually three years), based on the Group's estimate of the number ofshares that will eventually vest. At the vesting date, an adjustment is made totake into account the actual number of shares that vested. Fair value ismeasured by use of a Black-Scholes model. 4.3 Employee benefits Retirement obligations HMV Group plc operates defined benefit pension schemes in the UK and Ireland. Under UK GAAP, the cost to the Group of the defined benefit section of the Grouppension scheme was charged to the profit and loss account so as to spread thecosts of pensions over employees' working lives with the Group. The pensionprovision in the balance sheet represented the differences between contributionspaid and cumulative amounts charged to profit; the assets and liabilities of thescheme itself were not recognised on the Group's balance sheet. IAS 19 requires the operating and financing costs of defined benefit pensions tobe recognised separately in the income statement, but permits a number ofalternative accounting treatments for actuarial gains and losses. The Group haselected to recognise, directly in equity, all actuarial gains and losses in fullin the period in which they occur. This option has been selected forconsistency, as it is most similar to the treatment required under UK GAAP (FRS17) that has previously been disclosed by way of a note in the Group's financialstatements. The retirement benefit obligation recognised in the balance sheet under IAS 19represents the present value of the defined benefit liabilities under theprojected unit credit method, as reduced by the market value of scheme assets. 4.4 Other adjustments These adjustments are included within the 'Other' column in Appendices I to V. a. Dividends (IAS 10) Dividends will now be recognised only when they are declared and approved,rather than accrued for in the period to which they relate. Compared to theprevious treatment this will have the effect of deferring the recognition offinal dividends to the following half year. In addition, dividends will be shownas a movement directly in equity instead of through the income statement. b. Deferred taxation (IAS 12) IAS 12 takes a balance sheet approach to deferred tax whereby deferred tax isrecognised in the balance sheet by applying the appropriate tax rate to thetemporary differences arising between the carrying value of assets andliabilities and their tax base. This contrasts with UK GAAP (FRS 19), whichconsiders timing differences arising in the income statement. Adjustments made to the financial statements on the transition to IFRS result inrelated adjustments to deferred tax, particularly with regard to leaseincentives, share based payments and post-retirement benefits. Furthermore, under IFRS, deferred tax assets and liabilities are alwaysrecognised as being non-current. Previously under UK GAAP, the Group had splitits deferred tax balances between those due in less than one year and those duein greater then one year. Consequently an adjustment has been made toreclassify all deferred tax assets and liabilities to being non-current. c. Cumulative translation differences Under IFRS, exchange differences arising on consolidation on the translation ofoverseas subsidiaries are required to be recognised as a separate equityreserve. On disposal of an overseas subsidiary, the cumulative exchange gain orloss associated with that subsidiary is recognised in the income statement aspart of the profit or loss on disposal. The Group has utilised the exemption available in IFRS 1 whereby cumulativetranslation differences are deemed to be zero at the date of transition to IFRS;the profit or loss on all subsequent disposals will therefore exclude anytranslation differences arising prior to 25 April 2004. 5. Summary of Significant Accounting Policies Basis of preparation The consolidated accounts of the Company and its subsidiaries are made up to theSaturday on or immediately preceding 30 April each year. The financialstatements are prepared under the historical cost convention, in accordance withapplicable accounting standards and specifically in accordance with theaccounting policies set out below. Basis of consolidation The consolidated accounts comprise the accounts of the Company and itssubsidiaries. All intra-group transactions, balances, income and expenses areeliminated on consolidation. The results of subsidiaries acquired during a period are included from the datethat effective control passed. Revenue Revenue represents the value of goods and services supplied, less discountsgiven. It also includes commission earned on ticket sales and similaractivities. Revenue excludes value added tax ("VAT") and similar sales-relatedtaxes. Goodwill The Group has utilised the exemption available in IFRS 1 whereby IFRS 3 BusinessCombinations has not been applied retrospectively to past business combinations. Goodwill arising on acquisitions prior to 25 April 1998 was set off directlyagainst reserves. This goodwill has not been reinstated on the balance sheet onthe transition to IFRS. Furthermore, it will not be transferred to the incomestatement if the subsidiary is disposed of or if the investment in thesubsidiary becomes impaired. Positive goodwill arising on acquisitions since 24 April 2004 is capitalised andclassified as an asset on the balance sheet. It is reviewed for impairmentannually or more frequently if events or changes in circumstances indicate thatthe carrying value may be impaired. Intangible assets Intangible assets are valued at cost and amortised over their useful life unlessthe asset can be demonstrated to have an indefinite life. Intangible assetswith definite lives are reviewed for impairment if there is any indication thatthe carrying value may not be recoverable. Intangible assets with an indefiniteuseful life are tested for impairment annually. Foreign currencies Transactions denominated in foreign currencies are recorded at the rates ofexchange ruling at the date of the transactions. Monetary assets andliabilities denominated in foreign currencies are retranslated into sterling atperiod end rates. The resulting foreign exchange differences are dealt with inthe determination of profit (loss) for the period. On consolidation, average exchange rates are used to translate the results ofoverseas companies and businesses, and the assets and liabilities of overseascompanies and businesses are translated into sterling at period-end rates.Differences on translation are recognised as a separate equity reserve,inclusive of differences on foreign currency borrowings that provide a hedgeagainst a net investment in a foreign entity. On disposal of an overseascompany or business, the cumulative exchange differences for that entity arerecognised in the income statement as part of the profit or loss on disposal. Advertising costs Advertising costs are expensed as incurred. Leased assets In respect of property operating leases, benefits received and receivable as anincentive to sign a lease are spread on a straight line basis over the leaseterm. All other operating lease payments are charged directly to theconsolidated income statement in the financial period to which the paymentsrelate. The Group has a number of lease agreements in which the rent payable iscontingent on revenue. Property, plant and equipment The capitalised cost of property, plant and equipment includes only those coststhat are directly attributable to bringing an asset to its working condition forits intended use. Depreciation of property, plant and equipment is calculated on cost, at ratesestimated to write off the cost, less the estimated residual value, of therelevant assets by equal annual amounts over their estimated useful lives. The annual rates used are: Fixtures and fittings Period of the lease Plant, equipment and vehicles 10 to 33 1/3% The carrying values of property, plant and equipment are reviewed for materialimpairment in periods if events or changes in circumstances indicate thecarrying value may not be recoverable. Inventories Inventories, which represent finished goods and goods for resale, are stated atthe lower of cost and net realisable value on a first-in, first-out basis. Deferred taxation Deferred tax expected to be payable or recoverable on differences at the balancesheet date between the tax bases of assets and liabilities and their carryingamounts for financial reporting purposes is accounted for using the liabilitymethod. Deferred tax liabilities are generally recognised for all taxabletemporary differences, and deferred tax assets are recognised to the extent thatit is probable that taxable profits will be available against which deductibletemporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differencearises from goodwill or from the initial recognition (other than in a businesscombination) of other assets and liabilities in a transaction that affectsneither the taxable profit nor the accounting profit. Deferred tax iscalculated at the rates of taxation enacted or substantively enacted at thebalance sheet date and is not discounted. Pension costs The Group operates both defined benefit and defined contribution pensionschemes. The cost of providing benefits under the defined benefit scheme is determined bya qualified actuary using the projected unit credit method. An actuarialvaluation is carried out at each balance sheet date. The retirement benefitobligation recognised in the balance sheet represents the present value of theliabilities of the defined benefit schemes as reduced by the market value of theassets of the schemes. Actuarial gains and losses are recognised in full in the period in which theyoccur. They are recognised directly in equity and are presented in thestatement of recognised income and expense. Other income and expense associatedwith the defined benefit scheme are recognised in the income statement. For the defined contribution schemes, contributions are charged in the profitand loss account as they become payable in accordance with the rules of thescheme. Share based payments The fair value of employee share options granted on or after 7 November 2002 iscalculated using the Black-Scholes option pricing model. The resulting cost ischarged in the income statement over the vesting period of the option (usuallythree years) and is adjusted for the expected and actual number of optionsvesting. Independent Auditors' Report to HMV Group plc on the preliminary IFRS FinancialStatements for the year ended 30 April 2005 We have audited the accompanying preliminary International Financial ReportingStandards ("IFRS") financial statements of the Group for the year ended 30 April2005 which comprise the opening IFRS Consolidated Balance Sheet as at 24 April2004, the Consolidated Income Statement for the 53 weeks ended 30 April 2005 andthe Consolidated Balance Sheet as at 30 April 2005, together with the relatedaccounting policies note set out on pages 7 to 9. We have not audited norreviewed and we will not provide any opinion in respect of the 26 weeks to 23October 2004 disclosures. This report is made solely to the Company in accordance with our engagementletter dated 20 September 2005. Our audit work has been undertaken so that wemight state to the Company those matters we are required to state to them in anauditors' report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility or liability to anyone other thanthe Company for our audit work, for this report, or for the opinions we haveformed. Respective responsibilities of directors and auditors These preliminary IFRS financial statements are the responsibility of theCompany's directors and have been prepared as part of the Company's conversionto IFRS. They have been prepared in accordance with the basis set out inSection 3 'Basis of restatement', which describes how IFRS have been appliedunder IFRS 1, including the assumptions management has made about the standardsand interpretations expected to be effective, and the policies expected to beadopted, when management prepares its first complete set of IFRS financialstatements as at 29 April 2006. Our responsibility is to express an independent opinion on the preliminary IFRSfinancial statements based on our audit. We read the other informationaccompanying the preliminary IFRS financial statements and consider whether itis consistent with the preliminary IFRS financial statements. This otherinformation comprises the description of significant changes in accountingpolices on pages 5 to 6 and the reconciliations from UK GAAP to IFRS set out inAppendices I, IV and V. We consider the implications for our report if webecome aware of any apparent misstatements or material inconsistencies with thepreliminary IFRS financial statements. Our responsibilities do not extend toany other information. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standardsissued by the Auditing Practices Board. Those Standards require that we planand perform the audit to obtain reasonable assurance about whether thepreliminary IFRS financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the preliminary IFRS financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation ofthe preliminary IFRS financial statements. We believe that our audit provides areasonable basis for our opinion. Emphasis of matter Without qualifying our opinion, we draw attention to the fact that Section 3 'Basis of restatement' explains why there is a possibility that the preliminaryIFRS financial statements may require adjustment before constituting the finalIFRS financial statements. Moreover, we draw attention to the fact that, underIFRS only a complete set of financial statements with comparative financialinformation and explanatory notes can provide a fair presentation of theCompany's financial position, results of operations and cash flows in accordancewith IFRS. Opinion In our opinion, the preliminary IFRS financial statements for the year ended 30April 2005 have been prepared, in all material respects, in accordance with thebasis set out in Section 3 'Basis of restatement', which describes how IFRS havebeen applied under IFRS 1, including the assumptions management has made aboutthe standards and interpretations expected to be effective, and the policiesexpected to be adopted, when management prepares its first complete set of IFRSfinancial statements as at 29 April 2006. The maintenance and integrity of the HMV Group plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the financialinformation since it was initially presented on the web site. Legislation in the United Kingdom governing the preparation and dissemination offinancial statements may differ from legislation in other jurisdictions. ERNST & YOUNG LLP Registered Auditor London 28 September 2005 CONSOLIDATED INCOME STATEMENT 53 weeks ended 26 weeks ended 30 April 2005 23 October 2004 Unaudited £m £m Revenue 760.2 1,885.6 Cost of sales (695.9) (1,646.5)Administrative expenses (48.6) (100.0) Group operating profit 15.7 139.1 Financial income 2.1 4.8Financial costs (7.3) (15.9)Net finance charges (5.2) (11.1) Profit before taxation 10.5 128.0Taxation (3.3) (36.3) Profit attributable to members of the holding company 7.2 91.7 Earnings per share - basic 1.8p 22.7p - adjusted 22.8p - diluted 1.8p 22.3p - diluted adjusted 22.4p CONSOLIDATED BALANCE SHEET 30 April 23 October 24 April 2005 2004 2004 Unaudited £m £m £mAssets Non-current assetsProperty, plant and equipment 175.4 167.7 162.6Intangible assets 2.0 2.0 2.0Deferred income tax asset 32.4 25.5 25.6Trade and other receivables 8.4 9.4 8.5 218.2 204.6 198.7Current assets Inventories 157.9 200.4 157.5Trade and other receivables 53.5 46.8 45.2Current tax recoverable 0.4 0.3 1.0Cash and cash equivalents 47.6 106.9 177.2 259.4 354.4 380.9 Total Assets 477.6 559.0 579.6 LiabilitiesNon-current liabilitiesInterest bearing loans and borrowings - (118.2) (182.3)Deferred income tax liabilities (0.2) (0.2) (0.2)Retirement benefit liabilities (30.0) (23.2) (17.4)Other non-current liabilities (0.2) (0.1) (0.1)Provisions (2.4) (3.2) (4.3) (32.8) (144.9) (204.3)Current liabilitiesTrade and other payables (356.6) (431.1) (359.8)Current income tax payable (33.3) (18.3) (33.3)Current portion of interest bearing loans andborrowings (64.2) (45.2) (48.2)Provisions (5.1) (4.9) (6.5) (459.2) (499.5) (447.8) Total Liabilities (492.0) (644.4) (652.1) Net Liabilities (14.4) (85.4) (72.5) Equity Issued share capital 4.0 4.1 4.0Share premium 309.6 309.3 308.5Treasury shares (4.2) (3.0) (1.9)Foreign currency translation reserve 0.4 0.8 -Capital reserve 0.3 0.2 0.2Retained earnings (324.5) (396.8) (383.3)Total equity attributable to members of theholding company (14.4) (85.4) (72.5) APPENDIX I RECONCILIATION OF EQUITY AT 24 APRIL 2004 Share Based Effect of Restated UK Payments Transition Under GAAP Leases Pensions Other To IFRS IFRS £m £m £m £m £m £m £mAssets Non-current assetsProperty, plant and 156.4 6.2 6.2 162.6equipmentIntangible assets 2.0 2.0Deferred income tax asset 9.3 2.7 3.0 5.1 5.5 16.3 25.6Trade and other 8.5 8.5receivables 176.2 198.7 Current assetsInventories 157.5 157.5Trade and other 45.2 45.2receivablesCurrent tax recoverable 6.4 (5.4) (5.4) 1.0Cash and cash equivalents 177.2 177.2 386.3 380.9 Total Assets 562.5 579.6 Liabilities Non-current liabilitiesInterest bearing loansand borrowings (182.3) (182.3)Deferred income tax - (0.2) (0.2) (0.2)liabilitiesRetirement benefits - (17.4) (17.4) (17.4)liabilitiesOther non-current (0.1) (0.1)liabilitiesProvisions (4.3) (4.3) (186.7) (204.3) Current liabilities Trade and other payables (361.3) (16.7) 18.2 1.5 (359.8)Current income tax (33.3) (33.3)payableCurrent portion ofinterest bearing loansand borrowings (48.2) (48.2)Provisions (6.5) (6.5) (449.3) (447.8) Total Liabilities (636.0) (652.1) Net Liabilities (73.5) (7.8) 3.0 (12.3) 18.1 1.0 (72.5) Equity Issued capital 4.0 4.0Share premium 308.5 308.5Treasury shares (1.9) (1.9)Capital reserve 0.2 0.2Retained earnings (384.3) (7.8) 3.0 (12.3) 18.1 1.0 (383.3) Total equity attributableto members of the holdingcompany (73.5) (7.8) 3.0 (12.3) 18.1 1.0 (72.5) Adjustments included within the 'Other' column are explained in section 4.4. APPENDIX II RECONCILIATION OF PROFIT FOR THE 26 weeks ENDED 23 OCTOBER 2004 Share Based Effect of Restated UK Payments Transition Under GAAP Leases Pensions Other To IFRS IFRS £m £m £m £m £m £m £m Unaudited Unaudited Revenue 760.2 760.2 Cost of sales (694.5) (1.1) (0.3) (1.4) (695.9) Administrative expenses (47.3) (0.5) (0.8) (1.3) (48.6) Operating profit 18.4 15.7 Financial income 2.1 2.1Financial costs (7.2) (0.1) (0.1) (7.3)Net finance charges (5.1) (5.2) Profit before tax 13.3 10.5 Tax (4.0) 0.1 0.3 0.3 0.7 (3.3) Profit for the period 9.3 (1.0) (0.8) (0.6) 0.3 (2.1) 7.2 Earnings per share - basic 2.3p 1.8p- diluted 2.3p 1.8p Adjustments included within the 'Other' column are explained in section 4.4. APPENDIX III RECONCILIATION OF EQUITY AT 23 OCTOBER 2004 Opening Balance Sheet Share Based Effect of Restated Payments UK Adjustments Transition Under GAAP Leases Pensions Other To IFRS IFRS £m £m £m £m £m £m £m £m Unaudited Unaudited Assets Non-current assetsProperty, plant andequipment 161.0 6.2 0.5 6.7 167.7Intangible assets 2.0 2.0Deferred income tax 9.2 16.3 16.3 25.5assetTrade and other 9.4 9.4receivables 181.6 204.6 Current assetsInventories 200.4 200.4Trade and other 46.8 46.8receivablesCurrent tax recoverable 5.7 (5.4) (5.4) 0.3Cash and cash 106.9 106.9equivalents 359.8 354.4 Total Assets 541.4 559.0 Liabilities Non-current liabilities Interest bearing loansand borrowings (118.2) (118.2)Deferred income taxliabilities - (0.2) (0.2) (0.2)Retirement benefitsliabilities - (17.4) (5.8) (23.2) (23.2)Other non-current (0.1) (0.1)liabilitiesProvisions (3.2) (3.2) (121.5) (144.9) Current liabilities Trade and other (418.9) 1.5 (1.5) (12.2) (12.2) (431.1)payablesCurrent income tax (18.3) (18.3)payableCurrent portion ofinterest bearing loansand borrowings (45.2) (45.2)Provisions (4.9) (4.9) (487.3) (499.5) Total Liabilities (608.8) (644.4) Net Liabilities (67.4) 1.0 (1.0) - (5.8) (12.2) (18.0) (85.4) Equity Issued capital 4.1 4.1Share premium 309.3 309.3Treasury shares (3.0) (3.0)Foreign currencytranslation reserve - 0.8 0.8 0.8Capital reserve 0.2 0.2Retained earnings (378.0) 1.0 (1.0) (5.8) (13.0) (18.8) (396.8) Total equityattributable to membersof the holding company (67.4) 1.0 (1.0) - (5.8) (12.2) (18.0) (85.4) Adjustments included within the 'Other' column are explained in section 4.4. APPENDIX IV RECONCILIATION OF PROFIT FOR THE 53 weeks ENDED 30 APRIL 2005 Share Based Effect of Restated UK Payments Transition Under GAAP Leases Pensions Other To IFRS IFRS £m £m £m £m £m £m £m Revenue 1,885.6 1,885.6 Cost of sales (1,643.8) (2.1) (0.6) (2.7) (1,646.5) Administrative expenses (97.4) (1.0) (1.6) (2.6) (100.0) Operating profit 144.4 139.1 Financial income 4.8 4.8Financial costs (15.7) (0.2) (0.2) (15.9)Net finance charges (10.9) (11.1) Profit before tax 133.5 128.0 Tax (37.1) 0.2 0.6 0.8 (36.3) Profit for the period 96.4 (1.9) (1.6) (1.2) - (4.7) 91.7 Earnings per share - basic 23.9p 22.7p- adjusted 24.0p 22.8p- diluted 23.4p 22.3p- diluted adjusted 23.5p 22.4p APPENDIX V RECONCILIATION OF EQUITY AT 30 APRIL 2005 Opening Balance Sheet Share Based Effect of Restated Payments UK Adjustments Transition Under GAAP Leases Pensions Other To IFRS IFRS £m £m £m £m £m £m £m £mAssets Non-current assetsProperty, plant andequipment 168.1 6.2 1.1 7.3 175.4Intangible assets 2.0 2.0Deferred income tax 10.2 16.3 0.2 0.8 4.9 22.2 32.4assetTrade and other 12.8 (4.4) (4.4) 8.4receivables 193.1 218.2 Current assetsInventories 157.9 157.9Trade and other 53.5 53.5receivablesCurrent tax recoverable 5.8 (5.4) (5.4) 0.4Cash and cash 47.6 47.6equivalents 264.8 259.4 Total Assets 457.9 477.6 Liabilities Non-current liabilities Deferred income taxliabilities - (0.2) (0.2) (0.2)Retirement benefits - (17.4) (12.6) (30.0) (30.0)liabilitiesOther non-current (0.2) (0.2)liabilitiesProvisions (2.4) (2.4) (2.6) (32.8) Current liabilities Trade and other payables (357.3) 1.5 (3.2) 2.4 0.7 (356.6)Current income tax (33.3) (33.3)payableCurrent portion ofinterest bearing loansand borrowings (64.2) (64.2)Provisions (5.1) (5.1) (459.9) (459.2) Total Liabilities (462.5) (492.0) Net Liabilities (4.6) 1.0 (1.9) 0.8 (12.1) 2.4 (9.8) (14.4) Equity Issued capital 4.0 4.0Share premium 309.6 309.6Treasury shares (4.2) (4.2)Foreign currencytranslation reserve - 0.4 0.4 0.4Capital reserve 0.3 - 0.3Retained earnings (314.3) 1.0 (1.9) 0.8 (12.1) 2.0 (10.2) (324.5) Total equityattributable to membersof the holding company (4.6) 1.0 (1.9) 0.8 (12.1) 2.4 (9.8) (14.4) Adjustments included within the 'Other' column are explained in section 4.4. APPENDIX VI SEGMENTAL ANALYSIS OF OPERATING PROFIT FOR THE 26 weeks ENDED 23 OCTOBER 2004 Effect of Restated UK Transition Under GAAP To IFRS IFRS £m £m £m HMV UK & Ireland 15.4 (1.9) 13.5 HMV Asia Pacific 1.1 (0.2) 0.9 HMV North America 0.5 (0.1) 0.4 Total HMV 17.0 (2.2) 14.8 Waterstone's 1.4 (0.5) 0.9 HMV Group 18.4 (2.7) 15.7 SEGMENTAL ANALYSIS OF OPERATING PROFIT FOR THE 53 WEEKS ENDED 30 APRIL 2005 Effect of Restated UK Transition Under GAAP To IFRS IFRS £m £m £m HMV UK & Ireland 100.7 (3.8) 96.9 HMV Asia Pacific 7.3 (0.4) 6.9 HMV North America 8.0 (0.2) 7.8 Total HMV 116.0 (4.4) 111.6 Waterstone's 28.4 (0.9) 27.5 HMV Group 144.4 (5.3) 139.1 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Hmv Group