3rd May 2006 08:00
Grainger Trust PLC03 May 2006 FOR IMMEDIATE RELEASE 3 May 2006 Grainger Trust plc: THE EFFECT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") ON THEFINANCIAL REPORTING OF GRAINGER TRUST plc ("GRAINGER") Grainger is today presenting information to show the effect of adopting IFRS onits balance sheet at the transition date of 1 October 2004 and on its incomestatement and balance sheet for the year ended 30 September 2005 in preparationfor the adoption of IFRS for the year ending 30 September 2006. Presentation is made also of the group's accounting policies under IFRS. The adoption of IFRS has no effect on the operating basis of the group, itsstrategy or management, or on the cash flows derived from the business. The term IFRS includes all EU endorsed International Accounting Standards (IAS)and International Financial Reporting Standards (IFRS) issued by theInternational Accounting Standards Board (IASB) and the International FinancialReporting Committee (IFRIC) and Interpretations issued by IFRIC. Effect of adoption of IFRS on the 2005 position and results:- UK GAAP IFRS Difference Profit after taxation £26.5m £30.9m £4.4mShareholders funds £223.6m £205.0m (£18.6m)Basic earnings per share 21.2p 24.7p 3.5pMarket value net assets per share 558.3p 474.8p (83.5p)NNNAV per share 385.2p 388.9p 3.7pGrainger NAV per share 492.3p 496.0p 3.7pNet Debt £861.0m £861.0m -Loan to value ratio 54.0% 54.0% - In summary, the main changes to Grainger's income statement and balance sheetare as follows:- • Under IFRS 3 all negative goodwill in the opening balance sheet as at 1 October 2004 is written back to retained earnings. The amortisation of negative goodwill in the 2005 income statement is therefore reversed. • Under IAS 12 deferred tax is provided in the opening balance sheet on a) the difference between the fair value of properties acquired as part of a business acquisition and their tax base cost and b) on the cumulative revaluation surplus on investment properties. This charge will result in the group's effective tax rate being closer to 30% compared to 40% currently. • The final proposed dividend is recorded as a liability only when approved at the group's Annual General Meeting. • Surpluses and deficits arising on the revaluation of investment properties are shown in the income statement rather than through revaluation reserve. • The result of providing for deferred tax as set out above is that the market value net asset value per share ('NAV') will reduce. However, NNNAV, which now under IFRS only takes account of the market value of fixed rate debt and contingent tax over and above that now provided under IAS 12, and Grainger NAV, which adjusts for the reversionary surplus in the portfolio, both remain materially the same. The main adjustments required by Grainger under IFRS are similar to those madeby other companies within the property sector. However, some other propertycompanies have made adjustments to treat leasehold properties subject to groundleases as finance leases under IAS 17 and to spread lease incentives to tenantsover the lease term rather than to the first rent review under the SIC 15interpretation issued by IFRIC. Grainger has concluded that neither of theseadjustments are required in its financial statements. A more detailed review of the impact of IFRS on Grainger's financial results,including reconciliations to UK GAAP and explanations of all adjustments made,can be found in a separate report on the company's website,www.graingertrust.co.uk. Ends. Contact: Grainger Trust plc Telephone: (0191) 261 1819 Andrew Cunningham Deputy Chief Executive and Finance Director David Smith Group Financial Controller This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Grainger plc