14th Apr 2005 07:01
ROLLS-ROYCE GROUP plc TRANSITION FROM UK GAAP TO IFRS IntroductionIn accordance with European Union regulations, Rolls-Royce is required to adoptInternational Financial Reporting Standards (IFRS) in its consolidated accountsfor accounting periods commencing on or after January 1, 2005. Consequently,the Group's first IFRS results will be for the six month period ending June 30,2005. These results and the financial statements for the year ended December31, 2005 will include comparative information for 2004.The major changes required by the introduction of IFRS are:recognition of intangible assets, whereby certain qualifying costs, inparticular related to research and development and engine costs, which werewritten off under UK GAAP, are required to be capitalised and amortised over afuture period of time;treatment of financial instruments, whereby the majority of financial assetsand derivatives, employed by the Group to provide stability for long-termbusiness planning, for example in respect of foreign exchange rates, will befair-valued on the balance sheet with subsequent changes in fair valuesrecorded in the income statement, unless hedge accounting is applied;financial risk and revenue sharing partners, whereby a balance sheet liabilityis required to be established to reflect the expected future present value ofpayments to partners;pensions and other post retirement costs, whereby pension scheme deficits arerequired to be recorded on the balance sheet;the cessation of amortisation of goodwill; andthe recording of share-based payments at fair value.The Group achieves hedge accounting under UK GAAP. However the strictmethodology to achieve hedge accounting under IAS 39 will limit its applicationfor use by the Group unless there are significant changes to the way in whichthe Group operates its economic hedging policies. The Group has determinedthat its existing hedging strategy is in the best interests of the business andits shareholders. It will not, therefore, be altering its hedging activitiesin order to achieve a particular accounting presentation under the new rules.The Group will apply hedge accounting to its interest rate derivative hedgebook, but will not be applying hedge accounting to its foreign exchange andcommodity derivative hedge books. To explain how the Group's reported performance and financial position areaffected by IFRS, this document presents the restatement of informationpreviously reported under UK Generally Accepted Accounting Principles (GAAP). Further information is included in the appendices, which are available on theGroup's website, as follows:Appendix1. Accounting policies revised under IFRS2. Restatement of the transition net assets at January 1, 20043. Restatement of the financial statements for the year ended December 31, 20044. Restatement of the interim financial statements for the six months endedJune 30, 2004.5. Restatement of the net assets on adoption of IAS 39 at January 1, 20056. Reformat of 2004 UK GAAP financial statements in accordance with IAS 1A webcast of the presentation to financial analysts is also available on theGroup's website, www.rolls-royce.com2. Basis of preparationThe financial information has been prepared in accordance with the IFRSexpected to be adopted by the EU at December 31, 2005. These standards arestill subject to change. The accounting policies applied are set out inAppendix 1.The Group has adopted the exemption granted by IFRS 1 First-time Adoption ofInternational Financial Reporting Standards that IAS 32 and IAS 39 FinancialInstruments need not be applied to the comparative period. Consequently therestated results for the year ended December 31, 2004 and the six months endedJune 30, 2004 are prepared using the accounting policies for financialinstruments previously adopted under UK GAAP. The net assets at January 1,2005 have been prepared including the impact of the adoption of IAS 32 and IAS39 in 2005.3. Implementation processAn implementation team was established in 2002 to manage the internalassessment and the programme of transition to IFRS. This programme utilisedindustry and accounting practice professionals, including KPMG Audit plc, ourown auditors, and other external accounting professionals. All UK GAAPaccounting policies were examined to assess any impact from IFRS.The Group also participated in industry forums to identify standard practiceduring the implementation phase.4. Overview of impact4.1. Income statement Reconciliation of profit for the year ended December 31, 2004 Before After tax tax Ref ‚£m ‚£m Profit - UK GAAP 306 205 Re-formatted into IFRS format 6.2 (9) - Profit - UK GAAP re-formatted 297 205 IFRS Adjustments IAS 38 Development costs 6.3 (6) (4) Recoverable engine costs 6.4 (10) (7) IFRS 3 Goodwill 6.5 48 47 IAS 19 Pensions and other post-retirement benefits 6.6 41 27 IFRS 2 Share-based payments 6.7 (6) (5) IAS 12 Tax 6.9 n/a 1 Profit - IFRS 364 264 4.2 Earnings per shareEarnings per share - 2004 pence UK GAAP Basic 12.07 Underlying 14.50 IFRS Basic 15.56 Underlying 15.56 4.3 Net assetsReconciliation of net assets Ref ‚£m Net assets - UK GAAP at December 31, 2004 2,307 IFRS adjustments (net of deferred tax) IAS 38 Research and development 6.3 108 Recoverable engine costs 6.4 87 IFRS 3 Goodwill 6.5 47 IAS 19 Pensions and post retirement benefits 6.6 (1,076) IFRS 2 Share-based payments 6.7 9 IAS 12 Tax 6.9 (44) Other 8 Net assets - IFRS at December 31, 2004 1,446 IAS 32/39 6.10 Foreign exchange instruments 719 Consequential impact of IAS 39 (110) Interest rate instruments (11) Commodity instruments 6 Risk and revenue sharing partnerships (325) Own share total return swaps (123) Net assets - IFRS at January 1, 2005 1,602 5.Underlying profitUnder UK GAAP the Group has presented a measure of its underlying performancethat excluded exceptional and non-trading items.In implementing IFRS, it is necessary to revise the definition of underlyingprofit. Through the presentation of underlying profit, the Group will seek tocontinue to present a measure of its underlying performance. In consequence,it is appropriate to exclude the unrealised amounts arising from revaluationsrequired by IAS 32 and 39 and to include the realised amounts arising fromsettled transactions.In 2004, as the Group is not restating its results in respect of IAS 32 and 39,there are no adjustments required to derive underlying profit from reportedprofit.The reconciliation of underlying profit before tax between the UK GAAP and IFRSbasis is as follows:Underlying profit before tax: ‚£mReconciliation of UK GAAP to IFRS Underlying profit before tax (UK GAAP 345 basis included in the 2004 Annual Report) Non-trading items 8 Amortisation of goodwill on joint ventures 1 Reallocation of share of joint ventures' (9)tax to profit before tax Development costs (6) Recoverable engine costs (10) Share-based payments (6) Pensions and other post-retirement 41 benefits Underlying profit before tax (IFRS basis) 364 6. Changes in accounting policiesSignificant changes in accounting policy, required by the implementation ofIFRS, together with the associated transitional arrangements are set out below.6.1 Presentation of financial statementsThe Group's primary financial statements have been presented in accordance withIAS 1 Presentation of Financial Statements.The principal impact on the income statement is the presentation of the Group'sshare of the results of joint ventures (which are accounted for using theequity method) as a single line. Under UK GAAP, the Group's shares ofoperating profit, interest and taxation were reported separately. As aconsequence, the Group's share of joint venture taxation is included in profitbefore tax. There is no impact on reported profit after tax.The format of the balance sheet has been amended to include the items requiredby IAS 1 to be presented on the face of the balance sheet.Appendix 6 includes reconciliations from the UK GAAP format to the IFRSformat. The adjustments below are then applied to these revised formats.6.2 Transitional arrangementsThe rules for the first-time adoption of IFRS are set out in IFRS 1. Ingeneral, a company is required to determine its IFRS policies and apply thoseretrospectively to determine its opening balance sheet under IFRS. These IFRSpolicies are based on the standards expected to be effective at December 31,2005. The 'carve-outs' from IAS 39 (relating to the full fair value option andcertain aspects of hedge accounting), endorsed by the EU do not have any impacton the Group. IFRS 1 allows a number of exemptions to this generalrequirement. Where Rolls-Royce has applied these exemptions, they are noted inthe relevant section below.6.3 Research and developmentIAS 38 requires that all development costs meeting specified criteria becapitalised as intangible assets. As part of its IFRS transition project, Rolls-Royce has reviewed alldevelopment projects, whether the costs were previously recognised under UKGAAP or not, to determine whether the criteria in IAS 38 were met. The keyeligibility criteria for capitalisation relate to:i) Identification of development costs. In general, research and developmentactivities are closely interrelated and it is not until the technicalfeasibility of the project can be determined with reasonable certainty thatdevelopment costs can be separately identified; andii) The generation of future economic benefit. Intangible assets are notrecognised unless the project is expected to generate future economic benefitexceeding the amount capitalised.Certain expenditures on internal product development meet all the criteria ofIAS 38 and have therefore been capitalised.Development costs capitalised are amortised on a straight-line basis over aperiod not exceeding 15 years. The impact arising from this change issummarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Capitalisation of development expenditure 11 Amortisation of intangible asset (17) Adjustment to profit before taxation (6) Related taxation effect 2 Adjustment to profit after taxation (4) Net assets Intangible asset - cost 246 257 Intangible asset - accumulated (86) (103)amortisation 160 154 Related taxation effect (48) (46) Adjustment to net assets 112 108 6.4 Recoverable engine costsOn occasions, the Group may sell original equipment to customers at a cashamount below its cost of manufacture, with the expectation that this deficitwill be recovered from future aftermarket sales, generally the sale of spareparts. Where the Group is contractually required to supply aftermarketrequirements to the customer and has a reasonable degree of control over thesesales, these costs represent an investment in the aftermarket that meets thedefinition of an intangible asset. Under UK GAAP, these intangible assets wererequired to be written-off as they arose; under IAS 38 such intangible assetsare required to be capitalised. The resulting intangible asset will beamortised over a maximum of ten years, subject to any specific contractualcircumstances.The impact arising from this change is summarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Capitalisation of intangible 21 assets previously written off in 2004 Amortisation of intangible asset (26) Elimination of related inventory (5)provision recognised under UK GAAP Adjustment to profit before taxation (10) Related taxation effect 3 Adjustment to profit after taxation (7) Net assets Intangible asset - cost 208 229 Intangible asset - cumulative (88) (114)amortisation 120 115 Elimination of related inventory 14 9 provision recognised under UK GAAP 134 124 Related taxation effect (40) (37) Adjustment to net assets 94 87 6.5 Goodwill and business combinationsIFRS 3 prohibits the amortisation of goodwill. Instead, it requires goodwillto be carried at cost. Annual impairment tests are required to be performed.The Group has applied the exemption granted by IFRS 1 to apply IFRS 3prospectively from the date of transition to IFRS. This has the followingimpact:All prior business combination accounting is frozen at the transition date; andThe value of goodwill is frozen at the transition date and amortisationpreviously reported under UK GAAP for the year ended December 31, 2004 isreversed for the IFRS restatement.The impact arising from this change is summarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Reversal of goodwill amortisation 47 relating to subsidiaries Reversal of goodwill amortisation 1 relating to joint ventures Adjustment to profit before taxation 48 Related taxation effect (1) Adjustment to profit after taxation 47 Net assets Reversal of goodwill amortisation - 48 - 48 Related taxation effect - (1) Adjustment to net assets - 47 6.6 Pensions and other post retirement benefitsIAS 19 requires separate recognition of the operating and financing costs ofdefined benefit pension schemes (and similarly funded employee benefits) in theincome statement. The standard permits a number of options for the recognitionof actuarial gains and losses. The Group's policy is to recognise immediatelyany variations in full in a statement of recognised income and expense, aspermitted in the IASB's amendment to IAS 19 entitled Actuarial Gains andLosses, Group Plans and Disclosures. The EU has not yet endorsed thisamendment and the above policy is subject to change, depending on the outcomeof the endorsement process.The cash funding of the plans is designed, in consultation with independentqualified actuaries, to ensure that present and future contributions should besufficient to meet future liabilities.The impact arising from this change is summarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Adjustments to operating profit 42 Adjustments to financing costs (1) Adjustment to profit before taxation 41 Related taxation effect (14) Adjustment to profit after taxation 27 Net assets Eliminate amounts recognised under SSAP 24 Prepaid pension contributions (239) (263) Provision for pension costs 160 159 Include IAS 19 pension liability (1,466) (1,409) (1,545) (1,513) Related taxation effect 447 437 Adjustment to net assets (1,098) (1,076) 6.7 Share-based paymentsIFRS 2 requires the fair value of share-based payments granted to employeessince November 7, 2002 (the date of publication of the exposure draft of IFRS2) to be charged to the income statement. The fair value is calculated usingan option-pricing model and is charged to income over the relevant vestingperiods, adjusted to reflect actual and expected levels of vesting. The basis of calculation for deferred taxation is in respect of all schemes(including pre November 7, 2002 grants) and is the difference between themarket price at the date of the financial statements and the option exerciseprice. This will not necessarily correlate to the fair value charge.The impact arising from this change is summarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Fair value of share options (6)charged to operating profit Adjustment to profit before (6)taxation Related taxation effect 1 Adjustment to profit after taxation (5) Net assets Related taxation effect 2 9 Adjustment to net assets 2 9 6.8 Scope of consolidationOn transition to IFRS, IAS 27 Consolidated Separate Financial Statementsrequires the consolidation of all subsidiaries and special purpose entitiesthat the Group controls at January 1, 2004. Based on the IAS 27 definitions ofcontrol, and after taking into account the facts and circumstances relevant atthe transition date, the Group has determined that it controls one arrangement(Pembroke 717 Holdings Limited) that was not required to be consolidated underUK GAAP. The consolidation of this company does not have any net impact on thereported results for 2004.The impact arising from this change is summarised as follows: At 1 January Year ended 2004 31 December 2004 ‚£m ‚£m Income statement Operating profit 4 Finance costs (4) Adjustment to profit before taxation - Related taxation effect - Adjustment to profit after taxation - Net assets Property plant and equipment 69 46 Current liabilities (1) (1) Borrowings (77) (69) Elimination of provision recognised 9 24 under UK GAAP Adjustment to net assets - - 6.9 Income taxesThe net deferred tax impact of the changes above is shown as part of therelevant adjustment. In addition, under IAS 12 Income Taxes, certain temporary differences, forexample in respect of capital losses and unremitted earnings from jointventures, which previously were not recognised under UK GAAP, will berecognised.The impact arising from this change is summarised as follows: At January Year ended 1, 2004 December 31, 2004 ‚£m ‚£m Changes to deferred tax charge 1 resulting from differences in the basis of recognition Adjustment to profit after taxation 1 Changes to deferred tax balance (45) (44)resulting from differences in the basis of recognition Adjustment to net assets (45) (44) 6.10 Financial instruments (applicable from 1 January 2005)IAS 32 and IAS 39 address the accounting for, and financial reporting of,financial instruments. IAS 32 covers disclosure and presentation, while IAS 39covers recognition and measurement including detailed rules for hedgeaccounting. These include the requirements to match the hedged item to thehedging instrument and to measure hedge effectiveness. Under IAS 39 manyfinancial assets are recognised at fair value and many financial liabilitiesare recognised at amortised cost. Accounting for movements in fair value isdependent on the designation of the relevant financial instrument and whetherhedge accounting is adopted. The Group has applied the exemption, granted by IFRS 1, not to apply IAS 32 andIAS 39 to its comparative figures for 2004. On January 1, 2005, the fair valueof foreign exchange and commodity derivatives will be included in a hedgingreserve. As the Group has not adopted hedge accounting for future foreignexchange transactions under IAS 39 from January 1, 2005, the reserve is frozenand will be released to the income statement based on the designated maturitieson that date.6.10.1 Risk and revenue sharing partnershipsRisk and revenue sharing partnership (RRSP) agreements are a standard form ofco-operation in the civil aero-engine industry. In general, partners share:investment in the programme; market risk as they receive their return fromfuture sales; currency risk as their returns are denominated in US dollars;sales financing obligations; warranty costs; and, where they are manufacturingor development partners, technical and cost risk.As part of the IFRS transition project, RRSP arrangements have been reviewed toassess whether they are financial instruments as defined by IAS 32. Followingthis review, certain partnerships, where the arrangement is not part of anoverall supplier arrangement, will be reclassified as financial instruments ontransition to IFRS.Reclassified RRSP arrangements are accounted for using the amortised costmethod. The amortised cost method requires that the financial liabilityrecognised at any point is the present value of expected future payments. Theevaluation is performed using the effective interest rate at the inception ofthe transaction. The charge to the income statement will be the change in thevalue recognised over the period and will comprise: (i) a finance cost, beingthe unwinding of the discount; and (ii) a credit/charge reflecting changes inforecast payments.6.10.2 Government investmentIn the past, Rolls-Royce has received investment in certain projects from theUK Government. Under UK GAAP, these amounts were recognised as income whenthey were receivable with the levies being recognised as they became due onengine delivery. A similar review to that for RRSPs concluded that thesearrangements were not financial instruments and that no changes are required tothe accounting treatment.6.10.3 Foreign exchange derivativesA large element of the Group's trading is denominated in US dollars and asignificant portion of its costs is incurred in Sterling and Euros. In orderto protect itself from the associated currency volatility, the Group takessignificant levels of forward cover relating to its net exposure. Under UKGAAP, gains or losses on this cover are not recognised in the income statementuntil realised, matching them with the underlying transactions. Contracts maybe signed several years in advance of delivery and forecasts of aftermarketsales have to be made. Delivery dates may change and timing of spares salesmay vary. Therefore meeting the strict criteria for hedge accounting in IAS 39is not considered to be practicable within the current risk managementpractices. Rolls-Royce believes that its current risk management practices arein the best economic interests of shareholders and should not be amended purelyto achieve a particular accounting treatment. Accordingly, Rolls-Royce hasdecided not to adopt hedge accounting for forecast foreign exchangetransactions. Rolls-Royce will continue to hedge its future forecast US dollarincome on a portfolio basis, which it considers is the most efficient economicbasis for doing so.As a result of not hedge accounting for forecast foreign exchange transactions,the movements on the fair value of derivative contracts held for the purpose ofhedging these transactions will be recognised in the income statement. Thesize of this movement in fair values will be largely dependent on movements inspot exchange rates as is indicated by the disclosures required by FRS 13 andincluded in the notes to accounts under UK GAAP.Under UK GAAP, as part of its hedging policy, Rolls-Royce:recognised profits at the average exchange rate achieved in the year;recognised monetary assets and liabilities at the rate expected to be achievedin settling these items, taking account of the foreign exchange cover in place;incorporated rates achieved on forward cover in its assessment of theprofitability of service and long-term contracts.Under IFRS, Rolls-Royce will:recognise profits at the exchange rate at the time of the transaction;recognise monetary assets and liabilities at the spot exchange rate on thereporting date; andassess the profitability of service and long-term contracts without includingthe impact of forward exchange rate contracts.6.10.4 Interest rate derivativesRolls-Royce will adopt hedge accounting for hedges entered into for thepurposes of managing its exposure to movements in interest rates. Fair valuehedge accounting will be used for the hedging of fixed rate borrowings and cashflow hedge accounting will be used where the underlying borrowing is a floatingrate instrument. Where fair value hedge accounting is used, the debt beinghedged will be measured at fair value in respect of the interest rate riskbeing hedged, with movements in the fair values of both the derivative and thedebt being included in the income statement. Where cash flow hedge accountingis used, the effective element of the fair value of the derivative will beincluded in a hedging reserve in equity. This hedging reserve will be releasedto the income statement to offset changes in interest rates on the hedgedfloating rate borrowings.6.10.5 Other financial derivativesThe Group has an ongoing exposure to the price of jet fuel from businessoperations. For reasons similar to those described for foreign exchange above,Rolls-Royce will not adopt hedge accounting for its exposures to changes in theprice of jet fuel. These are hedged using commodity swaps.The Group has entered into forward contracts to purchase its own shares for thepurposes of meeting obligations to issue shares under employee share schemes. Under UK GAAP, these contracts were not recognised until the shares werepurchased and issued to employees. Under IAS 32, these contracts arecategorised as financial liabilities and accounted for on the amortised costbasis, based on the present value of forecast obligations.The impact of the transition to IFRS on the net assets in respect of financialinstruments as at January 1, 2005 is summarised as follows: ‚£m ‚£m Net assets Amortised cost value of (455) risk and revenue sharing partnerships Related taxation effect 130 (325) Fair value of foreign exchange 996 derivatives Revaluation of monetary (91) assets and liabilities to spot rate Foreign exchange effects (54) within service and other long-term contracts Related taxation effect (242) 609 Fair value of interest rate (15) derivatives Related taxation effect 4 (11) Fair value of commodity 9 derivatives Related taxation effect (3) 6 Amortised cost value of (115) contracts to purchase own shares Related taxation effect (8) (123) Adjustment to net assets 156 6.10.6 Contingent LiabilitiesThe Group's customer financing arrangements fall into two categories that needto be considered separately for IFRS purposes:Credit based guaranteesCredit based guarantees are specifically exempt from being treated as financialderivatives under IAS 39. They are required to be treated as insurancecontracts in accordance with IFRS 4. Asset value guarantees (AVGs)The Group has treated AVGs as insurance contracts in accordance with IFRS 4, asit considers that this treatment best reflects the underlying nature of thearrangements, being other than purely financial.There are no material changes to the treatment of contingent liabilities upontransitioning from UK GAAP to IFRS.7. OtherThe Group's banking covenants are not affected by the transition to IFRS asthey are based on UK GAAP prevailing at the time the relevant borrowingfacility was entered into ('frozen UK GAAP').The Group's borrowing powers under its Articles of Association were amended atthe 2004 AGM to a fixed limit in anticipation of the transition to IFRS.The Scheme of Arrangement and the reduction in share capital undertaken in 2003provides the Group with a buffer in respect of reserves available for makingreturns to shareholders.8. ConclusionThe IFRS information in this release is subject to any changes in standardsendorsed by the EU in the period to December 31, 2005.The most significant impacts arising from the transition to IFRS upon therestated financial information relate to the timing of profit recognition inthe results. Net assets are impacted as a result of this timing, but there isno impact upon the underlying cash flows within the business.Restated income statement for the year ended December 31, 2004 Restated in accordance with IFRS Unaudited ‚£m Group revenues 5,947 Cost of sales (4,744) Gross profit 1,203 Other operating income 73 Commercial and administrative costs (599) Research and development (self funded) (288) Share of profit of joint ventures 19 Group operating profit 408 Profit on sale or termination of businesses 9 Profit on ordinary activities before finance costs 417 Net finance costs (53) Profit on ordinary activities before taxation 364 Taxation (100) Profit for the year 264 Attributable to: Ordinary shareholders 263 Equity minority interests in subsidiary undertakings 1 264 Restated statement of recognised income and expense for the year ended December31, 2004 Restated in accordance with IFRS Unaudited ‚£m Profit attributable to ordinary shareholders 263 Exchange adjustments on foreign currency net investments (38) Actuarial loss (5) Total recognised gains for the year 220 Restated net assets at January 1, 2005 Restated in accordance with IFRS Unaudited ‚£m Non current assets Intangible assets 1,227 Property, plant and equipment 1,672 Investments in joint ventures 211 Other investments 57 Deferred tax assets 203 3,370 Current assets Inventory 1,090 Trade and other receivables 1,775 Taxation recoverable 2 Short-term investments 36 Other financial assets 1,230 Cash and cash equivalents 1,277 5,410 Current liabilities Borrowings (107) Financial liabilities (216) Trade and other payables (2,177) Current tax liabilities (176) Provisions (173) (2,849) Net current assets 2,561 Total assets less current liabilities 5,931 Non current liabilities Borrowings (1,544) Financial liabilities (496) Other payables (541) Deferred tax liabilities (119) Pensions and post-retirement benefits (1,409) Provisions (220) (4,329) Net assets 1,602 Restated cash flow statement for the year ended December 31, 2004 Restated in accordance with IFRS Unaudited ‚£m Net cash inflow from operating activities 610 Cash flows from investing activities (237) Cash flows from financing activities 189 Increase in cash and cash equivalents 562 Cash and cash equivalents at January 1 909 Exchange adjustments (32) Cash and cash equivalents at December 31 1,439 Reconciliation of increase in cash and cash equivalents to movements in net debt Increase in cash and cash equivalents 562 Cash inflow from decrease in investments (3) Cash inflow from increase in borrowings (296) Change in net debt resulting from cash flows 263 Zero-coupon bonds 2005/2007 (9% interest accretion) (4) Exchange adjustments (8) Movement in net debt 251 Net debt at January 1 (400) Net debt at December 31 (149) Restated cash flow statement for the year ended December 31, 2004 continued Restated in accordance with IFRS Unaudited ‚£m Net profit before taxation 364 Share of joint ventures' profit before taxation (19) Gain on sale or termination of businesses (9) Loss on sale of fixed assets 2 Net finance costs 53 Share-based payments 6 Taxation paid (84) Amortisation of intangible assets 58 Depreciation of property, plant and equipment 241 Increase in provisions (9) Decrease in liabilities for pensions (17) Decrease in inventory (116) Increase in trade and other receivables 156 Decrease in trade and other payables (31) Dividends received from joint ventures 15 Net cash inflow from operating activities 610 Additions to intangible assets (142) Purchases of property, plant and equipment (175) Disposals of property, plant and equipment 66 Disposals of businesses 16 Investments in joint ventures (2) Cash flows from investing activities (237) Restated cash flow statement for the year ended December 31, 2004 continued Restated in accordance with IFRS Unaudited ‚£m Decrease in government securities and corporate bonds 3 Borrowings due within one year - repayment of loans (57)Related Shares:
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