POSTING OF ANNUAL REPORT AND ACCOUNTS 2001
Share Code: LBT
ISIN Code: GB0006834344
25 February 2002
The Annual Report and Accounts for the year ended 31 December 2001 has been
posted to shareholders today.
The Annual General Meeting of the company has been fixed for 12 noon on
Tuesday, 26 March 2002 at 40 Broadway, London SW1.
The Annual Report and Accounts contain the statement set out below in
relation to a change in accounting policy in respect of the acquisition of
the minority interests in Capital Shopping Centres PLC (CSC) during the year
ended 31 December 2000.
The change in accounting policy has no effect on the Preliminary
Announcement of Results for 2001 issued by the company on 12 February 2002
and has no effect on the profit and loss account or cash flows for the year
ended 31 December 2000 or shareholders' funds and net assets per share at
that date.
"Change in Accounting Policy
In preparing the 2000 Report and Accounts and the fair value table relating
to the acquisition of the remaining minority interests in CSC, the Directors
reduced the fair value of assets acquired to match the consideration given,
on the grounds that there had been no "bargain purchase" and therefore
negative goodwill should not arise. This treatment resulted in the
recognition at the end of the year of 193.2 million as part of a
revaluation surplus in respect of the share of these assets acquired from
the minority interests.
Following discussions with the Financial Reporting Review Panel (FRRP),
which opened an inquiry in December 2001, the fair value table from the 2000
accounts has been amended as set out in note 21 with the result that
negative goodwill of 193.2 million arises. In respect of this transaction
the Directors have adopted the revised accounting policy set out below under
Goodwill, which credits negative goodwill directly to other reserves as a
negative consolidation difference, to ensure that the financial statements
continue to show a true and fair view. The FRRP has indicated that it has
no objection to the revised presentation.
The changes referred to above have no effect on the profit and loss account
or cash flows for the year ended 31 December 2000 or shareholders' funds and
net assets per share at that date.
Goodwill
Goodwill arising on acquisition of group undertakings is carried as an
intangible asset and is amortised over its estimated useful economic life
which does not exceed 20 years.
The negative goodwill which arose as a result of the acquisition of the
minority interest in CSC during 2000 has been credited to other reserves.
This is not in accordance with FRS 10 which requires that negative goodwill
should be presented as a negative asset immediately below the Goodwill
heading on the balance sheet. Since the negative goodwill relates to
investment properties which are neither depreciated nor held for resale, the
negative goodwill could remain on the balance sheet as a negative asset
indefinitely. The Directors consider that the treatment required by FRS 10
would not show a true and fair view, as it would not properly reflect the
particular transaction or correctly state the net assets of the group. The
treatment adopted is not inconsistent with the requirements of the Companies
Act 1985."
The Financial Reporting Review Panel (`FRRP') are today issuing a statement
in connection with the discussions held with the company in relation to this
matter.
Enquiries
Aidan Smith Finance Director +44(0)20 7960 1210
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