| Wed 15 Feb 2006, 12:10 | | 3. Gain on revaluation and sale of investment prop |
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3. Gain on revaluation and sale of investment properties
A reconciliation of the investment and development property revaluation
surplus to the gain on revaluation of investment properties in the income
statement is set out below:
Year ended
Year ended 31 December
31 December 2004
2005 Restated
GBPm GBPm
Investment and development property revaluation
surplus per external valuers 552.9 337.7
Less valuation movement in respect of head
lease payments (0.4) (0.4)
Less valuation movement in respect of lease
incentives (5.3) 3.0
Gain on sale of investment property 2.6 17.0
Development property revaluation recognised in
equity rather than the Income Statement 15.7 -
Income statement gain on revaluation and sale
of investment properties 565.5 357.3
4. Exceptional profit on disposal of fixed asset investments
Year ended
Year ended 31 December
31 December 2004
2005 Restated
GBPm GBPm
Profit on disposal of fixed asset investments - 35.6
5. Finance costs
Year ended Year ended
31 December 31 December
2005 2004
Restated
GBPm GBPm
Gross interest payable 180.3 151.9
Interest capitalised on investment properties
under development (8.6) (4.4)
Interest payable 171.7 147.5
Exceptional finance costs 13.7 3.4
Exceptional finance costs include costs of GBP8.4m (2004 - GBPnil) incurred in
early conversion of GBP128.7m of the GBP240m Liberty International 3.95%
convertible bonds in issue as well as GBP4.5m (2004 - GBP3.3m) of unamortised
issue costs written off on redemption of loans.
6. Taxation
(a) Current tax
Year ended Year ended
31 December 31 December
2005 2004
Restated
GBPm GBPm
Current UK corporation tax at 30% (2004 - 30%)
on profits 24.0 27.6
Prior year items - UK corporation tax (0.9) (6.2)
23.1 21.4
Overseas taxation 2.4 3.0
Current tax on ordinary items 25.5 24.4
Deferred tax:
On investment property 183.3 112.5
On derivative financial instruments (43.7) (12.9)
On other temporary differences 0.2 (3.2)
Deferred tax on ordinary items 139.8 96.4
Tax charge on ordinary items 165.3 120.8
Tax on exceptional items
Current tax (15.3) 0.4
Deferred tax 10.6 1.8
(4.7) 2.2
Total tax charge 160.6 123.0
(b) Deferred tax
Under IAS 12, provision is made for the deferred tax liability associated with
the revaluation of investment properties. The group does not provide for
deferred tax on investment properties by reference to the tax that would be due
on the sale of the investment properties as the group has no current intention
to dispose of these properties. Instead the group treats the value of the
investment properties as being recovered through use, and so provides for
deferred tax on the revaluation of investment properties by applying the
corporation tax rate of 30% to the revaluation surplus without indexation
allowance.
The deferred tax provision on the revaluation of investment properties
calculated under IAS 12 is GBP817.4m at 31 December 2005 (31 December 2004:
GBP653.8m). This IAS 12 calculation does not reflect the expected amount of tax
that would actually be payable if the assets were sold. On a disposal basis,
the estimated liability is GBP642.5m at 31 December 2005 (31 December 2004:
GBP505.0m).
If upon sale of the properties the group retained all the capital allowances,
which is within the control of the group, the deferred tax provision in respect
of capital allowances of GBP95.7m would also be released, and further capital
allowances of GBP19.1m would be available to reduce the amount of tax payable
on sale.
Under IFRS, where gains such as revaluation of development properties and other
assets, and actuarial movements on pension funds are dealt with in reserves,
the deferred tax is also dealt with in reserves.
Movements in the provision for deferred tax:
As at As at
31 December Recognised in Recognised in 31 December
2004 income equity 2005
Restated
GBPm GBPm GBPm GBPm
Deferred tax on
revaluation of
investment properties 653.8 168.3 (4.7) 817.4
Capital allowances 76.2 17.2 2.3 95.7
Derivative financial
instruments (39.7) (43.7) - (83.4)
Other temporary
differences 18.6 8.7 (0.8) 26.5
Net deferred tax provision 708.9 150.5 (3.2) 856.2
7. Investment and development property
Other
UK shopping commercial
centres properties Total
GBPm GBPm GBPm
Investment property:
At 31 December 2004 (as previously
stated) 4,310.2 942.5 5,252.7
Effect of adopting IFRS (8.4) 6.1 (2.3)
At 31 December 2004 (restated) 4,301.8 948.6 5,250.4
Additions 1,008.1 59.6 1,067.7
Disposals - (40.4) (40.4)
Reclassifications - developments 41.7 - 41.7
Reclassifications - trading
properties 2.5 - 2.5
Foreign exchange fluctuations - 28.8 28.8
Surplus on valuation 460.7 102.2 562.9
At 31 December 2005 5,814.8 1,098.8 6,913.6
Development property:
At 31 December 2004 (as previously
stated) 52.7 7.5 60.2
Effect of adopting IFRS (5.5) (7.5) (13.0)
At 31 December 2004 (restated) 47.2 - 47.2
Additions 34.4 - 34.4
Reclassification - investment
property (41.7) - (41.7)
(Deficit)/surplus on valuation (15.7) - (15.7)
At 31 December 2005 24.2 - 24.2
Total investment and development
properties:
At 31 December 2005 5,839.0 1,098.8 6,937.8
At 31 December 2004 (restated) 4,349.0 948.6 5,297.6
The group"s interests in investment and development properties, including those
held through joint ventures, were valued as at 31 December 2005 by external
valuers in accordance with the RICS Appraisal and Valuation Standards, on the
basis of market value. Market value represents the figure that would appear in
a hypothetical contract of sale between a willing buyer and a willing seller.
Regional shopping centres in the UK were valued by either DTZ Debenham Thorpe
Tie Leung, Chartered Surveyors or CB Richard Ellis. Other commercial properties
in the UK were valued by either Knight Frank LLP or CB Richard Ellis. In the
United States, properties were valued by Cushman and Wakefield California Inc.
A reconciliation of investment and development property valuations to the
balance sheet carrying value of property is shown below:
Year ended Year ended
31 December 31 December
2005 2004
Restated
GBPm GBPm
Investment and development property at market
value as determined by external valuers 6,936.3 5,309.7
Add minimum payment under head leases
separately included as a creditor in the
balance
sheet 53.9 31.9
Less accrued incentives separately included as
a debtor in the balance sheet (52.4) (44.0)
Balance sheet carrying value of investment and
development property 6,937.8 5,297.6
8. Trading properties
The estimated replacement cost of trading properties based on market value
amounted to GBP156.0m (31 December 2004 - GBP113.9m).
9. Trade and other receivables
As at As at
31 December 31 December
2005 2004
Restated
GBPm GBPm
Amounts falling due within one year:
Rents receivable 20.8 15.0
Other debtors 21.5 34.3
Derivative financial instruments 0.9 2.4
Prepayments and accrued income 35.5 28.8
78.7 80.5
Amounts falling due after more than one year:
Other debtors 13.7 11.5
Prepayments and accrued income 52.0 47.8
65.7 59.3
10. Borrowings, including finance leases
As at As at
31 December 31 December
2005 2004
Restated
GBPm GBPm
Amounts falling due within one year:
Bank loans and overdrafts 151.6 9.2
Commercial Mortgage Backed Securities ("CMBS") 15.0 -
Finance lease obligations 6.9 4.0
Total amounts falling due within one year 173.5 13.2
Amounts falling due after more than one year:
Secured borrowings - non recourse
CMBS Notes 2015 1,141.9 -
CMBS Notes 2011 547.5 548.7
Bank loan 2015 - 526.5
Bank loans 2014 384.9 386.0
Bank loan 2007 40.0 40.0
2,114.3 1,501.2
Other secured borrowings
Debentures 2021 and 2027 230.0 230.0
Bank loan due 2016 - 172.5
Bank loan due 2013 98.4 -
Other loans 147.0 117.4
2,589.7 2,021.1
Unsecured borrowings
CSC bonds 2013 26.5 31.7
CSC bonds 2009 41.0 64.1
2,657.2 2,116.9
GBP111.3m (2004- GBP240m) 3.95% convertible
bonds due 2010 105.4 220.9
2,762.6 2,337.8
Finance lease obligations 47.6 28.5
2,810.2 2,366.3
Amounts falling due after more than one year
Total borrowings, including finance leases 2,983.7 2,379.5
Cash and cash equivalents (70.8) (438.8)
Net borrowings 2,912.9 1,940.7
11. Fair value of financial instruments
As at 31 December
2005
Balance
sheet Fair
value value
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 9.875% debenture 2027 150.0 233.1
C&C 11.25% debenture 2021 80.0 126.9
CSC 6.875% unsecured bonds 2013 26.5 28.0
CSC 5.75% unsecured bonds 2009 41.0 41.0
US Dollars
Fixed rate loans 156.7 162.4
454.2 591.4
Bank loans and loan notes - LIBOR linked 2,369.6 2,369.6
Finance lease obligations 54.5 54.5
Derivative instruments 281.1 281.1
3,159.4 3,296.6
Convertible debt 105.4 141.0
As at 31 December
2004
Balance
sheet
value Fair value
Restated Restated
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 9.875% debenture 2027 150.0 217.0
C&C 11.25% debenture 2021 80.0 119.9
CSC 6.875% unsecured bonds 2013 31.7 33.0
CSC 5.75% unsecured bonds 2009 64.1 63.8
US Dollars
Fixed rate loans 119.1 124.7
444.9 558.4
Bank loans and loan notes - LIBOR linked 1,681.2 1,681.2
Finance lease obligations 32.5 32.5
Derivative instruments 132.3 132.3
2,290.9 2,404.4
Convertible debt 220.9 293.0
The fair value adjustment in respect of financial instruments, after credit
for tax relief, would amount to 27p per share diluted (31 December 2004 -
23p).
All other financial assets and liabilities included in the balance sheet are
stated at fair values.
12. Provisions for liabilities and charges
Deferred
taxation Other Total
GBPm GBPm GBPm
At 31 December 2004 (as previously stated) 79.3 16.6 95.9
Effect of adopting IFRS 629.6 0.6 630.2
At 31 December 2004 (restated) 708.9 17.2 726.1
Net charge for the period 150.5 1.2 151.7
Other movements (3.2) (11.6) (14.8)
At 31 December 2005 856.2 6.8 863.0
13. Capital commitments
At 31 December 2005, the group was contractually committed to GBP69.9 million
(2004 - GBP329.2 million) of future expenditure for the purchase, construction,
development and enhancement of investment property.
14. Per share details
(a) Number of shares used in the calculation of earnings per share
Year Year
ended ended 31
31 December December
2005 2004
millions millions
Weighted average shares (basic) 319.0 317.0
Effect of dilution 31.5 31.9
Weighted average shares (diluted) 350.5 348.9
(b) Earnings used in the calculation of earnings per share
Year
Year ended
ended 31 December
31 December 2004
2005 Restated
GBPm GBPm
Earnings used for calculation of basic earnings
per share 366.3 332.1
Effect of dilution 10.2 10.8
Earnings used for calculation of diluted
earnings per share 376.5 342.9
Basic earnings per share (pence) 114.8p 104.8p
Diluted earnings per share (pence) 107.4p 98.3p
Earnings used for calculation of basic earnings
per share 366.3 332.1
Add back/(less) exceptional items, net of tax 9.0 (30.0)
Less gain on revaluation and sale of investment
properties (565.5) (357.3)
Add back fair value movement on derivative
financial instruments 145.8 41.4
Add back deferred tax in respect of investment
properties 183.3 112.5
Less deferred tax in respect of derivative
financial instruments (43.7) (12.9)
Earnings used for calculation of adjusted
earnings per share 95.2 85.8
Adjusted earnings per share (pence) 29.8p 27.1p
Earnings used for calculation of adjusted
earnings per share 95.2 85.8
Effect of dilution 10.2 10.8
Earnings used for calculation of adjusted,
diluted earnings per share 105.4 96.6
Adjusted, diluted earnings per share (pence) 30.1p 27.7p
(c) Other share information
Nominal value
(i) Convertible bonds in issue
3.95% convertible
bonds 2010 GBPm Conversion price Callable from
At 31 December 2004 240.0 800p 14 October 2008
Converted in year (128.7)
At 31 December 2005 111.3
On 8 December 2005 Liberty International PLC announced that it would offer
GBP60 per GBP1,000 of bonds to holders of outstanding GBP240m 3.95 per cent
convertible bonds due 2010 to convert into ordinary shares.
Conversion notices were accepted by the company in respect of GBP128.7m of
bonds, representing 53.6 per cent of the GBP240m of bonds outstanding on 16
December 2005. The company paid a sum of GBP7.7m which, together with costs of
GBP0.7m resulted in an exceptional finance charge of GBP8.4m.
The bonds converted into 16.1 million new ordinary shares of the company on the
basis of 125 shares for GBP1,000 of bonds, increasing the company"s issued
ordinary share capital by 5 per cent from 321.7 million to 337.8 million
ordinary shares.
The outstanding convertible bonds may be redeemed at par on 30 September 2007
at the option of the bondholders.
Number
(ii) Ordinary share capital millions
At 31 December 2005 337.8
Of which, held by ESOP trust and treated as cancelled 2.4
(iii) Dividends paid Year Year
ended Ended
31 December 31 December
2005 2004
Restated
GBPm GBPm
Ordinary shares:
Prior period final dividend paid of 14.1p (2004
- 13.25p) 44.7 41.8
Interim dividend paid of 13.0p per share (2004
- 12.4p) 41.6 39.3
86.3 81.1
Proposed dividend of 15.25p (2004 - 14.1p) per
share (not provided for) 51.1 44.7
15. Summary of changes in group equity
Year ended Year ended
31 December 31 December
2005 2004
Restated
GBPm GBPm
Opening equity shareholders" funds - restated 2,534.2 2,288.9
Bond conversions 121.7 0.1
Issue of shares 11.2 4.1
Cancellation of shares (1.1) (1.2)
2,666.0 2,291.9
Total recognised income and expense for the
period 353.4 323.4
3,019.4 2,615.3
Dividends paid (86.3) (81.1)
Closing equity shareholders" funds 2,933.1 2,534.2
16 Adoption of International Financial Reporting Standards
As stated in note 1, this is the group"s first preliminary report prepared in
accordance with IFRS. The accounting policies set out in the release dated 26
July 2005 have been applied in preparing the financial information for the
periods ended 31 December 2005, 31 December 2004 and in the preparation of an
opening IFRS balance sheet at 1 January 2004 (the group"s date of IFRS
transition).
In preparing the opening IFRS balance sheet, the group has adjusted amounts
reported previously in financial statements prepared in accordance with UK
GAAP. An explanation of how the transition from UK GAAP to IFRS has affected
the group"s financial performance, financial position and cash flows is set out
in the following tables and accompanying notes. A full line-by-line
reconciliation of the financial position as at 31 December 2004 and the
financial performance for the year then ended is set out in the release dated
26 July 2005.
(a) Reconciliation of net profit:
Year ended
31 December
2004
Notes GBPm
Previously reported - UK GAAP:
Net profit on ordinary activities 115.7
Exceptional items 42.6
Net profit before tax 158.3
Taxation charge - recurring (32.3)
Taxation charge - on exceptional items (1.4)
Net profit after tax 124.6
Adjustments to net profit before tax:
Revaluation gains on investment properties previously
dealt with in reserves 1 336.7
Movement in fair value of derivative financial
instruments 2 (41.4)
"Recycling" of prior year valuation gains of fixed
asset
investments into profit on disposal 3 6.6
Additional amortisation upon reallocation to equity
of portion of
the convertible debt liability 4 (4.3)
Longer amortisation period for rent free periods and
other lease incentives 5 (0.4)
Defined benefit pension scheme net liability and
other employee benefits 6 (0.4)
296.8
Restated - IFRS:
Net profit on ordinary activities 422.9
Exceptional items 32.2
Net profit before tax 455.1
Taxation charge - recurring 8 (120.8)
Taxation charge - on exceptional items (2.2)
Net profit after tax 7 332.1
1. Under IFRS, gains and losses arising on revaluation of investment
properties are recorded as operating income in the Income Statement. For the
year ended 31 December 2004, this includes gains previously reported in the
revaluation reserve of GBP337.6m on the group"s investment properties and
GBP5.6m on the group"s share of investment properties of joint ventures, net of
GBP5.5m revaluation losses on development properties which were not revalued
under UK GAAP and GBP1.0m lower gain arising from reclassification of rent free
periods (see 5 below). In addition, gains or losses realised on investment
properties disposed of during the period are accounted for as revaluation
gains, rather than exceptional items as under UK GAAP. The effect of this for
the year ended 31 December 2004 is a reclassification from exceptional items to
revaluation gains of GBP17.0m. Other reclassifications which offset within net
profit in respect of finance-leased assets and letting costs are also included
within revaluation gains on investment properties (see note 7a and 7c below).
2. Under IFRS, derivative financial instruments are carried in the balance
sheet at fair value with gains or losses arising on revaluation dealt with in
the Income Statement unless they are eligible to be accounted for as hedges.
This does not affect the underlying cash flows.
3. Under IFRS, exceptional gains or losses on disposal of fixed asset
investments are calculated by reference to their historic cost. Any previous
revaluation surpluses are "recycled" into the profit on disposal, with a
corresponding adjustment to the revaluation reserve.
4. Under IFRS, convertible debt is required to be allocated between debt and
equity (see 12 below). The debt element is initially less than the nominal
value of the bond and must therefore be amortised up to full nominal value
over the term of the instrument, resulting in an additional tax-deductible
finance charge.
5. Under IFRS, investment property lease rent free periods, stepped rents and
other incentives are amortised over the full lease term rather than the
period to first open market rent review (see 13 below). To the extent that
any unamortized incentives have been taken into account in the property
valuation, for example rent free periods recognised as income ahead of
invoicing, the property valuation must be adjusted to avoid double counting
(see below).
6. Under IFRS, the group is required to account for the net liability or asset
in respect of defined benefit pension schemes. Whilst the actuarial gains
and losses in respect of the scheme are dealt with in the statement of
recognised income and expense, the difference between the notional interest
cost on scheme liabilities and the expected return on the scheme assets is
included in the group"s net interest cost. In respect of the year ended 31
December 2004, this amounts to a credit of GBP0.2m. Further, IFRS requires
the group to account for the cost of share-based payments at their fair
value rather than intrinsic value. This increases administration expenses
for the year ended 31 December 2004 by GBP0.5m.
7. Other adjustments have been necessary to the group"s reported financial
performance which offset within net profit.
a. Investment properties held leasehold are treated as finance-leased
assets, with the minimum element of future head rent payments treated as
if it relates to a loan which is financing an increased interest in the
property (see 17a below). The fixed head rental payment is largely
treated as a finance cost instead of a property expense. For the year
ended 31 December 2004, this decreases rental expenses by GBP4.0m,
increases net interest cost by GBP3.6m and decreases fair value gains on
investment property by GBP0.4m.
b. Under UK GAAP the group was required to show its share of the operating
profit of joint ventures as a separate line on the profit and loss
account. Under IFRS joint ventures are proportionally consolidated, with
the group"s share of individual gains and losses of the joint venture
included on the relevant line of the Income Statement. For the year
ended 31 December 2004 this increases rental income by GBP8.0m and
removes the line item "share of operating profit of joint ventures".
c. Under IFRS, letting costs of developments and investment properties are
capitalised over the lease term whereas under UK GAAP the former were
capitalised and the latter were written off as incurred. For the year
ended 31 December 2004, this increases fair value gains on investment
property and rental expenses, each by GBP4.0m.
8. The principal changes in the tax charge for the year ended 31 December
2004 are as follows:
UK GAAP Adjustments IFRS
GBPm GBPm GBPm
Profit on ordinary activities before
taxation 158.3 296.8 455.1
Current United Kingdom corporation tax at
30% 47.5 89.0 136.5
Effects of:
Capital allowances not reversing on sale (2.2) - (2.2)
Disposals of properties and subsidiaries (10.5) 1.9 (8.6)
Prior year items (2.5) 0.1 (2.4)
Expenses disallowed, net of capitalised
interest 1.9 (1.6) 0.3
Untaxed dividends (1.2) - (1.2)
Overseas taxation, including joint
ventures 0.7 (0.1) 0.6
Tax charge for the year 33.7 89.3 123.0
(b) Reconciliation of equity:
31 December 1 January
2004 2004
Notes GBPm GBPm
Previously reported - UK GAAP 3,244.0 2,859.4
Deferred tax on revaluation of
investment properties 9 (653.8) (549.9)
Fair value of derivative financial
instruments 10 (132.3) (89.5)
Exclusion of provision for proposed
dividend 11 44.7 41.8
Reallocation to equity of a portion of
the convertible debt liability 12 14.5 18.9
Longer amortisation period for lease
incentives - long term debtor 13 50.6 50.3
Longer amortisation period for lease
incentives - adjust property
valuation 13 (44.0) (42.3)
Fair value of development properties 14 (11.4) (5.8)
Defined benefit pension scheme net
liability and other employee
benefits 15 (2.0) (1.3)
Owner-occupied property held under
finance lease 16 (0.3) (0.4)
Tax effect of the above 24.2 7.7
Restated - IFRS 17 2,534.2 2,288.9
Notes:
9. Under IAS 12, provision is made for the deferred tax liability associated
with the revaluation of investment properties, whereas UK GAAP requires that
the potential liability on the sale of the properties be disclosed as
contingent tax but not provided in the balance sheet. This liability will
not be incurred while the group continues to hold its property assets.
10. Under IFRS, derivative financial instruments are carried in the balance
sheet at fair value. This does not affect the underlying cash flows. The
total fair value recognised as a liability at 31 December 2004 is GBP132.3m
(1 January 2004 GBP89.5m), which is partially offset by a deferred tax asset
of GBP39.7m (GBP26.9m).
11. Under IFRS, proposed dividends are not recognised as liabilities at the
balance sheet date. Accordingly, compared with UK GAAP, equity shareholders"
funds have increased, and current liabilities have decreased.
12. Under IFRS, convertible debt is required to be allocated between debt and
equity. The debt element is initially less than the nominal value of the bond
and must therefore be amortised up to full nominal value over the term of the
instrument, resulting in an additional tax-deductible finance charge. The
equity element is not remeasured during the term of the instrument. The
effect of this is to reduce borrowings by GBP14.5m and to reduce the tax
liability by GBP1.5m at 31 December 2004 (1 January 2004 GBP18.9m and
GBP0.2m).
13. Under IFRS, investment property lease rent free periods, stepped rents
and other incentives are amortised over the full lease term rather than the
period to first open market rent review. To the extent that any unamortized
incentives have been taken into account in the property valuation, for
example rent free periods recognised as income ahead of invoicing, the
property valuation must be adjusted to avoid double counting. The effect of
this at 31 December 2004 is to reduce the value of investment property by
GBP44.0m, increase debtors due in more than one year by GBP47.8m,
increase debtors due within one year by GBP2.8m and increase the provision for
deferred tax by GBP1.4m (1 January 2004 GBP42.3m, GBP47.9m, GBP2.4m and
GBP2.0m)
14. Under IFRS, investment properties under redevelopment remain classified
as investment properties subject to revaluation through the Income Statement
in accordance with IAS 40. The effect of this at 31 December 2004 is to
reduce development properties by GBP11.4m and reduce the deferred tax
liability by GBP3.4m (1 January 2004 GBP5.8m and GBP1.7m). Properties
acquired with the intention of development are classified as properties in
the course of development and are accounted for at fair value in accordance
with IAS 16. Valuation changes for the latter properties are recognised in
equity rather than the Income Statement
15. Under IFRS, the group is required to account for the net liability or
asset in respect of defined benefit pension schemes and any corresponding
deferred tax asset or liability. At 31 December 2004, the adjustment to the
net scheme liability was GBP1.2m with a deferred tax asset of GBP0.4m (1
January 2004 GBP1.0m and GBP0.3m). Further, IFRS requires the group to
account for the cost of share- based payments at their fair value rather than
intrinsic value. This increases accruals by GBP0.8m at 31 December 2004,
partially offset by a tax credit of GBP0.2m (1 January 2004 GBP0.3m and
GBP0.1m)
16. Under IFRS, the leased property occupied by the group is classified as a
finance-leased asset and as such it increases fixed assets by GBP0.3m, net of
cumulative depreciation. The minimum lease payments are included as a
creditor of GBP0.6m.
17. Other adjustments have been necessary to the group"s reported financial
position which offset within net assets and therefore do not affect equity:
a. Investment properties held leasehold are still valued at the fair value
of the group"s interest, but under IFRS the minimum element of future
head rent payments is treated as if it relates to a loan which is
financing an increased interest in the property. The capitalised value
of the minimum payment is reflected by grossing up the carrying value of
the property with an equal and opposite amount included as a creditor.
The fixed head rental payment is largely treated as a finance cost
instead of a property expense. At 31 December 2004, this increased
investment property and creditors by GBP31.9m, with GBP4.0m of the
creditor falling due within one year (1 January 2004 GBP32.3m and
GBP4.0m).
b. Under UK GAAP the group was required to show its share of the gross
assets and gross liabilities of joint ventures separately on the balance
sheet. Under IFRS joint ventures are proportionally consolidated, with
the group"s share of individual assets and liabilities of the joint
venture included on the relevant line of the balance sheet. At 31
December 2004 this increases investment property by GBP14.9m, trading
properties by GBP13.5m, cash by GBP0.4m, creditors due within one year
by GBP1.2m and borrowings by GBP7.3m, removing the GBP20.3m group"s
share of net assets of joint ventures (1 January 2004 investment
property GBP132.6m, trading property GBP10.6m, working capital GBP0.2m
and borrowings GBP69.3m).
c. Under IFRS, letting costs are capitalised and amortised over the lease
term (see 7c above). The effect of this is to increase investment
property cost and correspondingly reduce revaluation by GBP11.4m.
(c) Cash flows
Under IFRS, the consolidated cash flow statement reconciles the movements in
cash and cash equivalents, whereas in the last audited UK GAAP financial
statements it reconciled the movements in cash only. Other than this, there are
no material differences in the restated consolidated cash flow statement from
that previously published.
Date: 15/02/2006 09:05:31 AM Produced by the JSE SENS Department
