Pilkington, one of the world’s largest manufacturers of glass and glazing products, has added £1m to its operating profit for 2004 after revamping the way in which it accounts for investment in its shares.
Reporting an increase in pre-tax profit on ordinary activities from £137m in 2004 to £165m in 2005, Pilkington also restated its 2004 figures for a number of profit indicators to comply with UITF reporting requirements.
The requirements saw the company reclassify the accounting for investment in its shares from trade investments to shareholders’ equity.
The glassmaker will also reflect the difference between the exercise price of the share options and the market value of shares on the grant date in the profit and loss account.
As result of the changes, operating profit for the 2004 financial year increased from £179m to £180m, while adjusted earnings per share, excluding exceptionals and goodwill amortisation, increased from 7.4p to 7.5p.
The UITF revision will change the balance sheet too, where trade investments are reduced from £13m to £10m. The profit and loss reserve falls from £46m to £43m. The cash flow statement, meanwhile, was impacted by £2m, as the new purchases of Pilkington shares are now reported as part of financing rather than purchase of investments as previously reported.
Pilkington chairman Sir Nigel Rudd also advised investors that the results for the year to 31 March 2005 would be the last the company would present under UK GAAP.
Emphasising that IFRS would not affect Pilkington’s underlying business drivers, Rudd said the company had been working on the transition project over the last 24 months and would provide a full restatement of its 2005 results in September.
‘Pilkington has planned for this transition for over two years and, although there will be changes to the UK GAAP results and balance sheet as previously reported, the changes will not mask the underlying improving trends in the robustness of Pilkington’s business,’ Rudd said.
In IFRS guidance for the half-year to 30 September 2004, Pilkington revealed that, under the new standards, revenues and operating profits would be marginally down as it would have to exclude the contributions of joint ventures.
Under IFRS, Pilkington’s revenue for the half-year was £1.1bn, down from the £1.3bn reported under UK GAAP. Operating profit for the period was also reduced, dropping from £113m to £102m when international accounting standards were applied.
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