ASSOCIATED BRITISH PORTS HOLDINGS PLC

1
International Financial Reporting Standards
(IFRS) Seminar 24 June 2005
2
Agenda

• Overview
• Key areas of impact
• Income statement reconciliation for the year
  ended 31 December 2004
• Income statement reconciliation for the six
  months ended 30 June 2004
• Balance sheet reconciliations
• Impact on reporting
• Conclusions

3
Overview of transition to IFRS

• Modest overall impact on pre-tax profit, earnings
  per share and net assets for 2004
• No impact on cash flow
• No impact on dividend policy
• No impact on strategy plans to invest in excess
  of 400m over next 10 years in developing core UK
  ports business unchanged
• Interim accounts to be published under IFRS in
  September 2005

4
Overview of transition to IFRS context

• Financial information included in this
  presentation is unaudited
• Ongoing monitoring of latest interpretations and
  best practice developments, the consequences of
  which may result in changes
• No new information on current trading contained
  within this presentation or associated
  announcement

5
Overview of financial impact of transition to IFRS

• Pre-tax profit for the year ended 31 December
  2004 reduced by 1 or 0.8m (from 83.0m to
  82.2m)
• Basic earnings per share for the year ended 31
  December 2004 increased by 6 or 1.0p (from 17.9p
  to 18.9p)
• Underlying pre-tax profit for the year ended 31
  December 2004 reduced by 4 or 5.2m (from
  135.4m to 130.2m)
• Underlying earnings per share for the year ended
  31 December 2004 reduced by 2 or 0.5p (from
  30.3p to 29.8p)
• Net assets as at 31 December 2004 increased by 1
  or 10.4m (from 950.8m to 961.2m)

6
Key areas of impact
Main recognition/measurement changes

• IFRS 2 - Share-based Payment
• IFRS 3 - Business Combinations Goodwill
• IAS 10 - Events after the Balance Sheet Date
  Dividends
• IAS 12 - Income Taxes Deferred Tax Provisions
• IAS 17 - Leases Re-classification of Leases
• IAS 19 - Employee Benefits Half Year Accrual
  for Holiday Pay
• IAS 40 - Investment Property Treatment of
  Property Revaluation Surplus/Deficit

7
Key areas of impact
Main presentation changes

• IAS 1 - Presentation of Financial Statements
• Associates
• Sale of Fixed Assets

• IAS 19 - Employee Benefits
• Pension Schemes

8
Income statement reconciliation from UK GAAP to
IFRS
Year ended 31 December 2004
Reported
Underlying
Profit before taxm
Earnings per sharePence
Profit before taxm
Earnings per sharePence
UK GAAP as previously reported continuing and
discontinued operations 83.0 17.9 135.4 30.3Adju
stmentsIAS 1 - Presentation of Financial
Statements - associates (3.3) (0.1) (3.3) (0.1)I
AS 1 - Presentation of Financial Statements -
sale of fixed assets (0.1) IFRS 2 -
Share-based Payment (1.7) (0.4) (1.7) (0.4)IFRS
3 - Business Combinations 0.9 0.3 IAS 17 -
Leases (0.1) (0.1)IAS 40 - Investment
Property 3.4 1.1 IFRS as restated continuing
operations 82.2 18.8 130.2 29.8 IFRS as restated
discontinued operations 0.1 IFRS as restated
continuing and discontinued operations 18.9 C
hange -0.8m 1.0p -5.2m -0.5p
-
-
-
-
-
-
-
-
-
n/a
n/a
-1 6 -4 -2
Before goodwill amortisation and exceptional
items under UK GAAP and before property
revaluation surplus and exceptional items under
IFRS
9
IAS 1 Presentation of Financial Statements -
associates
Year ended 31 December 2004
UK GAAP

• Groups share of operating profit, interest,
  other finance income/cost and taxation reported
  within the respective line items

IFRS

• Groups post-tax share of results from continuing
  associated undertakings reported as a single line
  item at the pre-tax profit level
• Groups post-tax share of results from
  discontinued associated undertakings reported as
  a single line item at the post-tax level

Impact
Reported and underlying results
Profit before taxm
Earnings per sharePence
Groups share of associates tax charge reported
at the pre-tax level (2.9) Discontinued
associated undertakings reported at the post-tax
level (0.4) (0.1) Continuing operations (3.3) (0.1
)Discontinued operations 0.1
-
-
10
IAS 1 Presentation of Financial Statements
sale of fixed assets
Year ended 31 December 2004
UK GAAP

• Profit or loss on the sale of fixed assets
  reported as a separate item in the income
  statement

IFRS

• Profit or loss on the sale of fixed assets to be
  included within operating profit unless material
  enough to warrant separate disclosure

Impact
Underlying results only
Profit before taxm
Re-categorisation of the loss on the sale of
fixed assets to underlying operating profit (0.1)
11
IFRS 2 Share-based Payment
Year ended 31 December 2004
UK GAAP

• Expense recognised in respect of the all-employee
  share and the long-term incentive plans but no
  expense recognised in relation to options granted
  under all-employee or executive option schemes

IFRS

• Expense recorded for all share-based payments
  based on the fair value of those payments as
  determined at the date of grant
• Associated tax credit recognised if exercise is
  tax deductible

Impact
Reported and underlying results
Profit before taxm
Earnings per sharePence
Additional expense recognised in relation
toshare-based payments (1.7) (0.4)
12
IFRS 3 Business Combinations
Year ended 31 December 2004
UK GAAP

• Goodwill amortised over its expected useful
  economic life of 20 years

IFRS

• Goodwill to be carried on the balance sheet,
  subject to annual reviews for impairment, with an
  initial impairment test at 1 January 2004

Impact
Reported results only
Profit before taxm
Earnings per sharePence
Reversal of goodwill amortisation provided under
UK GAAP 0.9 0.3
13
IAS 17 Leases
Year ended 31 December 2004
UK GAAP

• Leases treated as either operating or finance
  depending upon their specific terms

IFRS

• Additional guidance provided in IAS 17 results in
  the re-classification of a small number of
  operating leases as finance leases

Impact
Reported and underlying results
Profit before taxm
Acceleration of charge to income statement (0.1)
14
IAS 40 Investment Property
Year ended 31 December 2004
UK GAAP

• Changes arising from the revaluation of
  investment property recorded through the
  statement of total recognised gains and losses

IFRS

• Investment property revaluation surplus/deficit
  to be reported through the income statement

Impact
Reported results only
Profit before taxm
Earnings per sharePence
Revaluation of investment property portfolio
previously reported direct to equity 3.4 1.1
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Interim income statement reconciliation from UK
GAAP to IFRS
Six months ended 30 June 2004
Reported
Underlying
Profit before taxm
Earnings per sharePence
Profit before taxm
Earnings per sharePence
UK GAAP as previously reported continuing and
discontinued operations 20.1 3.8 65.2 14.3Adjust
mentsIAS 1 - Presentation of Financial
Statements - associates (1.5) (0.1) (1.5) (0.1)I
AS 1 - Presentation of Financial Statements -
sale of fixed assets (0.2) IFRS 2 -
Share-based Payment (0.6) (0.1) (0.6) (0.1)IFRS
3 - Business Combinations 0.5 0.1 IAS 19 -
Employee Benefits (1.0) (0.2) (1.0) (0.2) IFRS as
restated continuing operations 17.5 3.5 61.9 13.
9 IFRS as restated discontinued
operations 0.1 IFRS as restated continuing
and discontinued operations 3.6 Change -2.6m -0
.2p -3.3m -0.4p
-
-
-
-
-
n/a
n/a
-13 -5 -5 -3
Before goodwill amortisation and exceptional
items under UK GAAP and before property
revaluation surplus and exceptional items under
IFRS
16
IAS 19 Employee Benefits
Six months ended 30 June 2004
UK GAAP

• Holiday entitlement not taken at year end
  provided, with limited provision at half-year
  stage

IFRS

• Additional guidance provided in IAS 19 results in
  further holiday pay accrual at 30 June

Impact
Reported and underlying results
Profit before taxm
Earnings per sharePence
Additional accrual for holiday pay (1.0) (0.2)
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Balance sheet reconciliations from UK GAAP to IFRS
Net assets
1 Jan2004m
30 Jun 2004m
31 Dec 2004m
UK GAAP as previously reported 1,030.3 968.1 950.8
Adjustments IFRS 2 - Share-based
Payment 2.8 2.2 2.1IFRS 3 - Business
Combinations 0.5 0.9IAS 10 - Events after the
Balance Sheet Date 28.0 22.2 27.9IAS 12 - Income
Taxes (20.3) (20.1) (19.8)IAS 17 -
Leases (0.3) (0.3) (0.4)IAS 19 - Employee
Benefits (0.3) (1.0) (0.3) IFRS as
restated 1,040.2 971.6 961.2 Change 9.9m 3.5m
10.4m
-
-
1 - 1
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IFRS 2 Share-based Payment
UK GAAP

• Expenses recognised in respect of the
  all-employee share and the long-term incentive
  plans but no expense recognised in relation to
  options granted under all-employee or executive
  option schemes
• No deferred tax asset in relation to share-based
  payment expense

IFRS

• Expense recorded for all share-based payments
  based on the fair value of those payments as
  determined at date of grant
• Associated deferred tax asset recognised if
  exercise is tax deductible

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Reversal of UK GAAP provision for all-employee
share and long-term incentive plans 1.1 0.6 0.5D
eferred tax asset 1.7 1.6 1.6 2.8 2.2 2.1
19
IFRS 3 Business Combinations
UK GAAP

• Goodwill amortised over its expected useful
  economic life of 20 years

IFRS

• Goodwill to be carried on the balance sheet
  subject to annual reviews for impairment with an
  initial impairment test at 1 January 2004

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Reversal of goodwill amortisation provided under
UK GAAP 0.5 0.9
-
20
IAS 10 Events after the Balance Sheet Date
UK GAAP

• Dividends accrued at the balance sheet date

IFRS

• Dividends cannot be accrued at the balance sheet
  date unless the amount has been formally approved

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Reversal of dividends accrued under UK
GAAP 28.0 22.2 27.9
21
IAS 12 Income Taxes
UK GAAP

• No requirement to provide deferred tax in
  relation to any property revaluation
  surplus/deficit unless a binding agreement had
  been entered into for the sale

IFRS

• Deferred tax to be provided for any property
  revaluation surplus/deficit

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Deferred tax in respect of revaluation
surplus (20.3) (20.1) (19.8)
22
IAS 17 Leases
UK GAAP

• Leases treated as either operating or finance
  depending upon their specific terms

IFRS

• Additional guidance provided in IAS 17 results in
  the re-classification of a small number of
  operating leases as finance leases

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Increase in property, plant and
equipment 4.3 4.1 3.8Additional obligations
under finance leases (4.6) (4.4) (4.2) (0.3) (0.
3) (0.4)
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IAS 19 Employee Benefits
UK GAAP

• Pension scheme assets recorded at mid-market
  values
• Limited holiday pay accrual at half-year stage

IFRS

• Pension scheme assets recorded at bid values
• Additional guidance provided in IAS 19 results in
  further holiday pay accrual at 30 June

Impact on net assets
1 Jan 2004m
30 Jun 2004m
31 Dec 2004m
Adoption of bid-values for pension scheme
assetsnet of deferred tax (0.3) (0.3) (0.3)Addit
ional accrual for holiday pay net of deferred
tax (0.7) (0.3) (1.0) (0.3)
-
-
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Impact on reporting

• Other finance income from pension scheme surplus
  to be included in operating profit
• Associates to be reported at the pre-tax level as
  a single line item
• Property revaluation surplus/deficit to be
  reported through the income statement
• Definition of underlying results amended to
  earnings before property revaluation
  surplus/deficit and exceptional items
• No change to segmental reporting

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Conclusions

• Modest overall impact from the adoption of IFRS
• Underlying earnings per share for the year ended
  31 December 2004 reduced by 2 or 0.5p (from
  30.3p to 29.8p)
• Net assets as at 31 December 2004 increased by 1
  or 10.4m (from 950.8m to 961.2m)
• No impact on cash flow
• No impact on dividend policy, share repurchase
  programme or strategy

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Port of Immingham