Annual Report and Accounts - Hemscott IR

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NOTES TO THE FINANCIAL STATEMENTS 28. Pension arrangements continued i. Sensitivities The estimated effects of changing the key assumptions (discount rate, inflation and life expectancy) on the IAS19 balance sheet position as at 31 December 2012 Assumption TP Scheme effect on 2012 bSS Schemes effect on 2012 balance sheet position balance sheet position Discount rate Increase of 0.1% 14.6 4.1 Decrease of 0.1% (14.9) (4.5) Inflation Increase of 0.1% (8.3) (3.0) Decrease of 0.1% 8.5 3.3 Longevity Increase of 1 year (17.2) (6.2) Decrease of 1 year 17.2 6.0 Defined contribution schemes The Group operates five defined contribution schemes for all qualifying employees. The pension cost, which represents contributions payable by the Group, amounted to £7.2m (2011: £5.7m). 29. Acquisition of businesses a. Toolstation Limited On the 3 January 2012 the Group acquired the remaining 70% of the issued share capital of Toolstation Limited. The Group had previously acquired 30% in April 2008 which included an option to purchase the remaining 70%. The acquisition was accounted for using the acquisition method of accounting. In accordance with the requirements of the acquisition method of accounting the existing 30% holding has been re-valued to fair value which realised a gain of £35m which has been credited to the income statement as an exceptional item. The aggregate consideration paid following the payment on 3 January was £41.5m. On 3 January 2012, future consideration dependent upon future performance and expansion of the business over the period to December 2013 was estimated to be £65m. The deferred consideration is payable in 2014 and consequently the deferred consideration has been discounted over a two year period from acquisition to final settlement. Fair values ascribed to identifiable assets as at 3 January 2012 are shown in the table below 2012 Fair value acquired £m Property, plant and equipment 7.7 Identifiable intangible assets 53.3 Cash at bank 0.8 Inventories 21.4 Trade and other receivables 4.3 Trade and other payables (25.8) Deferred tax liabilities (6.4) Loan repayable to Travis Perkins plc (39.6) 15.7 Goodwill 102.9 118.6 Satisfied by: Cash paid in prior periods 17.3 Cash paid in current period 24.2 Contingent consideration 65.0 106.5 Revaluation of pre existing equity holding 33.1 Discount on contingent consideration (13.8) Losses previously recognised (7.2) 118.6 124
TRAVIS PERKINS ANNUAL REPORT AND ACCOUNTS 2012 29. Acquisition of businesses continued Toolstation Limited contributed £135.3m revenue and £6.5m to the Group’s operating profit for the period between the date of acquisition and the balance sheet date. This period also comprises the Group’s financial year. Goodwill recognised is driven from significant value in forecast growth, forecast new customers and the value of the assembled workforce. None of the goodwill is expected to be deductible for tax purposes. The fair value of the acquired receivables is £0.4m. All acquired receivables are expected to be collected in full. Acquisition costs included in administration expenses amount to £0.3m. In accordance with IAS 39 the contingent consideration payable has been reassessed at 31 December 2012 and as a result the amount previously recognised of £65m, discounted to £51.2m, has been reduced to £47.0m with the difference of £4.2m being credited to the income statement as exceptional investment income. b. Other acquisitions In addition to the acquisition of Toolstation the Group acquired 5 other businesses for a total consideration of £1.1m resulting in goodwill of £0.6m. 30. Operating lease arrangements The Group leases a number of trading properties under operating leases. The leases, at inception, are typically 25 years in duration, although some have lessee only break clauses of between 10 and 15 years. Lease payments are reviewed every five years and increases applied in line with market rates. The Group also leases certain items of plant and equipment. The Company has no operating lease arrangements. a. The Group as lessee 2012 2011 £m £m Minimum lease payments under operating leases recognised in income for the year 189.0 176.0 At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: 2012 2011 £m £m Within one year 181.0 173.3 In the second to fifth years inclusive 619.2 599.9 After five years 1,085.2 1,194.4 1,885.4 1,967.6 b. The Group as lessor The Group sublets a number of ex-trading properties to third parties. Property rental income earned during the year in respect of these properties was £4.2m (2011: £4.1m). At the balance sheet date, the Group had contracts with tenants for the following future minimum lease payments: 2012 2011 £m £m Within one year 4.1 3.6 In the second to fifth years inclusive 14.2 12.6 After five years 21.1 17.3 31. Capital commitments THE GROUP 39.4 33.5 THE COMPANY –––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––– 2012 2011 2012 2011 £m £m £m £m Contracted for but not provided in the accounts 12.2 15.6 - - FINANCIAL STATEMENTS 125
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TRAVIS PERKINS PLC Travis Perkins T
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T R A V I S P E R K I N S A N N U A
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Chairman’s Statement FOR THE YEAR
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Chief Executive’s Review of the Y
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C H I E F E X E C U T I V E ’ S R
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Post year end acquisition We expect
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Deputy Chief Executive’s Review o
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D E P U T Y C H I E F E X E C U T I
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Finance Director’s Review of the
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F I N A N C E D I R E C T O R ’ S
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Statement of Principal Risks and Un
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Environmental Report FOR THE YEAR E
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Health and Safety Report FOR THE YE
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H E A L T H A N D S A F E T Y R E P
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Directors Robert Walker Geoff Coope
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Corporate Responsibility Statement
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Directors’ Remuneration Report Re
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Page 134 and 135: Notice of Annual General Meeting No
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