IFRS presentation to analysts and investors - About United Utilities

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Treatment of subsidiary companies under IFRS• IFRS is being adopted by United Utilities PLC (consolidated accountsand parent company accounts) and United Utilities Electricity PLC witheffect from 1 April 2005 due to the issuance of listed equity or debt bythose entities and the requirement to prepare consolidated accounts• All other group companies will remain under UK GAAP– matches the treatment applied in regulatory accounting– protects the reserves of United Utilities Water PLC• Only potential impact will be due to any future convergence between UKGAAP and IFRS46Before moving on to a more detailed look at retained earnings, I’d like to brieflytalk about how our subsidiary companies are treated under IFRS.IFRS is being adopted by United Utilities PLC and United Utilities ElectricityPLC with effect from 1 April 2005. This is due to the issuance of listed equity ordebt by those entities and the requirement to prepare consolidated accounts.All other group companies, including United Utilities Water PLC, will remainunder UK GAAP. We’ve chosen to keep UK GAAP for subsidiary companies sothat we remain aligned with regulatory accounting and the assumptions made inthe regulatory determinations. Retaining UK GAAP will also mean that thedistributable reserves of United Utilities Water PLC remain unaffected.The only potential impact going forward will be due to any future convergencebetween UK GAAP and IFRS.
Retained Earnings• The consolidated retained earnings decrease from £1,363m to £225m as aresult of IFRS adoption. This is due to:– disallowance of deferred tax discounting (£952m);– recognition of the pensions deficit under IAS 19 (£59m);– derecognition of the SSAP 24 prepayment (£272m); and– other net adjustments, representing an increase of £145m, whichinclude the reversal of the 2004/05 final dividend• However, the value of the IFRS restatements to the reserves of the UnitedUtilities PLC parent company balance sheet, from which dividendpayments are made, are not material47Now, turning to retained earnings.The consolidated retained earnings for the group decrease substantially from£1.36 billion to £225 million, under IFRS.As Martin said earlier, the main adjustments relate to the disallowance ofdeferred tax discounting and the derecognition of the SSAP 24 pensionsprepayment, coupled with the recognition of the pensions deficit.By far, the largest single adjustment relates to the treatment of deferred tax.
Page 1 and 2: United Utilities PLCInternational F
Page 3 and 4: Simon BateyGroup Finance DirectorGo
Page 5 and 6: IFRS conversion timetable31/03/04 3
Page 7 and 8: IFRS headlines - effect on 2004/05
Page 9 and 10: Segmental operating profit£mIFRS 1
Page 11 and 12: United Utilities’ basis of prepar
Page 13 and 14: Infrastructure Accounting (IAS 16)
Page 15 and 16: Infrastructure Accounting (IAS 16)I
Page 17 and 18: IFRS impact - net assets at 31 Marc
Page 19 and 20: Interests in Joint Ventures (IAS 31
Page 21 and 22: Interests in Joint Ventures (IAS 31
Page 23 and 24: Defined Benefit Pension Scheme Acco
Page 27 and 28: Business Combinations (IAS 38 / IFR
Page 31 and 32: Deferred Tax (IAS 12)• IAS 12 doe
Page 33 and 34: Major IFRS adjustments representing
Page 37 and 38: Accounting for Derivatives (IAS 39)
Page 39 and 40: Accounting for Derivatives (IAS 39)
Page 41 and 42: Operating Profit (£m)IFRS impact -
Page 45: IFRS impact - 2004/05 earnings per
Page 49 and 50: IFRS impact on key ratios and finan
Page 51 and 52: Summary• Overall impact on profit

IFRS presentation to analysts and investors - About United Utilities

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