Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

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Date of Report: September 19, 2005

 

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CEMEX, S.A. de C.V.

(Exact name of Registrant as specified in its charter)

 

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CEMEX Corp.

(Translation of Registrant’s name into English)

 

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United Mexican States

(Jurisdiction of incorporation or organization)

 

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Av. Ricardo Margáin Zozaya #325, Colonia Valle del Campestre

Garza García, Nuevo León, México 66265

(Address of principal executive offices)

 

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Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.    Form 20-F  x    Form 40-F  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes  ¨    No  x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):  N/A

 

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This report on Form 6-K shall be deemed to be incorporated by reference into (i) CEMEX, S.A. de C.V.’s (“CEMEX”) Registration Statement on Form F-3 (Registration No. 333-86700) filed with the Securities and Exchange Commission (the “Commission”) on April 19, 2002, (iii) CEMEX’s Registration Statement on Form S-8 (Registration No. 333-86090) filed with the Commission on April 11, 2002, (iv) CEMEX’s Registration Statement on Form S-8 (Registration No. 333-83962) filed with the Commission on March 7, 2002 and (v) CEMEX’s Registration Statement on Form S-8 (Registration No. 333-13970) filed with the Commission on September 28, 2001 (collectively, the “Registration Statements”), and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Contents

 

1.

The consolidated financial statements of RMC Group Limited as of December 31, 2004 and 2003, and for each of the years in the three-year period ended December 31, 2004 (the “RMC Financial Statements”) (attached hereto as exhibit 1).

 

2.

Consent of PricewaterhouseCoopers LLP to the incorporation by reference into the Registration Statements of their report with respect to the RMC Financial Statements (attached hereto as exhibit 2).

 

Explanatory Note

 

On September 13, 2005, CEMEX filed with the Commission, pursuant to Rule 424(b)(2) under the Securities Act of 1933, as amended, a preliminary prospectus supplement relating to a non-dilutive equity offering by CEMEX, which included the RMC Financial Statements. The RMC Financial Statements included in such preliminary prospectus supplement were accompanied by a report of PricewaterhouseCoopers LLP, which was inadvertently dated June 6, 2005. The correct date of such report is September 5, 2005. In addition, there was a typographical error in Note 33 to the RMC Financial Statements, which overstated the UK GAAP to US GAAP adjustment pertaining to Leases and understated the US GAAP net loss for the year ended December 31, 2004 by £10 million. These amounts have been corrected in the RMC Financial Statements included as Exhibit 1 to this report on Form 6-K, and the UK GAAP to US GAAP reconciliation now includes an adjustment of £1.6 million (previously £11.6 million) in relation to Leases and a net loss of £204.8 million (previously £194.8 million) for the year ended December 31, 2004.

 

This report on Form 6-K is being filed in order to incorporate by reference the RMC Financial Statements and the accompanying PricewaterhouseCoopers LLP report, dated September 5, 2005, into the Registration Statements, including the registration statement of which such preliminary prospectus supplement forms a part, and to file the consent of PricewaterhouseCoopers LLP to such incorporation by reference into the Registration Statements.

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, CEMEX, S.A. de C.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

						CEMEX, S.A. de C.V.
						(Registrant)
Date:		September 19, 2005				By:		/s/    RAFAEL GARZA
						Name: Title:		Rafael Garza Chief Comptroller

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EXHIBIT INDEX

 

EXHIBIT NO.		DESCRIPTION
1		The consolidated financial statements of RMC Group Limited as of December 31, 2004 and 2003, and for each of the years in the three-year period ended December 31, 2004.
2		Consent of PricewaterhouseCoopers LLP.

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Exhibit 1

 

		Page
RMC Group Limited
Consolidated financial statements for the three years ended 31 December 2004
Report of independent auditors		1
Profit and loss account for the three years ended 31 December 2004		2
Balance sheet as at 31 December 2004 and 31 December 2003		3
Cashflow statement for the three years ended 31 December 2004		4
Statement of total recognised gains and losses for the three years ended 31 December 2004		6
Movements in shareholders’ equity funds for the two years ended 31 December 2004		7
Notes to the financial statements		8

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RMC Group Limited

 

Report of independent auditors

 

To the Board of Directors and Shareholders of RMC Group Ltd:

 

We have audited the accompanying consolidated balance sheets of RMC Group Ltd and its subsidiaries as of December 31, 2004 and December 31, 2003 and the related consolidated profit and loss accounts, statements of recognised gains and losses, consolidated cash flow statements and the notes to the financial statements for the three years in the period ended 31 December, 2004, which have been prepared in accordance with accounting principles generally accepted in the United Kingdom. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RMC Group Ltd and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for the years ended December 31, 2004, 2003 and 2002, in conformity with accounting principles generally accepted in the United Kingdom.

 

As discussed in Note 1, the Group changed its method of accounting for employee share ownership trusts and employee share schemes, in accordance with accounting principles generally accepted in the United Kingdom. The change has been accounted for by restating comparative information at 31 December 2003 and 2002 and for the years then ended.

 

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 33 to the consolidated financial statements.

 

/s/    PricewaterhouseCoopers LLP

 

PricewaterhouseCoopers LLP

London, England

5 September 2005

 

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RMC Group Limited

 

Profit and loss account for the years ended 31 December

 

				Notes		2004 £m			2003 £m			2002 £m
Turnover
Continuing operations						4,098.3			4,118.6			4,037.5
Acquisitions						22.8			—			—
Discontinued operations						—			296.4			464.8
Turnover of subsidiary undertakings				3		4,121.1			4,415.0			4,502.3
Operating profit/(loss)
Before exceptional items						206.9			194.3			212.8
Operating exceptional items						(293.2	)		(36.4	)		(31.4	)
						(86.3	)		157.9			181.4
Operating profit/(loss)
Continuing operations				4		(87.5	)		118.3			150.0
Acquisitions						1.2			1.3			—
Discontinued operations						—			38.3			31.4
Operating profit						(86.3	)		157.9			181.4
Share of operating profit of joint ventures and associated undertakings				3/4		18.0			17.1			11.1
Total trading profit/(loss)				2/3		(68.3	)		175.0			192.5
Non-operating exceptional items
—(loss)/profit on disposal of discontinued operations						(0.7	)		22.3			39.5
—loss on disposal/termination of continuing operations						—			(16.2	)		(13.9	)
—loss on disposal of investment—Australia						(8.5	)		—			—
—(loss)/profit on disposal of fixed assets of continuing operations						(0.6	)		—			1.7
—restructuring costs of continuing operations						10.9			(235.6	)		—
Profit/(loss) before net interest payable						(67.2	)		(54.5	)		219.8
Interest payable (net)				5		58.2			78.4			83.7
Profit/(loss) on ordinary activities before taxation						(125.4	)		(132.9	)		136.1
Taxation				6		15.7			(5.0	)		37.9
Profit/(loss) on ordinary activities after taxation						(141.1	)		(127.9	)		98.2
Minority interests						15.6			28.2			27.9
Profit/(loss) for the year attributable to shareholders						(156.7	)		(156.1	)		70.3
Dividends				7		25.2			82.6			82.6
Retained loss for the year						(181.9	)		(238.7	)		(12.3	)
Earnings per share of 25p				8
Basic						(58.9	)p		(59.0	)p		26.5p
Basic excluding exceptional items						50.4	p		23.8	p		28.4p
Basic excluding exceptional items and goodwill amortisation						59.2	p		37.1	p		41.4p
Diluted						(58.9	)p		(59.0	)p		26.5p
Diluted excluding exceptional items						49.9	p		23.7	p		28.4p
Diluted excluding exceptional items and goodwill amortisation						58.7	p		37.0	p		41.3p

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC Group Limited

 

Balance sheet as at 31 December

 

		Notes		2004 £m			2003 £m
Fixed assets
Intangible assets—Goodwill		10		201.8			367.1
Tangible assets		11		2,311.1			2,352.5
Properties held for resale		11		9.4			14.3
		11		2,320.5			2,366.8
Investments
Joint ventures		13
—share of gross assets				106.4			111.8
—share of gross liabilities				(45.4	)		(50.7	)
				61.0			61.1
Associated undertakings		13		30.0			38.5
Other investments		13		4.2			4.8
				95.2			104.4
				2,617.5			2,838.3
Current assets
Stocks		14		290.1			265.4
Debtors—due within one year		15		852.7			815.3
Debtors—due after one year		15		56.2			59.5
				908.9			874.8
Investments—Australia		16		—			145.2
Investments		16		38.4			35.9
Cash at bank and in hand				140.3			125.8
				1,377.7			1,447.1
Creditors: amounts falling due within one year
Loans and overdrafts		17		339.2			410.9
Dividend		7		—			57.7
Creditors		18		910.8			931.6
				1,250.0			1,400.2
Net current assets				127.7			46.9
Total assets less current liabilities				2,745.2			2,885.2
Creditors: amounts falling due after more than one year
Bank and other loans		19		746.3			665.0
Deferred creditors		20		72.6			76.1
				818.9			741.1
Provisions for liabilities and charges
Deferred taxation		21		165.6			188.3
Other provisions		21		253.9			285.6
				419.5			473.9
				1,238.4			1,215.0
Net assets				1,506.8			1,670.2
Capital and reserves
Called up equity share capital		22		66.6			66.3
Share premium account		22		656.4			651.5
Profit and loss account		24		635.7			797.2
Shareholders’ equity funds				1,358.7			1,515.0
Minority interests (including non-equity interests)		25		148.1			155.2
Total capital and reserves				1,506.8			1,670.2

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC Group Limited

 

Cashflow statement for the years ended 31 December

 

				2004			2003			2002
		Notes		£m			£m			£m
Cash flow from operating profit		26		259.7			388.6			392.0
Dividends from joint ventures and associates				4.9			12.1			8.2
Returns on investments and servicing of finance
Interest and dividend income received				15.2			6.0			7.1
Interest paid				(67.2	)		(79.2	)		(88.1	)
Issue of costs of new bank loan				—			(1.8	)		(4.5	)
Dividends paid to minority interests				(11.3	)		(17.8	)		(17.7	)
				(63.3	)		(92.8	)		(103.2	)
Taxation—Corporation and other taxes paid				(50.3	)		(43.9	)		(36.2	)
Capital expenditure and financial investment:
Purchase of tangible fixed assets				(222.9	)		(191.9	)		(184.6	)
Purchase of and loans to fixed asset investments				(1.2	)		(2.0	)		(0.4	)
Sale of tangible fixed assets*				77.5			31.3			60.1
Sale of fixed asset investments				1.9			0.7			9.4
				(144.7	)		(161.9	)		(115.5	)
Acquisitions and disposals
Purchase of subsidiaries/businesses		30		(43.8	)		(30.9	)		(22.0	)
Net overdrafts acquired with subsidiaries		30		(0.8	)		(4.2	)		—
Purchase of minority interests in subsidiaries				(8.4	)		(29.6	)		(2.7	)
Sale of subsidiaries/businesses/investment—Australia				143.6			308.8			237.8
Net overdrafts/(cash) disposed of with subsidiaries/businesses				0.1			(5.8	)		(12.1	)
Deferred cash receipts				—			—			8.4
Deferred cash payments				—			(7.5	)		—
Purchase of and loans to joint ventures and associated undertakings				(1.4	)		(10.6	)		(6.1	)
Sale of and loans from joint ventures and associated undertakings				15.8			5.4			5.7
				105.1			225.6			209.0

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC Group Limited

 

Cashflow statement for the years ended 31 December (continued)

 

				2004			2003			2002
		Notes		£m			£m			£m
Equity dividends
Equity dividends paid to RMC Shareholders				(82.9	)		(82.6	)		(82.6	)
Net cash inflow before management of liquid resources and financing				28.5			245.1			271.7
Management of liquid resources		27		3.3			22.7			15.1
Financing
Equity:
Issues of equity share capital				5.2			0.9			1.2
Minority interests’ equity capital contributions				0.1			—			7.0
				5.3			0.9			8.2
Debt:
New loans raised				122.3			100.4			390.5
Repayment of loans				(109.5	)		(219.8	)		(680.3	)
				12.8			(119.4	)		(289.8	)
Increase in cash in the year		28		49.9			149.3			5.2

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*

including assets held for resale

 

The contribution in 2004 of acquisitions to the cash flow statement is as follows: cash flow from operating activities: £1.1 million (2003: £1.3 million) (2002: £(3.3) million), capital expenditure and financial investment: £nil (2003: £nil million) (2002: £(4.0) million). The contribution of discontinued operations is as follows: cash flow from operating activities: £nil (2003: £21.1 million) (2002: £(20.9) million), taxation: £nil (2003: £(1.9) million) (2002: £(0.7) million), returns on investments and servicing of finance £nil (2003: £(10.4) million) (2002: £nil), capital expenditure and financial investment: £nil (2003: £(17.8) million) (2002: £0.1 million).

 

Cash flows in respect of non-operating exceptional items included in acquisitions and disposals: £143.5 million (2003: £296.6 million) (2002: £234.5 million).

 

Cash flows in respect of operating exceptional items included in cash flow from operating activities: £(30.9) million (2003: £(8.4) million) (2002: £(7.6) million).

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC Group Limited

 

Statement of total recognised gains and losses

for the years ended 31 December

 

		2004			2003			2002
		£m			£m			£m
(Loss)/profit for the year attributable to shareholders		(156.7	)		(156.1	)		70.3
Other gains and losses:
Foreign currency translation adjustments
—Group		21.7			24.5			12.7
—Joint ventures		(0.6	)		3.5			(2.6	)
—Associated undertakings		(1.8	)		1.8			2.2
		19.3			29.8			12.3
Total recognised gains and losses for the year		(137.4	)		(126.3	)		82.6
Prior year adjustment (as explained in note 13)		(1.6	)
Total recognised gains and losses since last annual report		(139.0	)

 

Foreign currency translation adjustments in Group undertakings are stated after credits for taxation of £nil (2003: £4.6million; 2002: £nil).

 

Total recognised gains and losses for the year for joint ventures are £15.2 million (2003: £15.8 million; 2002: £7.4 million) and for associated undertakings are £(3.6)million (2003: £(1.8)million; 2002: £(5.2)million).

 

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC Group Limited

 

Movements in shareholders’ equity funds

for the years ended 31 December

 

		2004			2003
		£m			£m
(Loss)/profit for the year attributable to shareholders		(156.7	)		(156.1	)
Dividends		(25.2	)		(82.6	)
		(181.9	)		(238.7	)
Foreign currency translation adjustments		19.3			29.8
New share capital		5.2			0.9
Goodwill written back on disposal		1.1			5.6
		(156.3	)		(202.4	)
Shareholders’ equity funds at 1 January		1,516.6			1,719.0
Prior year adjustment (as explained in Notes 13/6)		(1.6	)		(1.6	)
Shareholders’ equity funds at 1 January		1,515.0			1,717.4
Shareholders’ equity funds at 31 December		1,358.7			1,515.0

 

 

 

The notes on pages 8 to 76 form part of these financial statements.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS

 

1

Accounting policies

 

Basis of accounting

 

Principal accounting policies

 

The Group accounts are prepared in accordance with the Companies Act 1985 and applicable United Kingdom Accounting Standards. A summary of the more important Group accounting policies follows. These policies have been applied consistently, with the exception of those detailed immediately below. The Group accounts are prepared using the historical cost convention.

 

Change in accounting policies

 

The Group has adopted UITF 17 (revised 2003), “Employee share schemes”, and UITF 38, “Accounting for ESOP trusts”, in these financial statements. The adoption of each of these standards represents a change in accounting policy and the comparative figures have been restated accordingly. Details of the effect of the prior year adjustments are given in note 13. There was no material impact on the adoption of UITF 17 (revised 2003) on 2003 and 2004, and therefore prior year figures have not been restated.

 

Group accounts

 

The Group accounts comprise the audited accounts of the Company and all its subsidiary undertakings made up to 31 December, using the acquisition method of accounting, together with the Group’s share of the results of all joint ventures and associated undertakings. Where necessary, the accounts of subsidiary undertakings, joint ventures and associated undertakings are adjusted to reflect Group accounting policies. Where subsidiary undertakings, joint ventures and associated undertakings are acquired or disposed of during the year, the Group profit and loss account reflects their results from the date of acquisition or to the date of disposal.

 

Turnover

 

Turnover is recognised as goods are invoiced to customers, which is normally at the point that goods are dispatched. It excludes sales-related taxes and intra-Group transactions. Turnover is recognised net of any discounts agreed with the customer.

 

Joint ventures and associated undertakings

 

Joint ventures are undertakings in which the Group holds an interest on a long-term basis and which are jointly controlled by the Group, generally holding 50% of voting rights, and one or more other parties under a contractual arrangement. Associated undertakings are those undertakings in which the Group has a participating interest of at least 20% of voting rights and in which, in the opinion of the Directors, the Group exercises a significant influence in management without having joint control such as would require the undertaking to be accounted for as a joint venture.

 

The Group’s share of turnover and results of all joint ventures and associated undertakings up to 31 December is included in the Group profit and loss account on the basis of audited financial statements or, where these are not available, on the basis of unaudited management accounts.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

Depreciation

 

Depreciation is calculated to write off the cost of tangible fixed assets over their expected useful economic lives. The expected useful economic lives of the assets to the business are reassessed periodically in the light of experience. Annual rates of depreciation most widely used are:

 

Land and buildings		%
Freehold buildings		2–5
Leasehold land and buildings (or over the life of the lease if shorter)		2–5
Plant, machinery and equipment		%
Fixed		2.5–10
Mobile (including truckmixers)		12.5
Motor vehicles		20

 

Excess depreciation arising on the disposal of plant, machinery and equipment, and motor vehicles, unless material, is included in operating profit. Freehold land is not depreciated. The cost of mineral deposits is depleted in the proportion which the production for the year bears to the latest estimates of mineral reserves.

 

When a review for impairment is conducted, the recoverable amount is assessed by reference to the net present value of expected future cash flows of the relevant income generating unit. The discount rate applied is based upon the Group’s pre-tax weighted average cost of capital with appropriate adjustment for the risks associated with the relevant unit.

 

Property disposals

 

Property disposals, including depleted aggregates deposits, are regarded as part of the ordinary activities of the Group. The results of the Property division are disclosed separately in the segmental analysis by business. Disposals of properties are recognised on completion.

 

Grants

 

Grants received from governments and other agencies, where they relate to expenditure on fixed assets or are to finance the activities of the Group over a number of years, are recognised in the profit and loss account over the expected useful economic lives of the related assets or over that number of years, and to the extent not so recognised are treated as deferred income.

 

Grants which are intended to give immediate financial support or assistance or which are made to reimburse costs incurred, are included in the profit and loss account so as to match with those costs in the period in which they become receivable.

 

Deferred taxation

 

Provision for deferred tax is made on all timing differences that have originated, but not reversed at the balance sheet date. A deferred tax asset is regarded as recoverable and therefore recognised only when it is regarded as more likely than not that there will be sufficient future taxable profits. Deferred tax is not discounted.

 

Pensions

 

The expected costs of pensions are provided on systematic and rational bases over the period of service of members of the schemes, so that pension charges represent a consistent proportion of the related payroll costs.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

Operating leases

 

Costs incurred in respect of operating leases are charged in arriving at the operating profit for the year.

 

Goodwill

 

Goodwill arising on acquisitions made from 1 January 1998 is capitalised and amortised over 20 years or over its estimated economic useful life, if shorter, in accordance with FRS 10. Goodwill represents the excess of the cost of investment in new subsidiaries, joint ventures and associated undertakings over the fair value of net assets acquired. The Group has elected as a matter of policy not to reinstate goodwill written off to reserves prior to 1998. Refer to the depreciation note above, in respect to the Group’s policy on impairments. Profits or losses on disposals of businesses include attributable goodwill to the extent that it has not previously been charged in the profit and loss account with a corresponding credit being taken to reserves.

 

Stocks

 

Stocks are stated at the lower of cost and net value. Work in progress is mainly in respect of short-term contracts which are valued at cost. Provision is made for any losses expected to arise on completion of such contracts. Cost comprises direct materials, direct labour and appropriate production overheads. Net value comprises the estimated selling price, less further production costs to completion and appropriate selling and distribution costs. Provision is made for obsolescent, slow-moving and defective stocks.

 

Finance lease receivables

 

Income from finance leasing contracts, being the excess of total rentals received over the cost of the net investment in finance leasing contracts, is taken to profit in accordance with the investment period method of accounting in direct relationship to the reducing capital invested during the primary leasing period. Amounts written off the net investment in such leases are calculated to write off the cost over the primary periods of the contracts.

 

Foreign currencies

 

Assets and liabilities of subsidiaries and interests in joint ventures and associated undertakings in foreign currencies are translated into sterling at rates of exchange ruling at the end of the financial year and the results of foreign subsidiaries, joint ventures and associated undertakings are translated at the average rate of exchange for the year. Differences on exchange arising from the retranslation to closing rates of the opening net investment in subsidiary companies, loans designated as hedges, and from the translation of the results of those companies at average rates, are taken to reserves and are reported in the statement of total recognised gains and losses. All other foreign exchange differences are taken to the profit and loss account in the year in which they arise.

 

Investments

 

Investments held as current assets are valued at the lower of cost or market value. Profits or losses on sales are included in investment income for the year. Fixed asset investments are valued at cost less amounts written off. The shares held for resale within Investments—Australia have been valued at Directors’ valuation.

 

Provisions

 

Provisions are held in the balance sheets of certain foreign Group undertakings covering their pension obligations. The estimated costs of reinstating aggregate-bearing land are provided over the period of mineral extraction. Where there is a legal obligation to decommission plant or to monitor landfill sites, the costs of decommissioning/ monitoring are provided in full as soon as the obligation arises, with an equal and opposite amount being capitalised as a fixed asset and amortised over the period the sites are operated. Provisions of a long-term nature are discounted.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

Financial instruments

 

The Group uses financial instruments primarily to manage its exposure to fluctuations in currency exchange rates and interest rates. Principal instruments used are cross currency swaps, interest rate swaps and forward currency exchange contracts.

 

Cross currency swaps are used to manage the currency profile of the Group’s net debt and interest rate swaps are used to manage the interest rate profile of the Group’s net financial liabilities. Currency assets and liabilities inherent in cross currency swaps used to hedge the net investment in foreign subsidiaries, joint ventures and associated undertakings are revalued at the closing rate of exchange with the resulting gain or loss recognised in the statement of total recognised gains and losses. In the event that cross currency swaps are not, or cease to be, treated as hedges of such net investments, the gain or loss on currency revaluation is recognised in the profit and loss account. Interest payments and receipts and interest differentials associated with cross currency swaps and interest rate swaps are treated as interest in the profit and loss account and accrued over time.

 

Forward foreign exchange contracts are used to fix the local currency value of cash flows arising other than in local currency. Assets and liabilities in anticipation of the relevant cash flows are valued at the relevant forward exchange rate, otherwise gains or losses associated with the forward contract are deferred until they are realised. Where such forward exchange contracts cease to hedge future cash flows they are revalued at market rate with any gain or loss recognised in the profit and loss account.

 

Any premium paid to acquire a financial instrument is recognised in the profit and loss account over the life of the instrument with any unamortised premium at the time of termination or cancellation immediately recognised in the profit and loss account.

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

2

(i) Segmental reporting of total turnover, EBITA* before exceptional items, total trading profit (after operating exceptional items) and net operating assets (including joint ventures and associates)

 

		2004
		Total turnover £m		EBITA* before exceptional items £m			Total trading profit £m			Net operating assets £m
a) Geographical Analysis
Continuing operations:
Great Britain		1,082.3		50.7			(162.9	)		724.9
Germany		659.0		(10.1	)		(10.1	)		419.5
Rest of Europe		1,406.0		117.7			16.8			1,066.4
United States of America		1,102.0		83.9			83.0			439.9
Rest of the World		223.5		6.5			4.9			109.7
		4,472.8		248.7			(68.3	)		2,760.4
Continuing operations include contributions from acquisitions in:
Great Britain		3.4		—			—			2.2
Rest of Europe		18.8		1.6			1.5			32.9
United States of America		0.6		(0.3	)		(0.3	)		2.7
		22.8		1.3			1.2			37.8

---

*

Total trading profit excluding goodwill amortisation of £23.8 million and operating exceptional charges of £293.2 million.

 

Turnover is disclosed on an origin basis only as there is no material difference on a destination basis. Net operating assets of subsidiary undertakings comprise goodwill, tangible fixed assets, investments in joint ventures and associated undertaking, stocks and debtors (excluding corporation taxes), less creditors (excluding corporation taxes) and deferred creditors (excluding corporation taxes), less other provisions (excluding pensions and deferred tax).

 

The Group assesses the underlying performance of its businesses by adjusting UK GAAP statutory results to exclude goodwill amortisation and operating exceptional charges. Excluding these items, enables management of the Group to focus on the operational performance of the business. Goodwill amortisation is a financially material item within the Group’s Accounts and operating exceptional items which primarily relate to goodwill impairments are also material. The Group recognises that presenting performance measures which exclude goodwill amortisation and operating exceptional charges is additional disclosure to that required under UK GAAP. Furthermore, the Group recognises that such non-GAAP performance measures should not be viewed as replacements for, or alternatives to, comparable GAAP measures, rather they should be considered as supplementary measures of the Group’s operating performance. In addition, the non-GAAP measures used by the Group differ from, and may not be comparable to, similarly-titled measures used by other companies.

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2003
		Total turnover £m		EBITA* before exceptional items £m			Total trading profit £m			Net operating assets £m
Continuing operations:
Great Britain		1,061.3		68.0			31.6			860.7
Germany		758.3		(48.3	)		(52.6	)		392.3
Rest of Europe		1,362.4		106.9			90.5			1,070.3
United States of America		1,139.0		61.4			59.6			453.8
Rest of the World		196.4		6.3			1.1			114.6
		4,517.4		194.3			130.2			2,891.7
Discontinued operations:
Great Britain		55.2		4.0			4.0			—
Rest of the World		300.5		48.7			40.8			—
		355.7		52.7			44.8			—
Total:
Great Britain		1,116.5		72.0			35.6			860.7
Germany		758.3		(48.3	)		(52.6	)		392.3
Rest of Europe		1,362.4		106.9			90.5			1,070.3
United States of America		1,139.0		61.4			59.6			453.8
Rest of the World		496.9		55.0			41.9			114.6
		4,873.1		247.0			175.0			2,891.7

---

*

Total trading profit excluding goodwill amortisation of £35.6 million and operating exceptional charges of £36.4 million.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2002
		Total turnover £m		EBITA* before exceptional items £m			Total trading profit £m			Net operating assets £m
Continuing operations:
Great Britain		1,037.2		67.7			45.7			946.0
Germany		766.0		(0.3	)		(21.0	)		594.0
Rest of Europe		1,212.4		92.3			79.8			1,041.1
United States of America		1,255.4		57.2			51.8			523.2
Rest of the World		181.5		1.6			(0.5	)		125.1
		4,452.5		218.5			155.8			3,229.4
Discontinued operations:
Great Britain		118.6		10.4			10.4			39.1
Germany		30.3		(4.6	)		(4.6	)		—
Rest of Europe		138.4		4.3			4.0			17.0
Rest of the World		231.6		34.2			26.9			358.2
		518.9		44.3			36.7			414.3
Total:
Great Britain		1,155.8		78.1			56.1			985.1
Germany		796.3		(4.9	)		(25.6	)		594.0
Rest of Europe		1,350.8		96.6			83.8			1,058.1
United States of America		1,255.4		57.2			51.8			523.2
Rest of the World		413.1		35.8			26.4			483.3
		4,971.4		262.8			192.5			3,643.7

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*

Total trading profit excluding goodwill amortisation of £34.8 million and operating exceptional charges of £35.5 million.

 

Discontinued operations comprise the waste management division in Great Britain, which was sold in June 2003, and the Group’s businesses in Australia and India, which were sold in December 2003. In 2002 these also include Durox in Great Britain, YTONG in Germany and Rest of Europe and the Group’s businesses in the Benelux countries and Jordan.

 

Turnover is disclosed on an origin basis only as there is no material difference on a destination basis. Net operating assets of subsidiary undertakings comprise goodwill, tangible fixed assets, investments in joint ventures and associated undertaking, stocks and debtors (excluding corporation taxes), less creditors (excluding corporation taxes) and deferred creditors (excluding corporation taxes), less other provisions (excluding pensions and deferred tax).

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2004
		Total turnover £m		EBITA* before exceptional items £m			Total trading profit £m			Net operating assets £m
b) Analysis by business
Continuing operations:
Ready mixed concrete and aggregates		3,248.5		172.9			59.4			1,427.3
Cement, lime and concrete products		990.5		48.6			(153.8	)		1,295.0
Waste control and others		185.6		(0.3	)		(1.4	)		30.5
Property		48.2		27.5			27.5			7.6
		4,472.8		248.7			(68.3	)		2,760.4
Continuing operations include contributions from acquisitions of:
Ready mixed concrete and aggregates		16.8		1.2			1.2			32.9
Cement, lime and concrete products		6.0		0.1			—			4.9
		22.8		1.3			1.2			37.8

---

*

Total trading profit excluding goodwill amortisation of £23.8 million and operating exceptional charges of £293.2 million.

 

		2003
		Total turnover £m		EBITA* before exceptional items £m		Total trading profit £m			Net operating assets £m
Continuing operations:
Ready mixed concrete and aggregates		3,263.0		145.5		116.8			1,420.3
Cement, lime and concrete products		1,051.4		33.0		(1.4	)		1,452.2
Waste control and others		184.2		4.6		3.6			6.4
Property		18.8		11.2		11.2			12.8
		4,517.4		194.3		130.2			2,891.7
Discontinued operations:
Ready mixed concrete and aggregates		48.2		0.9		0.5			—
Cement, lime and concrete products		252.3		47.8		40.3			—
Waste control and others		55.2		4.0		4.0			—
		355.7		52.7		44.8			—
Total:
Ready mixed concrete and aggregates		3,311.2		146.4		117.3			1,420.3
Cement, lime and concrete products		1,303.7		80.8		38.9			1,452.2
Waste control and others		239.4		8.6		7.6			6.4
Property		18.8		11.2		11.2			12.8
		4,873.1		247.0		175.0			2,891.7

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*

Total trading profit excluding goodwill amortisation of £35.6 million and operating exceptional charges of £36.4 million.

 

15

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2002
		Total turnover £m		EBITA* before exceptional items £m			Total trading profit £m			Net operating assets £m
Continuing operations:
Ready mixed concrete and aggregates		3,147.6		152.7			136.1			1,599.6
Cement, lime and concrete products		990.0		47.9			8.0			1,564.9
Waste control and others		286.5		1.4			(4.8	)		28.7
Property		28.4		16.5			16.5			36.2
		4,452.5		218.5			155.8			3,229.4
Discontinued operations:
Ready mixed concrete and aggregates		69.9		(0.5	)		(0.7	)		51.4
Cement, lime and concrete products		331.4		34.5			27.1			323.8
Waste control and others		117.6		10.3			10.3			39.1
		518.9		44.3			36.7			414.3
Total:
Ready mixed concrete and aggregates		3,217.5		152.2			135.4			1,651.0
Cement, lime and concrete products		1,321.4		82.4			35.1			1,888.7
Waste control and others		404.1		11.7			5.5			67.8
Property		28.4		16.5			16.5			36.2
		4,971.4		262.8			192.5			3,643.7

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*

Total trading profit excluding goodwill amortisation of £34.8 million and operating exceptional charges of £35.5 million.

 

Included in the tables above are the Group’s share of joint ventures’ turnover of £81.4 million (2003: £155.6 million; 2002: £140.9 million), trading profit of £9.6 million (2003: £18.1 million; 2002; £15.4 million) and net operating assets of £61.0 million (2003: £61.1 million; 2002: £77.5 million) and the Group’s share of associated undertakings’ turnover of £270.3 million (2003: £302.5 million; 2002: £328.2 million), trading profit of £8.4 million (2003: loss £1.0 million; 2002: profit £4.3 million) and net operating assets of £30.0 million (2003: £38.5 million; 2002: £70.9 million).

 

2

(ii) Segmental reporting of Group’s share of turnover of joint ventures and associated undertakings (continued)

 

		2004 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
a) Geographical analysis
Continuing operations:
Great Britain		9.6		2.0		11.6
Germany		3.7		84.9		88.6
Rest of Europe		39.6		16.2		55.8
United States of America		—		167.2		167.2
Rest of World		28.5		—		28.5
		81.4		270.3		351.7

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2003 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
a) Geographical analysis
Continuing operations:
Great Britain		10.7		1.9		12.6
Germany		5.1		122.0		127.1
Rest of Europe		44.2		15.5		59.7
United States of America		—		163.1		163.1
Rest of World		36.3		—		36.3
		96.3		302.5		398.8
Discontinued operations:
Rest of World		59.3		—		59.3
		59.3		—		59.3
Total
Great Britain		10.7		1.9		12.6
Germany		5.1		122.0		127.1
Rest of Europe		44.2		15.5		59.7
United States of America		—		163.1		163.1
Rest of World		95.6		—		95.6
		155.6		302.5		458.1

 

		2002 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
a) Geographical analysis
Continuing operations:
Great Britain		10.2		2.6		12.8
Germany		5.5		137.7		143.2
Rest of Europe		34.7		13.7		48.4
United States of America		—		170.2		170.2
Rest of World		40.3		—		40.3
		90.7		324.2		414.9
Discontinued operations:
Rest of Europe		—		4.0		4.0
Rest of World		50.2		—		50.2
		50.2		4.0		54.2
Total
Great Britain		10.2		2.6		12.8
Germany		5.5		137.7		143.2
Rest of Europe		34.7		17.7		52.4
United States of America		—		170.2		170.2
Rest of World		90.5		—		90.5
		140.9		328.2		469.1

 

17

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2004 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
b) Analysis by business
Continuing operations:
Ready mixed concrete and aggregates		75.0		92.1		167.1
Cement, lime and concrete products		3.0		11.0		14.0
Waste control and others		3.4		167.2		170.6
		81.4		270.3		351.7

 

		2003 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
b) Analysis by business
Continuing operations:
Ready mixed concrete and aggregates		88.2		129.0		217.2
Cement, lime and concrete products		3.1		4.3		7.4
Waste control and others		5.0		169.2		174.2
		96.3		302.5		398.8
Discontinued operations:
Ready mixed concrete and aggregates		5.4		—		5.4
Cement, lime and concrete products		53.9		—		53.9
		59.3		—		59.3
Total
Ready mixed concrete and aggregates		93.6		129.0		222.6
Cement, lime and concrete products		57.0		4.3		61.3
Waste control and others		5.0		169.2		174.2
		155.6		302.5		458.1

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2002 Turnover
		Joint ventures £m		Associated undertakings £m		Total £m
b) Analysis by business
Continuing operations:
Ready mixed concrete and aggregates		86.6		142.6		229.2
Cement, lime and concrete products		4.1		5.6		9.7
Waste control and others		—		176.0		176.0
		90.7		324.2		414.9
Discontinued operations:
Ready mixed concrete and aggregates		2.7		3.1		5.8
Cement, lime and concrete products		47.5		0.9		48.4
		50.2		4.0		54.2
Total
Ready mixed concrete and aggregates		89.3		145.7		235.0
Cement, lime and concrete products		51.6		6.5		58.1
Waste control and others		—		176.0		176.0
		140.9		328.2		469.1

 

3

Analysis of total turnover to total trading profit

 

		2004
		Continuing £m			Acquisitions £m			Total £m
Turnover
Total turnover		4,450.0			22.8			4,472.8
Less share of turnover of:
—Joint ventures		81.4			—			81.4
—Associated undertakings		270.3			—			270.3
Turnover of subsidiary undertakings		4,098.3			22.8			4,121.1
Cost of sales		2,893.6			17.3			2,910.9
Gross profit		1,204.7			5.5			1,210.2
Distribution costs		(879.4	)		(3.4	)		(882.8	)
Administrative expenses		(467.4	)		(0.8	)		(468.2	)
Other operating income		54.6			(0.1	)		54.5
Operating profit		(87.5	)		1.2			(86.3	)
Share of operating profits of:
—Joint ventures		9.6			—			9.6
—Associated undertakings		8.4			—			8.4
		18.0			—			18.0
Total trading profit		(69.5	)		1.2			(68.3	)

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

The share of operating profits of joint ventures and associated undertakings is stated after amortisation of goodwill as follows:

 

		2004 £m		2003 £m		2002 £m
Joint ventures		0.1		0.4		0.6
Associated undertakings		0.2		0.2		0.6
		0.3		0.6		1.2

 

		2003
		Continuing £m			Discontinued £m			Total £m
Turnover
Total turnover		4,517.4			355.7			4,873.1
Less share of turnover of:
—Joint ventures		96.3			59.3			155.6
—Associated undertakings		302.5			—			302.5
Turnover of subsidiary undertakings		4,118.6			296.4			4,415.0
Cost of sales		2,746.6			214.2			2,960.8
Gross profit		1,372.0			82.2			1,454.2
Distribution costs		(868.9	)		(30.9	)		(899.8	)
Administrative expenses		(399.1	)		(13.4	)		(412.5	)
Other operating income		15.6			0.4			16.0
Operating profit		119.6			38.3			157.9
Share of operating profits/(losses) of:
—Joint ventures		11.6			6.5			18.1
—Associated undertakings		(1.0	)		—			(1.0	)
		10.6			6.5			17.1
Total trading profit		130.2			44.8			175.0

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2002
		Continuing £m			Discontinued £m			Total £m
Turnover
Total turnover		4,452.4			519.0			4,971.4
Less share of turnover of:
—Joint ventures		90.7			50.2			140.9
—Associated undertakings		324.2			4.0			328.2
Turnover of subsidiary undertakings		4,037.5			464.8			4,502.3
Cost of sales		2,699.3			346.9			3,046.2
Gross profit		1,338.2			117.9			1,456.1
Distribution costs		(806.5	)		(47.9	)		(854.4	)
Administrative expenses		(403.3	)		(41.1	)		(444.4	)
Other operating income		21.6			2.5			24.1
Operating profit		150.0			31.4			181.4
Share of operating profits/(losses) of:
—Joint ventures		9.7			5.7			15.4
—Associated undertakings		(3.9	)		(0.4	)		(4.3	)
		5.8			5.3			11.1
Total trading profit		155.8			36.7			192.5

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2004 £m			2003 £m			2002 £m
Profit/(loss) on ordinary activities before taxation is stated after charging/(crediting) the following items:
Depreciation of tangible fixed assets		170.8			211.2			210.4
Impairment of tangible fixed assets		—			9.7			—
Impairment of tangible fixed assets (charged as non-operating exceptional item)		—			103.2			—
Impairment of tangible fixed assets (charged as operating exceptional item)		87.2			—			—
Impairment of goodwill of j.v. (charged as operating exceptional item)		1.1			—			—
Amortisation of goodwill (including j.v.s and associates)		23.8			35.6			34.8
Impairment of goodwill		—			1.3			—
Impairment of goodwill (charged as non-operating exceptional item)		—			67.4			—
Impairment of goodwill (charged as operating exceptional item)		173.7			—			—
Profit on disposal of property division assets		(27.5	)		(11.2	)		(16.5	)
Profit on disposal of other fixed assets		(10.0	)		(1.7	)		(2.2	)
Grants received		(1.4	)		(1.6	)		(1.4	)
Operating lease rentals:
Hire of plant and machinery		48.5			54.3			52.9
Other		3.5			41.1			41.8
Audit services:
Statutory audit		3.5			4.0			3.8
Audit-related regulatory reporting		0.1			0.1			0.1
Total amounts paid to the Auditors for non-audit work were:
Further assurance services		0.3			0.3			0.2
Tax services:
Compliance services		0.8			0.7			0.7
Advisory services		0.2			0.1			0.1
Other services:
Financial information technology		0.1			—			1.0
Other		0.1			0.1			0.1
		1.5			1.2			2.1

 

4

Exceptional items

 

In 2004, non-operating exceptional items comprised losses of £0.7 million arising on adjustments to the disposals of discontinued businesses in Belgium (shown as net loss on disposal of discontinued operations), losses of £0.6 million arising on the disposal of a business in Austria (shown as net loss on disposal of continuing operations), losses of £8.5 million arising on the disposal of the Group’s remaining investment in Adelaide Brighton Limited (shown as a loss on disposal of investment—Australia), and profits of £10.9 million arising on the release of provisions no longer required (shown as restructuring costs of continuing operations).

 

In 2003, non-operating exceptional items comprised a net profit of £22.3 million arising on the disposals of the assets of the waste management division in Great Britain and the Group’s businesses in Australia, Belgium, Jordan and India, after charging goodwill written off to reserves of £5.6 million (shown as profit on disposal of discontinued operations), losses of £16.2 million arising on the disposal and closure of non-core businesses in the USA, Germany, Austria and Croatia (shown as loss on disposal/termination of continuing operations) and £235.6 million of costs arising from restructuring the German business, including £204.7 million of fixed asset write-downs.

 

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

In 2002, non-operating exceptional items comprised a profit of £39.5 million on the sale of the Group’s aerated concrete businesses, Durox and YTONG, and its concrete products business in the Netherlands, after charging goodwill previously written off to reserves of £51.3 million (shown as profit on disposal of discontinued operations), a loss of £13.9 million on the withdrawal from certain non-core operations in the USA and Germany (shown as loss on disposal/termination of continuing operations) and a net profit of £1.7 million on the disposal of fixed assets and investments in the USA and Germany.

 

Operating exceptional items in 2004 totalled net charges of £293.2 million, of which £261.7 million arose on the impairment of goodwill in the UK and fixed assets in Austria, calculated using a pre-tax discount rate of 10%, £16.5 million related to redundancy and other reorganisation costs, primarily in Great Britain, £20.2 million comprised costs associated with the acquisition by CEMEX and integration of the combined businesses. These charges of £298.4 million were offset by a credit of £5.2 million on the settlement of legal matter.

 

Operating exceptional items in 2003 totalled charges of £36.4 million, of which £20.8 million related to redundancy and other reorganisation costs, primarily in Great Britain, and £15.6 million to asset write-downs associated with reorganisations.

 

Operating exceptional items in 2002 of £31.4 million comprised anticipated fines for anti-competitive activities and associated legal costs totalling £15.9 million, principally arising from the German Federal Cartel Office investigation into the cement industry, redundancy costs arising from the Group’s business review of £9.5 million, abortive disposal costs of £3.4 million and a write-down of the shares held by the Trustee of the Long Term Incentive Plan to market value at 31 December 2002 amounting to £2.6 million. In addition there was a goodwill impairment in the Group’s associate, Huttig Building Products, Inc. in the USA of £4.1 million.

 

The tax effect on the above items is disclosed in Note 8 on page 25.

 

5

Interest payable (net)

 

		2004 £m		2003 £m		2002 £m
Bank loans and overdrafts		34.0		31.6		39.1
Amortisation of issue costs		0.9		5.1		3.5
Other loans		30.6		40.0		39.9
Unwinding of discount on pension provisions		5.8		5.2		5.1
		71.3		81.9		87.6
Less: interest received on short-term deposits		14.2		5.6		6.5
Income from investments		0.6		0.4		0.6
		14.8		6.0		7.1
		56.5		75.9		80.5
Joint ventures		0.6		1.0		0.7
Associated undertakings		1.1		1.5		2.5
		58.2		78.4		83.7

 

23

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

6

Taxation

 

		2004						2003						2002
		£m			£m			£m			£m			£m			£m
Current tax:
UK corporation tax on profits for the period		14.4									98.2						37.6
Double taxation relief		(11.6	)					(88.5	)					(37.0	)
Adjustments in respect of previous years		(18.7	)					(9.7	)		(98.2	)		(2.8	)		(39.8	)
					(15.9	)					—						(2.2	)
Foreign tax		47.9						49.3						46.7
Adjustment in respect of previous years		(0.5	)		47.4			(0.7	)		48.6			(12.7	)		34.0
Joint ventures		2.1						4.7						4.5
Associated undertakings		1.9			4.0			1.0			5.7			0.6			5.1
Total current tax					35.5						54.3						36.9
Deferred tax:
Decrease/(increase) in timing differences in year		6.5						(55.2	)					(4.4	)
Effect of tax rate variations on opening provision		(1.2	)					(0.2	)					(0.5	)
Adjustments in respect of previous years		(25.1	)					(3.9	)					5.9
Total deferred tax					(19.8	)					(59.3	)					1.0
Tax on profit on ordinary activities					15.7						(5.0	)					37.9

 

UK corporation tax has been calculated at the rate of 30% (2003: 30%) (2002: 30%).

 

The tax charge for 2004 has benefited from the utilisation of past tax losses and the release of prior year provisions following closure with tax authorities. There are no known specific factors that will impact the tax charge in future years.

 

		2004 £m			2003 £m			2002 £m
Reconciliation of current tax charge
(Loss)/profit on ordinary activities before tax		(125.4	)		(132.9	)		136.1
Tax thereon at standard rate of UK corporation tax of 30% (2003: 30%) (2002: 30%)		(37.6	)		(39.8	)		40.8
Increase in tax due to higher tax rates on foreign profits		2.8			2.0			0.9
		(34.8	)		(37.8	)		41.7
Non tax effective items (primarily goodwill and other amortisation)		78.8			47.3			11.3
Timing differences (primarily the excess of tax depreciation over accounts depreciation and provisions)		(15.7	)		67.4			(23.4	)
Losses		26.4			(12.2	)		22.8
Adjustment to tax charge for previous periods		(19.2	)		(10.4	)		(15.5	)
Current tax charge for period		35.5			54.3			36.9

 

24

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

7

Dividends

 

		2004 £m		2003 £m		2002 £m
Interim dividend of 9.4p per share (2003: 9.4p per share) (2002: 9.4p per share)		25.2		24.9		24.9
Final dividend proposed of nil per share (2003: 21.8p per share) (2002: 21.8p per share)		—		57.7		57.7
		25.2		82.6		82.6

 

All dividends on the shares awarded under the Long Term Incentive Plan have been waived by the Trustee.

 

8

Earnings per share

 

		2004									2003									2002
		Earnings £m			Basic earnings per share pence			Diluted earnings per share pence			Earnings £m			Basic earnings per share pence			Diluted earnings per share pence			Earnings £m			Basic earnings per share pence			Diluted earnings per share pence
a) Earnings		(156.7	)		(58.9	)		(58.9	)		(156.1	)		(59.0	)		(59.0	)		70.3			26.5			26.5
Anti-dilutive effect		—			—			0.5			—			—			0.2			—			—			—
Exceptional items		292.1			109.8			108.8			265.9			100.4			100.1			8.2			3.1			3.1
Taxation arising on operating exceptional items		(7.7	)		(2.8	)		(2.8	)		(9.3	)		(3.5	)		(3.5	)		(7.6	)		(2.9	)		(2.9	)
Taxation arising on non- operating exceptional items		6.5			2.4			2.4			(33.4	)		(12.6	)		(12.6	)		5.1			1.9			1.9
Minority interest share of exceptional items		(0.3	)		(0.1	)		(0.1	)		(4.1	)		(1.5	)		(1.5	)		(0.6	)		(0.2	)		(0.2	)
Earnings excluding exceptional items		133.9			50.4			49.9			63.0			23.8			23.7			75.4			28.4			28.4
Goodwill amortisation		23.8			8.9			8.9			35.6			13.4			13.4			34.8			13.0			13.1
Minority interest share of goodwill amortisation		(0.3	)		(0.1	)		(0.1	)		(0.3	)		(0.1	)		(0.1	)		(0.4	)		—			(0.2	)
Earnings excluding exceptional items and goodwill amortisation		157.4			59.2			58.7			98.3			37.1			37.0			109.8			41.4			41.3

 

b) Basic earnings per share are based on the profit for the year attributable to shareholders and on the weighted average number of shares in issue during the year, excluding shares owned by the RMC Long Term Incentive Plan which are treated as cancelled. The number of shares used for calculating basic earnings per share was 265,848,132 (2003: 264,736,826) (2002: 264,636,627). The number of shares used for calculating diluted earnings per share, taking into account employee share option schemes, was 268,292,445 (2003: 265,559,465) (2002: 265,241,185).

 

c) Supplementary basic and diluted earnings per share have been calculated to exclude the effect of goodwill amortisation and exceptional items. The adjusted numbers have been provided in order that the effects of goodwill amortisation and exceptional items on reported earnings can be fully appreciated.

 

25

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

9

Employees and directors

 

		2004 £m		2003 £m		2002 £m
a) Staff costs (including Directors)
Wages and salaries		509.8		666.8		697.4
Social security costs		123.2		122.0		123.9
Other pension costs		36.1		34.8		32.6
		669.1		823.6		853.9
		2004		2003		2002
b) Geographical analysis of the average number of persons employed by the Group during the year
Great Britain		6,899		7,816		7,991
Germany		3,928		4,275		4,872
Rest of Europe		8,043		8,218		9,700
United States of America		6,046		6,410		6,899
Rest of the World		1,835		2,448		2,334
		26,751		29,167		31,796

 

c) Pension schemes

 

The Group operates a number of pension schemes throughout the world. The majority of these schemes are self-administered and are separately funded. The schemes’ assets are held independently of the Group’s finances, with the exception of those in Germany, which are financed mainly by internal provisions. Pension costs are assessed in accordance with the advice of independent, professionally-qualified actuaries.

 

The main schemes in the UK are of the defined benefit type and in Germany and the USA both defined benefit and defined contribution schemes are operated. The results of the most recent valuations or reviews of the main defined benefit schemes under SSAP 24 were as follows:

 

Date of last valuation/review Method used		UK 31 Mar 2003 projected unit				Germany 31 Dec 2003 projected unit				2004 USA 30 Sep 2004 projected unit
Market value of investments		£	454.8	m		£	8.2	m		£	14.4	m
Assumed return on assets exceeds salary inflation by			3.1	%			3.5	%			3.0	%
Level of external funding			91.5	%			8.0	%			58.0	%
Charge during year		£	18.1	m		£	8.1	m		£	1.9	m
Total provision		£	20.0	m		£	96.9	m		£	1.1	m

 

Date of last valuation/review Method used		UK 31 Mar 2003 projected unit			Germany 31 Dec 2003 projected unit			2003 USA 30 Sep 2003 projected unit
Market value of investments		£	454.8m		£	8.2m		£	13.1m
Assumed return on assets exceeds salary inflation by			3.1%			3.5%			1.13%
Level of external funding			91.5%			8.0%			57.0%
Charge during year		£	15.6m		£	6.9m		£	1.7m
Total provision		£	26.4m		£	96.9m		£	1.9m

 

26

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RMC GROUP LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

Date of last valuation/review Method used		UK 31 Mar 2002 projected unit			Germany 31 Dec 2002 projected unit			2002 USA 31 Dec 2002 projected unit
Market value of investments		£	612.4m		£	15.0m		£	12.5m
Assumed return on assets exceeds salary inflation by			1.0%-1.75%			3.0%			4.5%
Level of external funding			108.0%			15.0%			54.0%
Charge during year		£	7.7m		£	7.2m		£	0.9m
Total provision		£	15.6m		£	94.8m		£	1.3m

 

UK: the two main defined benefit pension funds undertook full formal actuarial valuations as at 31 March 2003. Both funds disclosed deficits as at the valuation date. As a result, the employing companies are paying contributions at an increased rate in order to restore the funds to a full funding level. The figures for the UK pension funds at the 31 March 2001 valuation have been restated to include the two RMC Pension Funds together with the two Rugby Pension Schemes subsequently transferred to the RMC Pension Fund. The RMC Pension Fund (defined benefit section) was closed to new employees with effect from 1 January 2004.

 

Germany: the funding of the defined benefit schemes is met mainly by a book reserve. The provision shown above relates to the book reserve held in the accounts of companies in the Readymix AG Group. A proportion is provided through external insurance arrangements. The value of investments and level of external funding shown above reflects these insurance arrangements. The market value of the investments has reduced because the value of the insurance policy that relates to employees covered by a defined contribution benefit, which was included in the previous years has now been excluded.

 

The pension charges relating to other foreign schemes comply with the policy of providing for pensions on systematic and rational bases, so that the charges represent a consistent proportion of the related payroll costs.

 

d) Post-retirement benefits

 

The Group provides post-retirement healthcare, mainly in the UK and the USA to certain groups of its retired employees. The Group conforms with the provisions of the Urgent Issues Task Force Abstract 6 ‘Accounting for Post-retirement Benefits other than Pensions’ which require accrual of these costs over the period during which employees become eligible for such benefits.

 

At 31 December 2004 the provision for both the UK and the USA totals £16.4 million (2003: £16.2 million) (2002: £15.6 million), of which £8.9 million (2003: £8.6 million) (2002: £8.1 million) relates to the UK and £7.5 million (2003: £7.6 million) (2002: £7.5 million) relates to the USA. Independent qualified actuaries have calculated these provisions. The actuaries have assumed rates of inflation for medical expenses of 5.5% a year (UK) (2003: 5.5%) (2002: 5%) and 10% (USA) ) (2003: 8%) (2002: 9%) and discount rates of 6.6% a year (UK) (2003: 6.6%) (2002: 5.5%) and 6.0% (USA) (2003: 6.63%) (2002: 7.3%).

 

e) FRS 17—Retirement benefits

 

The valuations used for the FRS 17 disclosures with respect to the UK, German and USA funds have been based on the most recent actuarial valuations at 31 March 2003, 31 December 2003 and 30 September 2004 respectively and updated by the scheme actuary to take account of the requirements of FRS 17 in order to assess the liabilities at 31 December 2004. Scheme assets are stated at their market value on 31 December 2004. For all arrangements in each of the three countries the projected unit method of valuation was adopted. The principal defined benefit schemes operated by the Group are in the UK, Germany and the USA. These schemes cover over 95% of the Group’s defined benefit pension liabilities.

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

The financial assumptions used to calculate pension liabilities under FRS 17:

 

		2004									2003									2002
		USA			UK			Germany			USA			UK			Germany			USA			UK			Germany
Discount rate		5.40	%		5.00	%		6.00	%		5.50	%		5.50	%		6.13	%		5.50	%		5.75	%		6.50	%
Inflation rate		2.60	%		1.50	%		3.00	%		2.50	%		1.50	%		2.00	%		2.25	%		2.00	%		2.00	%
Increases to pensions in payment		2.60	%		1.50	%		—			2.50	%		1.50	%		—			2.25	%		1.75	%		—
Salary increases		3.60	%		2.00	%		5.00	%		3.50	%		2.00	%		5.00	%		3.75	%		3.00	%		4.00	%
Long-term healthcare cost increases		5.60	%		—			10.00	%		5.50	%		—			8.00	%		4.75	%		—			9.00	%

 

The assumptions for all the UK schemes are as above.

 

		2004
		UK						Germany						USA
		Long-term rate of return expected at 31 Dec 2004			Value at 31 Dec 2004 £m			Long-term rate of return expected at 31 Dec 2004			Value at 31 Dec 2004 £m			Long-term rate of return expected at 31 Dec 2004			Value at 31 Dec 2004 £m
Equities—Domestic		7.50	%		154						—			9.60	%		7
Equities—Overseas		7.75	%		190						—			10.30	%		1
Bonds—Fixed interest		4.75	%		163						—			4.70	%		5
Bonds—Index-linked		4.25	%		32						—			—			—
Other		6.60	%		57			5.0	%		8			3.70	%		1
Total market value of assets					596						8						14
Present value of schemes’ liabilities					683						124						23
Deficit					(87	)					(116	)*					(9	)
Post-retirement healthcare					(11	)					—						(10	)
					(98	)					(116	)					(19	)
Related deferred tax asset					—						9						8
Net pension liability					(98	)					(107	)					(11	)

---

*

As disclosed above, in Germany the Readymix AG group of companies holds total provisions of £96.9 million (2003: £96.9 million; 2002: £94.8 million) against the pension liabilities, in line with normal practice. The related deferred tax for Germany has been calculated on the difference between the deficit under FRS 17 and the book reserves held locally. These book reserves are calculated in accordance with the advice of an independent qualified actuary and are believed to be sufficient to meet the pension liabilities in this country.

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2003
		UK						Germany						USA
		Long-term rate of return expected at 31 Dec 2003			Value at 31 Dec 2003 £m			Long-term rate of return expected at 31 Dec 2003			Value at 31 Dec 2003 £m			Long-term rate of return expected at 31 Dec 2003			Value at 31 Dec 2003 £m
Equities—Domestic		7.25	%		160			—			—			9.80	%		7
Equities—Overseas		7.50	%		162			—			—			10.50	%		1
Bonds—Fixed interest		5.00	%		141			—			—			4.70	%		5
Bonds—Index-linked		4.50	%		34			—			—			—			—
Other		6.75	%		37			5.50	%		8			—			—
Total market value of assets					534						8						13
Present value of schemes’ liabilities					627						117						23
Deficit					(93	)					(109	)*					(10	)
Post-retirement healthcare					(10	)					—						(11	)
					(103	)					(109	)					(21	)
Related deferred tax asset					28						6						8
Net pension liability					(75	)					(103	)					(13	)

 

		2002
		UK						Germany						USA
		Long-term rate of return expected at 31 Dec 2002			Value at 31 Dec 2002 £m			Long-term rate of return expected at 31 Dec 2002			Value at 31 Dec 2002 £m			Long-term rate of return expected at 31 Dec 2002			Value at 31 Dec 2002 £m
Equities—Domestic		7.75	%		197			—			—			8.75	%		8
Equities—Overseas		8.00	%		114			—			—			—			—
Bonds—Fixed interest		5.00	%		104			—			—			5.50	%		4
Bonds—Index-linked		4.50	%		49			—			—			—			—
Other		7.00	%		19			5.75	%		16			—			—
Total market value of assets					483						16						12
Present value of schemes’ liabilities					567						122						23
Deficit					(84	)					(106	)*					(11	)
Post-retirement healthcare					(9	)					—						(12	)
					(93	)					(106	)					(23	)
Related deferred tax asset					28						4						9
Net pension liability					(65	)					(102	)					(14	)

---

*

As disclosed above, in Germany the Readymix AG group of companies holds total provisions of £96.9 million (2003: £96.9 million; 2002: £94.8 million) against the pension liabilities, in line with normal practice. The related deferred tax for Germany has been calculated on the difference between the deficit under FRS 17 and the book reserves held locally. These book reserves are calculated in accordance with the advice of an independent qualified actuary and are believed to be sufficient to meet the pension liabilities in this country.

 

29

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

If FRS 17 had been adopted in the financial statements, the Group’s net assets and profit and loss account (after excluding the effect of SSAP 24 on the main defined benefit retirement plans) at 31 December 2004 would have been as follows:

 

		2004 £m			2003 £m
Net assets excluding SSAP 24 pension and post-retirement healthcare liabilities		1,636.4			1,798.6
FRS 17 pension and post-retirement healthcare liabilities		(216.0	)		(191.0	)
Net assets including FRS 17 pension and post-retirement healthcare liabilities		1,420.4			1,607.6
Profit and loss account excluding SSAP 24 pension and post-retirement healthcare liabilities		765.3			925.6
FRS 17 pension and post-retirement healthcare liabilities		(216.0	)		(191.0	)
Profit and loss account including FRS 17 pension and post-retirement healthcare liabilities		549.3			734.6

 

Had FRS 17 been adopted, the amounts included in the performance statements in relation to the main defined benefit retirement and healthcare plans would have been as follows:

 

		2004
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
Current service cost		(0.1	)		(19.0	)		(1.6	)		(0.3	)		(0.9	)
Past service cost		—			(0.2	)		—			—			—
Total operating charge		(0.1	)		(19.2	)		(1.6	)		(0.3	)		(0.9	)
Expected return on assets		—			35.5			0.5			—			1.0
Interest on liabilities		(0.5	)		(34.4	)		(6.1	)		(0.6	)		(1.4	)
Net return included in other financial income		(0.5	)		1.1			(5.6	)		(0.6	)		(0.4	)
Total charge for profit and loss account		(0.6	)		(18.1	)		(7.2	)		(0.9	)		(1.3	)
Actual return less expected return on assets		—			23.9			(0.7	)		—			0.2
Experience gains and (losses) arising on liabilities		(0.1	)		(6.2	)		0.3			0.5			(0.3	)
Changes in assumptions		(0.3	)		(21.2	)		(5.9	)		0.8			(0.5	)
Actuarial gain/(loss) included in the statement of total recognised gains and losses		(0.4	)		(3.5	)		(6.3	)		1.3			(0.6	)

 

30

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2003
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
Current service cost		(0.1	)		(20.1	)		(1.6	)		(0.3	)		(0.8	)
Past service cost		—			(0.7	)		—			—			—
Total operating charge		(0.1	)		(20.8	)		(1.6	)		(0.3	)		(0.8	)
Expected return on assets		—			32.2			1.0			—			0.9
Interest on liabilities		(0.5	)		(31.1	)		(6.7	)		(0.7	)		(1.4	)
Net return included in other financial income		(0.5	)		1.1			(5.7	)		(0.7	)		(0.5	)
Total charge for profit and loss account		(0.6	)		(19.7	)		(7.3	)		(1.0	)		(1.3	)
Actual return less expected return on assets		—			23.2			(2.6	)		–			1.3
Experience gains and (losses) arising on liabilities		(0.2	)		(9.9	)		13.0			0.5			1.3
Changes in assumptions		(0.9	)		(9.3	)		2.3			(0.6	)		(2.8	)
Actuarial gain/(loss) included in the statement of total recognised gains and losses		(1.1	)		4.0			12.7			(0.1	)		(0.2	)

 

		2002
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
Current service cost		(0.1	)		(17.6	)		(2.1	)		(0.3	)		(0.7	)
Past service cost		—			(0.2	)		—			—			—
Total operating charge		(0.1	)		(17.8	)		(2.1	)		(0.3	)		(0.7	)
Expected return on assets		—			41.9			0.9			—			1.2
Interest on liabilities		(0.5	)		(31.5	)		(7.2	)		(0.7	)		(1.5	)
Net return included in other financial income		(0.5	)		10.4			(6.3	)		(0.7	)		(0.3	)
Total charge for profit and loss account		(0.6	)		(7.4	)		(8.4	)		(1.0	)		(1.0	)
Actual return less expected return on assets		—			(114.3	)		(1.1	)		—			(3.7	)
Experience gains and (losses) arising on liabilities		—			—			1.2			—			(0.6	)
Changes in assumptions		—			(2.0	)		(4.1	)		(0.9	)		(1.5	)
Actuarial gain/(loss) included in the statement of total recognised gains and losses		—			(116.3	)		(4.0	)		(0.9	)		(5.8	)

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2004
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
The movement in the deficit during the year arose as follows:
Deficit at 1 January 2004		(10.1	)		(93.2	)		(109.4	)		(11.3	)		(9.9	)
Translation adjustment		—			—			(1.0	)		0.9			0.7
Current service cost		(0.1	)		(19.0	)		(1.6	)		(0.3	)		(0.9	)
Contributions		0.3			28.5			7.9			0.4			2.2
Past service costs		—			(0.2	)		—			—			—
Curtailment cost*		—			(0.4	)		—			—			—
Other financial income/(charge)		(0.5	)		1.1			(5.6	)		(0.7	)		(0.4	)
Actuarial gain/(loss)		(0.4	)		(3.5	)		(6.3	)		1.3			(0.6	)
Deficit at 31 December 2004		(10.8	)		(86.7	)		(116.0	)		(9.7	)		(8.9	)

 

		2003
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
The movement in the deficit during the year arose as follows:
Deficit at 1 January 2003		(8.7	)		(83.8	)		(105.6	)		(11.7	)		(10.5	)
Correction to plan assets at 1 January 2003**		—			—			(7.7	)		—			—
Translation adjustment		—			—			(8.0	)		1.2			1.2
Current service cost		(0.1	)		(20.1	)		(1.6	)		(0.3	)		(0.8	)
Contributions		0.3			7.4			6.5			0.3			0.9
Past service costs		—			(0.7	)		—			—			—
Settlement gain*		—			0.3			—			—			—
Curtailment cost*		—			(1.4	)		—			—			—
Other financial income/(charge)		(0.5	)		1.1			(5.7	)		(0.7	)		(0.5	)
Actuarial gain/(loss)		(1.1	)		4.0			12.7			(0.1	)		(0.2	)
Deficit at 31 December 2003		(10.1	)		(93.2	)		(109.4	)		(11.3	)		(9.9	)

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2002
		UK post- retirement healthcare £m			UK pension £m			Germany pension £m			USA post- retirement healthcare £m			USA pension £m
The movement in the deficit during the year arose as follows:
Surplus/(deficit) at 1 January 2002		(8.4	)		34.0			(117.8	)		(11.2	)		(5.0	)
Translation adjustment		—			—			(6.9	)		1.1			0.8
Current service cost		(0.1	)		(17.6	)		(2.1	)		(0.3	)		(0.7	)
Contributions		0.3			5.9			3.6			0.3			0.5
Past service costs		—			(0.2	)		—			—			—
Group undertakings sold*		—			—			27.9			—			—
Other financial income/(charge)		(0.5	)		10.4			(6.3	)		(0.7	)		(0.3	)
Actuarial loss		—			(116.3	)		(4.0	)		(0.9	)		(5.8	)
Deficit at 31 December 2002		(8.7	)		(83.8	)		(105.6	)		(11.7	)		(10.5	)

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*

During 2004 the curtailment cost in the UK arises from the early retirement of one employee. During 2003 the Group disposed of Hales Waste Control in Great Britain. Certain employees have agreed to transfer their benefits in the RMC funds to those of the purchaser under the terms of the sale agreement. This has resulted in a settlement gain of £0.3 million. Also in Great Britain, a number of redundancies took place towards the end of 2003. This has resulted in a net curtailment cost of £1.4 million. As these items have been treated as non-operating and operating exceptional items respectively, they have not been included in the operating charge under FRS 17 in Note 9(e). In 2002 the Group disposed of an entity in Germany. As this item was treated as a non-operating exceptional, it has not been included in the operating charge under FRS 17 in Note 9(e).

**

The correction to plan assets in Germany arises because the value of the insurance policy that relates to employees covered by a defined contribution benefit, which was included in the previous year, has now been excluded.

 

		2004
		UK post- retirement healthcare			UK pension			Germany pension			USA post- retirement healthcare			USA pension
The experience gains and (losses) were as follows:
Difference between the expected and actual return on assets
—amount (£m)		—			23.9			(0.7	)		—			0.2
—percentage of assets		—			4.0	%		10.0	%		—			1.1	%
Experience gains and (losses) on liabilities
—amount (£m)		(0.1	)		(6.2	)		0.3			0.5			(0.3	)
—percentage of the present value of liabilities		0.9	%		0.9	%		0.3	%		4.3	%		1.3	%
Effect of change in assumptions underlying the present value of liabilities
—amount (£m)		(0.3	)		(21.2	)		(5.9	)		0.8			(0.5	)
—percentage of the present value of liabilities		2.8	%		3.1	%		5.1	%		8.2	%		2.1	%
Total amount included in the Statement of total recognised gains and (losses)
—amount (£m)		(0.4	)		(3.5	)		(6.3	)		1.3			(0.6	)
—percentage of the present value of liabilities		3.7	%		0.5	%		5.3	%		12.2	%		2.5	%

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

		2003
		UK post- retirement healthcare			UK pension			Germany pension			USA post- retirement healthcare			USA pension
The experience gains and (losses) were as follows:
Difference between the expected and actual return on assets
—amount (£m)		—			23.2			(2.6	)		—			1.3
—percentage of assets		—			4.3	%		32.5	%		—			9.0	%
Experience gains and (losses) on liabilities
—amount (£m)		(0.2	)		(9.9	)		13.0			0.5			1.3
—percentage of the present value of liabilities		2.0	%		1.6	%		11.3	%		4.0	%		5.3	%
Effect of change in assumptions underlying the present value of liabilities
—amount (£m)		(0.9	)		(9.3	)		2.3			(0.6	)		(2.8	)
—percentage of the present value of liabilities		8.9	%		1.5	%		2.0	%		5.0	%		11.1	%
Total amount included in the Statement of total recognised gains and (losses)
—amount (£m)		(1.1	)		4.0			12.7			(0.1	)		(0.2	)
—percentage of the present value of liabilities		10.9	%		0.7	%		10.9	%		1.0	%		0.7	%

 

		2002
		UK post- retirement healthcare		UK pension			Germany pension			USA post- retirement healthcare			USA pension
The experience gains and losses were as follows:
Difference between the expected and actual return on assets
—amount (£m)		—		(114.3	)		(1.1	)		—			(3.7	)
—percentage of assets		—		23.7	%		6.9	%		—			30.8	%
Experience gains and (losses) on liabilities
—amount (£m)		—		—			1.2			—			(0.6	)
—percentage of the present value of liabilities		—		—			1.0	%		—			2.6	%
Effect of change in assumptions underlying the present value of liabilities
—amount (£m)		—		(2.0	)		(4.1	)		(0.9	)		(1.5	)
—percentage of the present value of liabilities		—		0.3	%		3.4	%		7.5	%		6.5	%
Total amount included in the Statement of total recognised gains and losses
—amount (£m)		—		(116.3	)		(4.0	)		(0.9	)		(5.8	)
—percentage of the present value of liabilities		—		20.5	%		3.3	%		7.5	%		25.2	%

The Directors are aware of the differences in the main pension scheme valuations as disclosed under FRS 17 and SSAP 24.

 

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NOTES TO THE FINANCIAL STATEMENTS—(Continued)

 

10

Goodwill

 

a) Capitalised goodwill on acquisitions arising from 1 January 1998

 

		2004 £m			2003 £m
Cost:
At 1 January		549.1			667.9
Currency translation		22.2			2.7
Additions		16.3			38.4
Disposals		(0.3	)		(0.1	)
Disposals of Group undertakings		(0.3	)		(122.6	)
Transfers to investments—Australia		—			(37.2	)
At 31 December		587.0			549.1

 

		2004 £m			2003 £m
Amortisation:
At 1 January		(182.0	)		(105.2	)
Currency translation		(6.2	)		(1.7	)
Charge to profit and loss account		(23.5	)		(35.0	)
Impairment charge		(173.7	)		(68.7