IFRS hammers housebuilder

George Wimpey’s net assets have fallen by £107.7m, after the FTSE250
homebuilder restated its 2004 accounts to comply with international financial
reporting standards.

George Wimpey said the fall in assets from £1.3bn would increase gearing from
36.8% to 39.1%.

The main cause of the drop was due to new accounting for pensions, which
required the company to take the deficit of its defined-benefit scheme onto the
balance sheet.

Speaking to Accountancy Age, George Wimpey’s group finance director Andrew
Carr-Locke said the increase in the gearing ratio was not of concern and would
have no impact on the group’s banking arrangements.

‘The increase in gearing is not significant, but like other companies we have
maintained our banking arrangements on existing UK GAAP to avoid uncertainty,’
Carr-Locke said.

The new pension accounting also reduced pre-tax profits and earnings per
share by approximately 3%, but the group emphasised that changes had no effect
on cashflows or the underlying value of the business.

‘The move to IFRS does not impact group strategy or commercial decisions, nor
does it change the cashflows of the group,’ George Wimpey said in its IFRS
briefing.