IFRS Update
Kingspan Group PLC
12 July 2005
FOR IMMEDIATE RELEASE 12 July 2005
Kingspan Group plc
IFRS UPDATE
Kingspan Group plc, today announces the impact of the transition to
International Financial Reporting Standards (IFRS) on its opening balance sheet
at 1 January 2004 and on its 2004 results previously prepared in accordance with
accounting practice generally accepted in the Republic of Ireland (GAAP). The
Group's financial statements for the six months ended 30 June 2005 and for the
year ended 31 December 2005 will be prepared under IFRS.
The impact on the audited full year 2004 key financial data is summarised as
follows:
Irish GAAP Comments on principal
IFRS IFRS changes
€mn €mn
Revenue 958.1 958.1
Operating Profit (before goodwill Option costs and defined benefit
amortisation) pension schemes
102.2 103.3
Net Profit before tax 88.0 96.4 Non-amortisation of goodwill
Shareholders' Funds 302.2 304.6
Net debt 107.6 108.1 Inclusion of redeemable Preference
shares
euro cent euro cent
Earnings per share
Basic 42.3 47.1 Non-amortisation of goodwill
Excluding Irish GAAP goodwill 47.0 47.1
amortisation
INTRODUCTION
The Group currently prepares its primary financial statements under Irish GAAP
which are consistent with UK GAAP. From 2005 onwards the Group will be required
to prepare its consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union. This change applies to all financial reporting for accounting periods
beginning on or after 1 January 2005 and consequently, the Group's first
published IFRS results will be its interim results for the half year ended 30
June 2005. The Group's first Annual Report under IFRS will be for the year
ending 31 December 2005. The date for transition to IFRS is 1 January 2004,
which is the start of the earliest period of comparative information.
The financial information in this statement has been prepared in accordance with
IFRS. The financial information for the opening balance sheet at 1 January 2004
and for the full year ended 31 December 2004 has been audited by Grant Thornton.
In order to explain how the Group's reported performance and financial position
are affected by this change, selected information previously published under
Irish GAAP is restated under IFRS in the appendices as follows:
- Appendix 1 Independent auditors' report to the Directors of
Kingspan Group plc on the preliminary IFRS consolidated financial statements for
the year ended 31 December 2004.
- Appendix 2 Group Income Statement, Group Statement of
Recognised
Income and Expense for the year end 31 December
2004 and Group Balance Sheet as at that date, together with reconciliations of
profit and equity from Irish GAAP to IFRS.
- Appendix 3 Unaudited Group Income Statement, Group Statement
of Recognised Income and Expense for the six months ended 30 June 2004 and
Group Balance Sheet as at that date, together with reconciliations of profit and
equity from Irish GAAP to IFRS.
- Appendix 4 Adjustments required to the Irish GAAP Group
Balance Sheet at the transition date of 1 January 2004 for compliance with IFRS.
- Appendix 5 Restatement under IFRS of selected segmental
information published in the 2004 Interim and Annual Reports.
- Appendix 6 Accounting policies under IFRS.
These financial statements have been prepared on the basis of the IFRS expected
to be applicable at 31 December 2005 and the interpretation of those standards.
IFRS are subject to ongoing review and endorsement by the EU or possible
amendment by interpretative guidance from the IASB and are therefore still
subject to change. These financial statements may, therefore, require amendment
before their inclusion in the IFRS statements for the 12 months to 31 December
2005.
1. IMPACT OF TRANSITION TO IFRS IN OVERVIEW
The standards which give rise to the most significant changes to the
consolidated results of the Group on the transition to IFRS are:
IAS 19 Recognition of defined benefit pension scheme assets and liabilities
IFRS 2 Expensing of share-based payments at fair value
IFRS 3/ IAS 38 Non-amortisation of goodwill; intangible assets on business combinations
IAS 10 Events after the Balance Sheet date
IAS 32/ IAS 39 Recognition and measurement of financial instruments - derivatives carried at fair
value; classification of hedges
IAS 12 Income Taxes
IAS 20 Accounting for Government Grants
The impact of the transition to IFRS on the Group financial statements is
summarised as follows:
euro millions Full-year 2004* Interim 2004
(Unaudited)
Irish GAAP IFRS Irish GAAP IFRS
Group Income Statement
Revenue 958.1 958.1 439.4 439.4
Operating profit (EBITA) 102.2 103.3 44.4 43.6
Profit before tax (PBT) 88.0 96.4 37.6 40.4
Profit after tax 70.0 78.0 29.5 32.5
Tax rate (as a % of EBITA) 17.6% 17.8% 18.2% 18.1%
Basic EPS (euro cent) 42.3 47.1 17.8 19.6
EPS (Excluding Irish GAAP goodwill 47.0 47.1 20.2 19.6
amortisation)
Group Balance Sheet
Total assets 713.8 722.5 681.4 685.0
Total liabilities 411.6 417.9 392.5 402.3
________ ________ ________ _______
Total equity 302.2 304.6 288.9 282.7
________ ________ ________ _______
Net debt 107.6 108.1 116.2 116.7
Reconciliation of net debt Year-end 30 June
2004 2004
As reported under Irish GAAP 107.6 116.2
Reclassification from minority interest
of redeemable preference shares
0.5 0.5
Restated under IFRS 108.1 116.7
* Extracted from audited consolidated financial statements for year ended 31
December 2004
The tables set out below provide a reconciliation of the changes to net profit
before tax and shareholders' funds arising from the implementation to IFRS:
NET PROFIT BEFORE TAX RECONCILIATION Full Year Interim
2004 2004
€mn €mn
Irish GAAP 88.0 37.6
Defined benefit pension charge/ credit 2.3 (0.2)
Share based Payment (1.8) (0.9)
Goodwill amortisation 7.9 3.9
IFRS 96.4 40.4
SHAREHOLDERS' FUND RECONCILIATION Full Year Interim
2004 2004
€mn €mn
Irish GAAP 302.2 288.9
Defined benefit pension deficit (15.9) (14.9)
Share based Payment 0.4 0.2
Goodwill amortisation 7.9 3.9
Final dividend accrual 10.3 5.6
Others (0.3) (1.0)
IFRS 304.6 282.7
2. BASIS OF PREPARATION
The financial information has been prepared in accordance with IFRS and the
accounting policies applied in Appendix 6 and assumes that all IFRS, including
the interpretation of those standards, issued by the International Accounting
Standards Board (IASB) effective for 2005 reporting will be endorsed by the
European Commission.
Grant Thornton have audited the financial information for the opening balance
sheet at 1 January 2004 and for the full year ended 31 December 2004. Their
audit report to the Group is set out in Appendix 1. The information for the
half year ended 30 June 2004 is unaudited. Subject to EU endorsement of
unapproved standards and no further changes from the IASB, this information is
expected to form the basis for comparatives when reporting financial results for
2005, and for subsequent reporting periods.
3. PRINCIPAL EXEMPTIONS AVAILED OF ON TRANSITION TO IFRS
Exemptions under IFRS 1 First-time Adoption of International Financial Reporting
Standards
The rules for first time adoption of IFRS are set out in IFRS 1 First-time
Adoption of International Financial Reporting Standards. In general a company
is required to determine its IFRS accounting policies and apply these
retrospectively to determine its opening balance sheet under IFRS. The standard
allows a number of exceptions to this general principle to assist companies as
they change to reporting under IFRS.
In common with the majority of listed companies, Kingspan has availed of a
number of specified exemptions from the general principle of retrospective
restatement as follows:
• Business combinations undertaken prior to the transition
date of 1 January 2004 have not been subject to restatement; accordingly,
goodwill as at the transition date is carried forward at its net book value and
together with goodwill arising on business combinations subsequent to the
transition date, is subject to annual impairment testing in accordance with IAS
36 Impairment of Assets. As required under IFRS 1, goodwill was assessed for
impairment as at the transition date and no impairment resulted from this
exercise.
• The fixed asset revaluation performed as at 31 December
1980 and referred to in note 11 to the financial statements in the 2004 Annual
Report has been regarded as deemed cost and therefore remains unadjusted on
transition to IFRS.
• The cumulative actuarial gains and losses applicable to
the Group's defined benefit pension schemes at the transition date have been
recognised in full in the Transition Balance Sheet and adjusted against retained
income.
• IFRS requires that on disposal of a foreign operation,
the cumulative amount of currency translation differences be transferred to the
income statement as part of the profit or loss on disposal. Kingspan has deemed
the cumulative currency translation difference applicable to foreign operations
to be zero as at the transition date.
• As a result of the exemptions described above, financial
results and summarised historical financial information previously published for
the Group for periods prior to 2004 will not be stated under IFRS.
Other options availed of on transition
• In compliance with the transitional arrangements set out
in IFRS 2 Share-based Payment, this standard has been applied in respect of
share options granted after 7 November 2002.
• The Group has opted to pursue early implementation of the
financial instruments standards (IAS 32 and IAS 39) with effect from the
transition date taking account of the prohibition on the fair valuation of
financial liabilities imposed by the version of IAS 39 approved by the European
Commission. Given the delay encountered in securing European Commission
approval, the effective date of the revised versions of IAS 32 and IAS 39 is 1
January 2005.
• On the introduction of FRS 17 Retirement Benefits in 2001,
Kingspan, together with the majority of publicly-listed entities, elected to
continue to account for its pension obligations under SSAP 24 Accounting for
Pension Costs and to disclose the impact of FRS 17 in the notes to the financial
statements. IAS 19 Employee Benefits requires immediate recognition of
actuarial gains and losses on defined benefit pension schemes in the Statement
of Recognised Income and Expense. The interest cost associated with pension
scheme liabilities under IFRS, together with the expected return on pension
scheme assets, are included within net finance costs on the face of the Income
Statement. Current service costs and any past service items stemming from
benefit enhancements or curtailments are dealt with as components of operating
costs.
4. PRINCIPAL CHANGES ON TRANSITION TO IFRS
(1) IAS 19 Employee Benefits (Defined Pension Benefit Schemes)
The Group has a number of legacy defined benefit schemes in the UK. All of these
schemes have been closed and the liability relates only to past service. Under
GAAP, differences between funding contributions and the amounts charged to the
income statement were treated as either prepayments or accruals in the balance
sheet, and pension costs were spread over the working lifetime of active
members. In accordance with IAS 19, the assets and liabilities of the defined
benefit pension schemes have been capitalised gross of deferred tax on the face
of the balance sheet within employee benefit obligations. Deferred tax has been
computed in respect of the various defined benefit pension schemes and the
related deferred tax assets and liabilities are included in the restatements at
the various balance sheet dates.
In accordance with the exemptions afforded by IFRS 1, the Group has elected to
recognise all cumulative actuarial gains and losses attributable to its defined
benefit pension schemes as at the transition date. The alternative of
retrospective application of the corridor methodology under IAS 19 has not been
availed of by the Group. In addition, in line with the Amendment to IAS 19 and
Irish GAAP, actuarial gains and losses arising after the transition date are
dealt with in retained income via the Statement of Recognised Income and
Expense.
Under IFRS, the pension deficit at the period end is recognised as a liability
in the balance sheet of the Group. The impact of the change in accounting for
the pension deficit is a €2.3 million increase in profit before tax and a
reduction in shareholders' funds of €15.9 million for the full year 2004.
Interest expenses related to pension obligations and returns on pension assets
are charged to the income statement under IFRS.
The impact of IAS 19 on Kingspan is summarised as follows:
euro millions Transition H1 2004 FY 2004
Income Statement
Operating costs 0.1 2.9
Finance costs (0.3) (0.6)
(Decrease)/ increase in profit before tax (0.2) 2.3
Tax charge - (0.7)
Net impact - (decrease)/ increase in profit after tax (0.2) 1.6
Balance Sheet
Deferred income tax asset /(liability) 5.2 6.4 6.8
Employee benefits obligations (17.2) (21.3) (22.7)
Total liabilities (12.0) (14.9) (15.9)
Total assets less total liabilities (12.0) (14.9) (15.9)
Other reserves (2.7) (5.4)
Retained income (12.0) (12.2) (10.5)
Total equity (12.0) (14.9) (15.9)
(2) IFRS 2 Share - based Payment
Under IFRS 2, the fair value of share-based payments is expensed to the Income
Statement on a straight line basis. In accordance with IFRS, the fair value
calculations have only been applied in respect of share based payment
transactions granted after 7 November 2002. An expense of €1.8 million has been
recognised in respect of the year ended 31 December 2004 (€0.9 million for the
six-month period ended 30 June 2004).
A deferred tax asset has been recognised in the balance sheet on the deductible
temporary differences arising in respect of share options based on the
difference between the share price as at the balance sheet date and the exercise
price of the relevant outstanding options.
As at 30 June 2004, the deferred tax asset amounted to €0.2 million and
increased thereafter to €0.4 million as at 31 December 2004.
The fair value of the share options has been arrived at using a recognised
valuation methodology for the pricing of financial instruments (i.e. the
trinomial model). The following are the inputs used in determining the fair
value of share options:
• The exercise price; the market price of Kingspan's shares
as at the grant date.
• Time to maturity; the expected life of the option.
• Expected volatility; future volatility was determined by
analysing historic volatility of quoted companies on the Irish and other Stock
Exchanges, including analysis of the volatility of Kingspan's shares, and
disclosures regarding volatility by US-listed companies made as part of filings
with the US Securities and Exchange Commission.
• The expected dividend yield on Kingspan's Ordinary Shares.
• The first exercise date; options granted under each grant
will not be capable of exercise less than three years and more than ten years
after the grant date.
• The risk free interest rate; this rate is based on the
yield to maturity of an Irish Government Bond with a life similar to that of the
options.
• Expected dividend payments.
The impact of IFRS 2 on Kingspan is summarised as follows:
euro millions Transition H1 2004 FY 2004
Income Statement
Operating costs - share options expense (0.9) (1.8)
Tax charge 0.2 0.3
Net impact - decrease in profit after tax (0.7) (1.5)
Balance Sheet
Deferred income tax asset/ (liability) - 0.2 0.4
Total liabilities - 0.2 0.4
Total assets less total liabilities - 0.2 0.4
Other reserves 0.1 1.0 1.9
Retained income (0.1) (0.8) (1.5)
Total equity 0.0 0.2 0.4
(3) IFRS 3 Business Combinations / IAS 38 Intangible Assets
As noted above the Group has availed of the exemption under IFRS enabling
non-restatement of business combinations prior to the transition date of 1
January 2004.
Under IFRS, goodwill is not amortised but is subject to an annual impairment
test. Therefore goodwill of €7.9 million has been credited to the full year
2004 Group Income Statement (€3.9 million for the interim period) as restated
under IFRS.
The impact of IAS 38 on Kingspan is summarised in the following table:
euro millions Transition H1 2004 FY 2004
Income Statement
Total goodwill amortisation add-back - 3.9 7.9
Net impact - increase in profit after tax - 3.9 7.9
Balance Sheet
Intangible assets - 3.9 7.9
Total assets - 3.9 7.9
Retained income - 3.9 7.9
Total equity - 3.9 7.9
(4) IAS 10 Events After the Balance Sheet date (Dividend Liability Recognition)
Under IAS 10, Events After the Balance Sheet date, it is no longer acceptable to
recognise a dividend declared and approved after the balance sheet date. The
final dividend for 2004 was declared in March 2005 and was subject to approval
by shareholders in May 2005 and accordingly the dividend provision has been
reversed as at 31 December 2004 and will be accounted for as a charge to the
Income Statement in 2005.
The impact of this change in accounting policy on retained income is an increase
of €7.6 million at the transition date, €5.6 million at 30 June 2004 and €10.3
million at 31 December 2004.
(5) IAS 32 Financial Instruments; Disclosure and Presentation/ IAS 39 Financial
Instruments; Recognition and Measurement
The Group uses financial instruments throughout its businesses. Borrowings,
cash, cash equivalents and short-dated deposits are used to finance the Group's
operations. Trade debtors and trade creditors arise directly from operations.
Derivatives, principally interest rate and currency swaps and forward foreign
exchange contracts, are used to manage interest rate risks and currency
exposures and to achieve the desired profile of borrowings.
The transition to IAS 39, which governs the recognition and measurement of
financial instruments under IFRS, requires that financial instruments are
recorded initially at fair value with subsequent measurement either at fair
value or amortised cost dependent on the nature of the financial asset or
financial liability. Under IAS 39, derivatives are always measured at fair value
('market-to-market'). Irish GAAP focused on disclosure, rather than the
recognition of financial instrument exposures.
As highlighted in the qualifications section above, the financial instruments
framework under IFRS has not been finalised at the date of issue of this
announcement. The accompanying restatements have been undertaken based on the
version of IAS 39 approved by the European Commission which prohibits the fair
valuation of financial liabilities.
The Group has elected to pursue early adoption of both IAS 39 and IAS 32 with
effect from the transition date. Whilst the application of IAS 32 has no direct
impact on this announcement, given its focus on disclosures and presentations,
early application of this standard implies that the 2005 Annual Report will
contain full disclosures for the comparative period.
The impact of application of IAS 32 and IAS 39 on the restated Group Income
Statement and Balance Sheet may be summarised as follows:
• Under IAS 32 and as disclosed in the Transition Balance
Sheet in Appendix 4, €0.5 million of redeemable preference shares has been
reclassified from minority interest into current interest-bearing loans and
borrowings and €0.3 million of accrued dividends has been reclassified from
minority interest into trade and other payables.
• Under IAS 32, €3.8 million of deferred consideration has
been reclassified from deferred consideration into non-current interest-bearing
loans and borrowings at the transition date (€3.6 million and €3.3 million as at
30 June 2004 and 31 December 2004 respectively).
• Unrealised losses on interest rates swaps are recognised
under IAS 39 but were not recognised under Irish GAAP. The net impact on the
hedging reserve in the restated Balance Sheet is (€0.1) million at the
transition date, (€0.8) million at 30 June 2004 and (€0.1) million at 31
December 2004.
As discussed in more detail in the accounting policies provided in Appendix 6,
the following classifications have been adopted in respect of the financial
instruments employed by Kingspan:
• Derivative financial instruments are measured at fair value
in all cases with hedge accounting employed in respect of those derivatives
fulfilling the stringent requirements for hedge accounting laid down in IAS 39;
in general, these criteria relate to the documentation of the hedging
relationship, upfront designation of such in accordance with the subsequent
paragraph and the expectation that the hedge will be highly effective throughout
its life from inception. Where the criteria enabling the employment of hedge
accounting are not satisfied, movements in the related derivatives are reported
in the Group Income Statement either in operating costs or net finance costs as
appropriate.
• In applying hedge accounting, IAS 39 identifies three
categories of hedges - fair value hedges, cash flow and net investment. In the
case of fair value hedges, movements in fair value between the hedged item and
the hedging instrument are dealt with through the income statement with any
measure of ineffectiveness being reflected either as a debit or a credit. Where
hedging instruments are classified as cash flow or net investment hedges,
movements in fair value are accounted for through equity and released to the
income statement over time as changes in the hedged cash flow are recognised.
Ineffectiveness on fair value, cash flow and net investment hedges is reflected
in the income statement.
The impact of the application of IAS 32 can be summarised as follows:
euro millions Transition H1 2004 FY 2004
Balance Sheet
Trade and other payables 0.3 0.3 0.3
Interest bearing loans - current 0.5 0.5 0.5
Interest bearing loans - non current 3.8 3.6 3.3
Deferred consideration (3.8) (3.6) (3.3)
Minority interest (0.8) (0.8) (0.8)
Total liabilities - - -
Reconciliation of net debt
As reported under Irish GAAP 116.2 107.6
Reclassification from minority interest - redeemable
preference shares
0.5 0.5
Restated under IFRS 116.7 108.1
The impact of the application of IAS 39 can be summarised as follows:
euro millions Transition H1 2004 FY 2004
Balance Sheet
Trade and other receivables - 0.1
Total assets - 0.1
Trade and other payables (0.2) (1.1) (0.2)
Deferred income tax asset 0.1 0.3 -
Total liabilities (0.1) (0.8) (0.2)
Total assets less total liabilities (0.1) (0.8) (0.1)
Hedging reserve (0.1) (0.8) (0.1)
Total equity (0.1) (0.8) (0.1)
(6) IAS 12 Income Taxes
IAS 12, Income Taxes, requires that deferred tax be accounted for on the basis
of temporary differences rather than timing differences which form the basis of
the equivalent standard under Irish GAAP. The requirements of IAS 12 have been
retrospectively applied in the attached restatement of Kingspan's results with
the cumulative adjustment as at the transition date reflected in the Transition
Balance Sheet.
The adjustments made to deferred tax assets and liabilities on transition to
IFRS principally relate to the following issues:
• Under Irish GAAP (FRS 19 Deferred Tax), deferred tax was
not provided for on fair value asset uplifts in business combinations if these
uplifts did not give rise to timing differences between the tax base and the
book value of the revalued assets. The recognition under IAS of deferred tax
liabilities on the differences arising from such revaluations is the principal
reason underlying adjustments of €0.2 million as at the transition date, as at
30 June 2004 and as at 31 December 2004.
• Due to the focus of IAS 12 on temporary differences and the
fact that provisions may be discounted under IFRS, deferred tax assets arise
which have previously not been recognised under Irish GAAP mainly in respect of
the defined benefit pension schemes and share based payments as noted in note
(1) and (2) above.
In addition to the provisions of IAS described above, IAS 1 Presentation of
Financial Statements requires separate disclosure of deferred tax assets and
liabilities on the face of the balance sheet. The Group's restated Balance
Sheets at the transition date and as at
30 June 2004 and 31 December 2004 therefore contain reclassifications of amounts
previously netted within the overall Group deferred tax liability; these amounts
were €2.6 million, €0.7 million and €1.6 million as at the respective balance
sheet dates.
The impact of IAS 12 on Kingspan is summarised as follows:
euro millions Transition H1 2004 FY 2004
Balance Sheet
Deferred income tax asset
- Reclassification from deferred tax liabilities 2.6 0.7 1.6
Total assets 2.6 0.7 1.6
Deferred income tax liabilities
- Reclassification to deferred tax assets (2.6) (0.7) (1.6)
- On revaluation of assets (0.2) (0.2) (0.2)
Total liabilities (2.8) (0.9) (1.8)
Total assets less total liabilities (0.2) (0.2) (0.2)
Revaluation reserve (0.2) (0.2) (0.2)
Total equity (0.2) (0.2) (0.2)
Note: the impact on deferred tax of Share based Payment (IFRS2), Employee
Benefits (IAS 19) and Financial Instruments (IAS 39) is addressed in the
individual sections dealing with these issues.
(7) IAS 20 Accounting for Government Grants and Disclosure of Government
Assistance
Under IAS 20, Accounting for Government Grants and Disclosure of Government
Assistance, capital grants have been netted off the carrying value of the asset
in the balance sheets restated in accordance with IFRS. The impact of this
change in accounting policy was to reduce assets by €1 million as at the
transition date and as at 30 June 2004 and by €0.9 million as at 31 December
2004 as summarised in the following table:
euro millions Transition H1 2004 FY 2004
Balance Sheet
Property, plant and equipment (1.0) (1.0) (0.9)
Total assets (1.0) (1.0) (0.9)
Capital Grants 1.0 1.0 0.9
Total liabilities 1.0 1.0 0.9
Total assets less total liabilities - - -
Appendix 1
Independent auditors' report to the Directors of Kingspan Group plc on the
preliminary IFRS consolidated financial statements for the year ended 31
December 2004
We have audited the accompanying preliminary International Financial Reporting
Standards ('IFRS') consolidated financial statements of Kingspan Group plc ('the
Company') for the year ended 31 December 2004 which comprise the Group Balance
Sheet as at 1 January 2004, the Group Income Statement and Group Statement of
Recognised Income and Expense for the year ended 31 December 2004, the Group
Balance Sheet as at 31 December 2004 together with the related accounting
policies under IFRS and segmental reporting set out on pages 16 to 30 and 31 to
41 respectively but excluding half year information.
This report is made solely to the Directors in accordance with our engagement
letter dated 11 November 2004. Our audit work has been undertaken so that we
might state to the Directors those matters we are required to state to them in
an auditors' report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility or liability to anyone other than
the Company for our audit work, or for the opinions we have formed.
Respective Responsibilities of the Company's Directors and Grant Thornton,
Chartered Accountants and Registered Auditors
These preliminary IFRS consolidated financial statements are the responsibility
of the Company's Directors and have been prepared as part of the Company's
conversion to IFRS. They have been prepared in accordance with the basis set out
in sections 2 and 3 to the Restatement of 2004 Results under IFRS and Appendix
6, which describe how IFRS have been applied under IFRS 1, including the
assumptions management has made about the standards and interpretations expected
to be effective, and the policies expected to be adopted, when management
prepares its first complete set of IFRS consolidated financial statements as at
31 December 2005.
Our responsibility is to express an independent opinion on the preliminary IFRS
consolidated financial statements based on our audit. We read the other
information accompanying the preliminary IFRS consolidated financial statements
and consider whether it is consistent with the preliminary IFRS consolidated
financial statements. We consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the
preliminary IFRS consolidated financial statements.
Appendix 1
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the preliminary IFRS
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the preliminary IFRS consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
preliminary IFRS consolidated financial statements. We believe that our audit
provides a reasonable basis for our opinion.
Emphasis of matter
Without qualifying our opinion, we draw attention to the fact that section 2 of
the Restatement of 2004 Results under IFRS explains why there is a possibility
that the preliminary IFRS consolidated financial statements may require
adjustment before constituting the final IFRS consolidated financial statements.
Moreover, we draw attention to the fact that, under IFRS, only a complete set of
consolidated financial statements with comparative financial information and
explanatory notes can provide a fair presentation of the Company's financial
position, results of operation and cash flows in accordance with IFRS.
We also draw attention to the fact that we have not audited the Group Balance
Sheet of the Company, the related Group Income Statement, Group Statement of
Recognised Income and Expense and related segmental information for the half
year ended 30 June 2004.
Opinion
In our opinion, the preliminary IFRS consolidated financial statements for the
year ended 31 December 2004 have been prepared, in all material respects, in
accordance with the basis set out in sections 2 and 3 to the Restatement under
IFRS and Appendix 6, which describe how IFRS have been applied under IFRS 1,
including the assumptions management has made about the standards and
interpretations expected to be effective, and the policies expected to be
adopted, when management prepares its first complete set of IFRS consolidated
financial statements as at 31 December 2005.
Grant Thornton
Chartered Accountants & Registered Auditors
24-26 City Quay
Dublin 2
11 July 2005
Appendix 2
GROUP INCOME STATEMENT
for the year ended 31 December 2004
Restated under IFRS
Audited
Continuing Acquisitions Total
Operations
2004 2004 2004
€mn €mn €mn
Revenue 952.8 5.3 958.1
Cost of sales (671.7) (4.0) (675.7)
Gross operating profit 281.1 1.3 282.4
Distribution costs (59.3) 0 (59.3)
Administrative expenses (118.8) (1.0) (119.8)
Operating profit 103.0 0.3 103.3
Finance costs (net) (6.9)
Profit before tax 96.4
Income tax expense (18.4)
Group profit after tax for the financial year 78.0
Profit attributable to:
Equity holders of the Company 78.0
Minority interest -
Group profit after tax for the financial year 78.0
Basic earnings per share 47.1 c
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE 2004
for the year ended 31 December 2004 €mn
Profit for financial year attributable to Group 78.0
shareholders
Exchange adjustments (1.9)
Cash flow hedges 0.1
Pension deficit movement (5.4)
Total recognized income and expense for the financial 70.8
year
Group Income Statement Full- Year 2004 - Reconciliation from Irish GAAP to IFRS Appendix 2
Previous Employee Share Intangible Dividends Effect of Restated
Benefits based Assets transition under
Payment
GAAP IAS 19 IFRS 2 IAS 38 IAS 10 to IFRS's IFRS
Revenue 958.1 958.1
Cost of sales (675.7) (675.7)
Gross profit 282.4 282.4
Distribution costs (59.3) (59.3)
Administrative expenses (120.9) 2.9 (1.8) 1.1 (119.8)
Finance costs (net) (6.3) (0.6) (0.6) (6.9)
Goodwill amortisation (7.9) 7.9 7.9 -
Profit before taxation 88.0 2.3 (1.8) 7.9 8.4 96.4
Tax expense (18.0) (0.7) 0.3 (0.4) (18.4)
Profit on ordinary activities 70.0 1.6 (1.5) 7.9 - 8.0 78.0
after tax
Profit attributable to:
Shareholders 70.0 8.0 78.0
Minority interest (0.0) (0.0) (0.0)
70.0 8.0 78.0
Dividends paid (5.6) (5.6)
Dividends proposed (10.3) 10.3 10.3 -
54.1 1.6 (1.5) 7.9 10.3 18.3 72.4
Appendix 2
Restated under IFRS
GROUP BALANCE SHEET as at 31 December 2004 2004
€mn
ASSETS
Non-current assets
Property, plant and equipment 210.9
Intangible assets- goodwill 110.0
Intangible assets - other 2.2
Financial assets -
Deferred income tax assets 1.6
Total non-current assets 324.7
Current assets
Trade and other receivables 220.8
Inventories 89.2
Cash and cash equivalents 87.8
Total current assets 397.8
TOTAL ASSETS 722.5
LIABILITIES
Non-current liabilities
Interest bearing loans 111.5
Deferred income tax liability 3.9
Deferred consideration 7.2
Employee benefit obligations 22.7
Minority interest 0.4
Total non-current liabilities 145.7
Current liabilities
Trade and other payables 157.2
Warranty provisions 18.4
Interest bearing loans 76.6
Current tax liability 19.4
Deferred consideration 0.6
Total current liabilities 272.2
TOTAL LIABILITIES 417.9
TOTAL ASSETS LESS TOTAL LIABILITIES 304.6
EQUITY
Issued capital 21.8
Share premium account 20.3
Revaluation reserve 0.7
Hedging reserve (0.1)
Other reserves (38.3)
Retained earnings 300.2
TOTAL EQUITY 304.6
Group Balance Sheet as at 31 December 2004 - Reconciliation from Irish GAAP to IFRS Appendix2
Previous Employee Share Based Intangible Dividends Financial
Benefits Assets Instruments
Payment (disclosure)
GAAP IAS 19 IFRS 2 IAS 38 IAS 10 IAS 32
Property, plant and 211.8
equipment
Goodwill 102.1 7.9
Intangible assets 2.2
Deferred tax asset -
Total non-current assets 316.1 - - 7.9 - -
Trade and other 220.7
receivables
Inventories 89.2
Cash and cash equivalent 87.8
Total current assets 397.7 - - - -
TOTAL ASSETS 713.8 - - 7.9 -
Interest bearing loans 108.2 3.3
Deferred tax liability 9.3 (6.8) (0.4)
Deferred consideration 10.5 (3.3)
Grants 0.9
Employee benefits and - 22.7
obligations
Minority interest 1.2 (0.8)
Total non-current 130.1 15.9 (0.4) - - (0.8)
liabilities
Trade and other payables 156.7 0.3
Warranty provisions 18.4
Interest bearing loans 76.1 0.5
Current tax liability 19.4
Dividends 10.3 (10.3)
Deferred consideration 0.6
Total current liabilities 281.5 - - - (10.3) 0.8
TOTAL LIABILITIES 411.6 15.9 (0.4) - (10.3) -
302.2 (15.9) 0.4 7.9 10.3 -
TOTAL ASSETS LESS TOTAL
LIABILITIES
Issued capital 21.8
Share premium account 20.3
Revaluation reserve 0.9
Hedging reserve -
Other reserves (34.8) (5.4) 1.9
Retained earnings 294.0 (10.5) (1.5) 7.9 10.3
TOTAL EQUITY 302.2 (15.9) 0.4 7.9 10.3 -
Group Balance Sheet as at 31 December 2004 - Reconciliation from Irish GAAP to IFRS (cont) Appendix2
Financial Deferred Deferred Grants Restated
Instruments tax revaluation tax reclass under
(recognition)
IAS 39 IAS 12 IAS 12 IAS 20 IFRS
Property, plant and (0.9) 210.9
equipment
Goodwill 110.0
Intangible assets 2.2
Deferred tax asset 1.6 1.6
Total non-current assets - - 1.6 (0.9) 324.7
Trade and other 0.1 220.8
receivables
Inventories 89.2
Cash and cash equivalent 87.8
Total current assets 0.1 - - - 397.8
TOTAL ASSETS 0.1 - 1.6 (0.9) 722.5
Interest bearing loans 111.5
Deferred tax liability 0.2 1.6 3.9
Deferred consideration 7.2
Grants (0.9) -
Employee benefits and 22.7
obligations
Minority interest 0.4
Total non-current - 0.2 1.6 (0.9) 145.7
liabilities
Trade and other payables 0.2 157.2
Warranty provisions 18.4
Interest bearing loans 76.6
Current tax liability 19.4
Dividends -
Deferred consideration 0.6
Total current 0.2 - - 272.2
liabilities
TOTAL LIABILITIES 0.2 0.2 1.6 (0.9) 417.9
TOTAL ASSETS LESS TOTAL
LIABILITIES (0.1) (0.2) - - 304.6
Issued capital 21.8
Share premium account 20.3
Revaluation reserve (0.2) 0.7
Hedging reserve (0.1) (0.1)
Other reserves (38.3)
Retained earnings 300.2
TOTAL EQUITY (0.1) (0.2) - - 304.6
GROUP INCOME STATEMENT for the six months ended 30 June 2004 Appendix 3
Restated under IFRS
6 months ended 30
June 2004
(Unaudited)
€mn
Revenue 439.4
Cost of sales (311.3)
Gross operating profit 128.1
Distribution costs (28.0)
Administrative expenses (56.5)
Group operating profit 43.6
Finance costs (net) (3.2)
Profit before tax 40.4
Income tax expense (7.9)
Group profit after tax for the financial period 32.5
Profit attributable to:
Equity holders of the Company 32.5
Minority interest -
Group profit after tax for the financial period 32.5
Basic earnings per share 19.6c
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
(Unaudited)
€'mn
Group profit after tax for the financial period 32.5
Exchange adjustments 16.1
Cash flow hedges (0.7)
Pension deficit movement (2.7)
Total recognised income and expense for the financial period 45.2
Appendix 3
Group Income Statement for six months ended 30 June 2004 - Reconciliation from Irish GAAP to IFRS
(unaudited)
Previous Employee Share Intangible Effect of Restated
Benefits based Assets transition
GAAP Payment Dividends to IFRS's under
IAS 19 IAS 38 IFRS
IFRS 2 IAS 10
Revenue 439.4 - 439.4
Cost of sales (311.3) - (311.3)
Gross profit 128.1 - - - - - 128.1
Distribution costs (28.0) - (28.0)
Administrative expenses (55.7) 0.1 (0.9) (0.8) (56.5)
Finance costs (net) (2.9) (0.3) (0.3) (3.2)
Goodwill amortisation (3.9) 3.9 3.9 -
Profit before taxation 37.6 (0.2) (0.9) 3.9 - 2.8 40.4
Tax expense (8.1) - 0.2 - 0.2 (7.9)
Net profit/(loss) 29.5 (0.2) (0.7) 3.9 - 3.0 32.5
Profit attributable to:
Shareholders 29.5 3.0 32.5
Minority interest - - -
29.5 5.6 3.0 32.5
Dividends proposed (5.6) 5.6 5.6 -
Profit retained for the 23.9 5.6 8.6 32.5
period
Appendix 3
Restated under IFRS
(Unaudited)
GROUP BALANCE SHEET as at 30 June 2004 2004
€mn
ASSETS
Non-current assets
Property, plant and equipment 197.7
Intangible assets- goodwill 125.9
Intangible assets - other 2.2
Financial assets -
Deferred income tax assets 0.7
Total non-current assets 326.5
Current assets
Trade and other receivables 230.1
Inventories 72.0
Cash and cash equivalents 56.4
Total current assets 358.5
TOTAL ASSETS 685.0
LIABILITIES
Non-current liabilities
Interest bearing loans 149.4
Deferred income tax liability 3.5
Deferred consideration 0.2
Employee benefit obligations 21.3
Minority interest 0.5
Total non-current liabilities 174.9
Current liabilities
Trade and other payables 170.9
Warranty provisions 13.8
Interest bearing loans 23.3
Current tax liability 19.3
Deferred consideration 0.1
Total current liabilities 227.4
TOTAL LIABILITIES 402.3
TOTAL ASSETS LESS TOTAL LIABILITIES 282.7
EQUITY
Issued capital 21.7
Share premium account 19.2
Revaluation reserve 0.7
Hedging reserve (0.8)
Other reserves (18.5)
Retained earnings 260.4
TOTAL EQUITY 282.7
Group Balance Sheet as at 30 June 2004 - Reconciliation from Irish GAAP to IFRS Appendix 3
Previous Employee Share based Intangible Dividends Financial
Benefits Payment Assets Instruments
(disclosure)
GAAP IAS 19 IFRS 2 IAS 38 IAS 10 IAS 32
Property, plant 198.7
and equipment
Goodwill 122.0 3.9 -
Intangible 2.2
assets
Deferred tax -
asset
Total 322.9 - - 3.9 - -
non-current
assets
Trade and other 230.1
receivables
Inventories 72.0
Cash and cash 56.4
equivalent
Total current 358.5 - - - - -
assets
TOTAL ASSETS 681.4 - - 3.9 - -
Interest bearing 145.8 3.6
loans
Deferred tax 9.5 (6.4) (0.2)
liability
Deferred 3.8 (3.6)
consideration
Grants 1.0 -
Employee benefit 0 21.3
obligations
Minority 1.3 (0.8)
interest
Total 161.4 14.9 (0.2) - (0.8)
non-current
liabilities
Trade and other 169.5 0.3
payables
Warranty 13.8
provisions
Current tax 19.3
liability
Interest bearing 22.8 0.5
loans
Dividends 5.6 (5.6)
Deferred 0.1
consideration
Total current 231.1 - - (5.6) 0.8
liabilities
TOTAL 392.5 14.9 (0.2) - (5.6) -
LIABILITIES
- - - - - -
TOTAL ASSETS 288.9 (14.9) 0.2 3.9 5.6 -
LESS TOTAL
LIABILITIES
Issued capital 21.7
Share premium 19.2
account
Revaluation 0.9
reserve
Hedging reserve -
Other reserves (16.8) (2.7) 1.0
Retained 263.9 (12.2) (0.8) 3.9 5.6
earnings
TOTAL EQUITY 288.9 (14.9) 0.2 3.9 5.6 -
Group Balance Sheet as at 30 June 2004 - Reconciliation from Irish GAAP to IFRS Appendix 3
Financial Deferred tax on Deferred Grants Restated
Instruments revaluation tax reclass under
(recognition)
IAS 39 IAS 12 IAS 12 IAS 20 IFRS
Property, plant (1.0) 197.7
and equipment
Goodwill - 125.9
Intangible 2.2
assets
Deferred tax 0.7 0.7
asset
Total - 0.7 (1.0) 326.5
non-current
assets
Trade and other 230.1
receivables
Inventories 72.0
Cash and cash 56.4
equivalent
Total current - - - - 358.5
assets
TOTAL ASSETS - - 0.7 (1.0) 685.0
Interest bearing 149.4
loans
Deferred tax (0.3) 0.2 0.7 3.5
liability
Deferred 0.2
consideration
Grants (1.0) -
Employee benefit 21.3
obligations
Minority - 0.5
interest
Total (0.3) 0.2 0.7 (1.0) 174.9
non-current
liabilities
Trade and other 1.1 170.9
payables
Warranty 13.8
provisions
Current tax 19.3
liability
Interest bearing 23.3
loans
Dividends -
Deferred 0.1
consideration
Total current 1.1 - - - 227.4
liabilities
TOTAL 0.8 0.2 0.7 (1.0) 402.3
LIABILITIES
- - - - -
TOTAL ASSETS (0.8) (0.2) - - 282.7
LESS TOTAL
LIABILITIES
Issued capital 21.7
Share premium 19.2
account
Revaluation (0.2) 0.7
reserve
Hedging reserve (0.8) (0.8)
Other reserves (18.5)
Retained 260.4
earnings
TOTAL EQUITY (0.8) (0.2) - - 282.7
Appendix 4
Restated under IFRS
GROUP BALANCE SHEET as at 1 JANUARY 2004 ('TRANSITION DATE') (Audited)
2004
ASSETS €mn
Non-current assets
Property, plant and equipment 175.1
Intangible assets- goodwill 120.1
Intangible assets - other 2.4
Financial assets 0.1
Deferred income tax assets 2.6
Total non-current assets 300.3
Current assets
Trade and other receivables 176.0
Inventories 61.7
Cash and cash equivalents 55.7
Total current assets 293.4
TOTAL ASSETS 593.7
LIABILITIES
Non-current liabilities
Interest bearing loans 129.9
Deferred income tax liability 6.7
Deferred consideration 0.3
Employee benefit obligations 17.2
Minority interest 0.5
Total non-current liabilities 154.6
Current liabilities
Trade and other payables 124.6
Warranty provisions 8.4
Interest bearing loans 46.8
Current tax liability 15.5
Deferred consideration 0.1
Total current liabilities 195.4
TOTAL LIABILITIES 350.0
TOTAL ASSETS LESS TOTAL LIABILITIES 243.7
EQUITY
Issued capital 21.7
Share premium account 18.8
Revaluation reserve 0.7
Hedging reserve (0.1)
Other reserves (32.8)
Retained earnings 235.4
TOTAL EQUITY 243.7
Group Transition Balance Sheet as at 1 January 2004 -Reconciliation from Irish GAAP to IFRS Appendix 4
Share Financial
Previous Employee Benefits based Payment Dividends Instruments
(disclosure)
GAAP IAS 19 IFRS 2 IAS 10 IAS 32
Property, plant 176.1
and equipment
Goodwill 120.1
Intangible 2.4
assets
Financial assets 0.1
Deferred tax -
assets
Total 298.7
non-current
assets
Trade and other 176.0
receivables
Inventories 61.7
Cash and cash 55.7
equivalent
Total current 293.4
assets
TOTAL ASSETS 592.1
Interest bearing 126.1 3.8
loans
Deferred tax 9.2 (5.2) (0.0)
liability
Deferred 4.1 (3.8)
consideration
Grants 1.0
Employee benefit 0 17.2
obligations
Minority 1.3 (0.8)
interest
Total 141.7 12.0 (0.0) (0.8)
non-current
liabilities
Trade and other 124.1 0.3
payables
Warranty 8.4
provisions
Interest bearing 46.3 0.5
loans
Current tax 15.5
liability
Dividends 7.6 (7.6)
Deferred 0.1
consideration
Total current 202.0 (7.6) 0.8
liabilities
TOTAL 343.7 12.0 (0.0) (7.6) -
LIABILITIES
TOTAL ASSETS 248.4 (12.0) 0.0 7.6 -
LESS TOTAL
LIABILITIES
Issued capital 21.7
Share premium 18.8
account
Revaluation 0.9
reserve
Hedging reserve -
Other reserves (32.9) 0.1
Retained 239.9 (12.0) (0.1) 7.6
earnings
TOTAL EQUITY 248.4 (12.0) 0.0 7.6 -
Group Transition Balance Sheet as at 1 January 2004 -Reconciliation from Irish GAAP to IFRS (cont) Appendix 4
Financial Deferred Deferred
Instruments tax on tax reclass Grants Restated
(recognition) revaluation
IAS 39 IAS 12 IAS 12 IAS 20 under IFRS
Property, plant (1.0) 175.1
and equipment
Goodwill 120.1
Intangible 2.4
assets
Financial assets 0.1
Deferred tax 2.6 2.6
assets
Total 2.6 (1.0) 300.3
non-current
assets
Trade and other 176.0
receivables
Inventories 61.7
Cash and cash 55.7
equivalent
Total current 293.4
assets
TOTAL ASSETS 2.6 (1.0) 593.7
Interest bearing 129.9
loans
Deferred tax (0.1) 0.2 2.6 6.7
liability
Deferred 0.3
consideration
Grants (1.0) -
Employee benefit 17.2
obligations
Minority 0.5
interest
Total (0.1) 0.2 2.6 (1.0) 154.6
non-current
liabilities
Trade and other 0.2 124.6
payables
Warranty 8.4
provisions
Interest bearing 46.8
loans
Current tax 15.5
liability
Dividends -
Deferred 0.1
consideration
Total current 0.2 195.4
liabilities
TOTAL 0.1 0.2 2.6 (1.0) 350.0
LIABILITIES
TOTAL ASSETS (0.1) (0.2) - - 243.7
LESS TOTAL
LIABILITIES
Issued capital 21.7
Share premium 18.8
account
Revaluation (0.2) 0.7
reserve
Hedging reserve (0.1) (0.1)
Other reserves (32.8)
Retained 235.4
earnings
TOTAL EQUITY (0.1) (0.2) - - 243.7
Appendix 5
Restatement under IFRS of selected segmental information - Full Year 2004 (audited)
Analysis by class of business
Continuing operations - full year 2004
Insulated Panels Offsite & EC Access TOTAL
Segment Revenue & Boards Structural Floors
€m €m €m €m €m
Total Revenue 579.6 116.8 142.5 119.2 958.1
Intersegment revenue is not material and is thus not subject to separate disclosure in the above analysis
Segment Result (profit before finance costs)
Insulated Panels Offsite & EC Access TOTAL
& Boards Structural Floors
Profit before finance costs 72.2 13.9 14.2 3.0 103.3
Finance costs (6.9)
(net)
Profit before Tax 96.4
Tax on profit on ordinary (18.4)
activities
Profit after tax 78.0
Dividends (5.6)
Profit retained for the year 72.4
Insulated Panels Offsite & EC Access TOTAL
Segment Assets & Boards Structural Floors
Assets 323.9 93.2 96.2 119.8 633.1
Liabilities (139.0) (15.0) (25.0) (19.9) (198.9)
Total assets less total 184.9 78.2 71.2 99.9 434.2
liabilities
Cash and cash equivalents 87.8
Deferred income tax asset 1.6
Interest bearing loans and borrowings (current and non-current) (195.3)
Income tax liabilities (current and deferred) (23.3)
(0.4)
Net assets as reported in Group Balance Sheet 304.6
Appendix 5
Other Segment Information
Insulated Panels Offsite & EC Access TOTAL
& Boards Structural Floors
Capital 50.1 8.2 12.9 (21.1) 49.9
Expenditure
Depreciation included in segment 13.3 3.1 4.3 3.9 24.6
result
Amortisation included in segment 0.7 0.0 0.0 0.0 0.7
result
Non- Cash Items included in (1.2) (0.0) 0.0 (0.0) (1.2)
segment result
Analysis of Segmental Data by Geography
Republic of United Rest of Europe Americas Others TOTAL
Ireland Kingdom
€m €m €m €m €m €m
Income Statement Items
Segment Revenue 136.8 592.4 163.2 53.6 12.1 958.1
Balance Sheet Items
Assets 105.4 367.2 106.6 53.3 0.6 633.1
Other segmental information
Capital 5.9 10.5 17.0 0.0 16.5 49.9
Expenditure
Appendix 5
Restatement under IFRS of selected segmental information - Interim 2004 (unaudited)
Analysis by class of business
Continuing operations - interim 2004
Insulated Panels Offsite EC Access TOTAL
Segment Revenue & Boards & Structural Floors
€m €m €m €m €m
Total Revenue 258.6 50.2 69.9 60.7 439.4
Intersegment revenue is not material and is thus not subject to separate disclosure in the
above analysis
Segment Result (profit before finance
costs)
Insulated Panels Offsite EC Access TOTAL
& Boards & Structural Floors
Profit before finance costs 30.8 4.4 7.6 0.8 43.6
Finance costs (net) (3.2)
Profit before Tax 40.4
Tax on profit on ordinary (7.9)
activities
Profit after tax 32.5
Profit retained for the year 32.5
Segment Assets Insulated Panels Offsite EC Access TOTAL
& Boards & Structural Floors
Assets 298.1 65.4 92.1 172.3 627.9
Liabilities (122.2) (34.5) (24.5) (24.8) (206.0)
Total assets less total 175.9 30.9 67.6 147.5 421.9
liabilities
Cash and cash equivalents 56.4
Deferred income tax asset 0.7
Interest bearing loans and borrowings (current and (172.7)
non-current)
Deferred consideration (non current) (0.2)
Income tax liabilities (current and (22.9)
deferred)
Minority interest (0.5)
Net assets as reported in Group Balance 282.7
Sheet
Appendix 5
Page 4 of 4
Other Segment Information
Insulated Panels Offsite EC Access TOTAL
& Boards & Structural Floors
Capital Expenditure 18.4 3.6 4.7 1.8 28.5
Depreciation included in segment result (6.1) (1.4) (2.1) (2.0) (11.6)
Amortisation included in segment result (0.2) 0.0 0.0 (0.0) (0.2)
Non- Cash Items included in segment 0.0 0.0 0.0 0.0 0.0
result
Analysis of Segmental Data by Geography
Republic United Kingdom Rest of Americas Others TOTAL
of Ireland Europe
€m €m €m €m €m €m
Income Statement Items
Segment Revenue 60.8 274.7 68.4 28.3 7.2 439.4
Balance Sheet Items
Assets 79.5 390.6 67.8 88.7 1.3 627.9
Other segmental information
Capital Expenditure 3.5 20.9 3.6 0.5 0.0 28.5
Appendix 6
Accounting Policies
(A) Statement of compliance
The restatement of financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Commission, which comprise standards and interpretations approved by the
International Accounting Standards Board (IASB) and International Accounting
Standards and Standing Interpretations Committee interpretations approved by the
predecessor International Accounting Standards Committee that have been
subsequently authorised by IASB and remain in effect.
(B) Basis of accounting
The restated financial information has been prepared under the historical cost
convention, as modified by the revaluation of land and buildings and the
measurement of fair value share options and derivative instruments. The
carrying value of recognised assets and liabilities that are hedged are adjusted
to record changes in the fair values attributable to the risks that are being
hedged.
(C) Basis of consolidation
The consolidated Financial Statements incorporate the Financial Statements of
the Company and its subsidiary undertakings. Where a subsidiary is acquired or
disposed of during the financial year, the Group Financial Statements include
the attributable results from or to the effective date of acquisition or
disposal. All intra-group balances and transactions, including unrealised
profit arising from intra-group transactions, are eliminated on consolidation.
(D) Goodwill
Goodwill arising in respect of acquisitions completed prior to 1 January 2004
(being the transition date to IFRS) is included at its deemed cost, which
equates to its net book value recorded under previous GAAP. In line with the
provisions applicable to a first-time adopter under IFRS the accounting
treatment of business combinations undertaken prior to the transition date has
not been reconsidered in preparing the opening IFRS balance sheet as at 1
January 2004, and goodwill amortisation has ceased with effect from the
transition date.
Goodwill on acquisition is initially measured at cost being the excess of the
cost of the business combination over the acquirer's interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
As at the acquisition date, any goodwill acquired is allocated to each of the
cash-generating units expected to benefit from the combination's synergies.
Impairment is determined by assessing the recoverable amount of the
cash-generating unit, to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised. Where goodwill forms part of a cash-generating
unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on the basis of the
relative values of the operation disposed of and the portion of the
cash-generating unit retained.
(E) Intangible Assets (other than goodwill)
Intangible assets acquired separately are capitalised at cost. Intangible assets
acquired from a business acquisition are capitalised at fair value as at the
date of acquisition. Following initial recognition, the intangible asset is
carried at its cost less any accumulated amortisation and accumulated impairment
losses. Amortisation is charged on assets with finite lives and this expense is
taken to the income statement through a separate line on the face of the income
statement.
The amortisation rates generally applied are:
Trademark & Brands 5-10 years on a straight line basis
Technological know how 5-10 years on a straight line basis
Intangible assets, created within the business are not capitalised and
expenditure is charged against profits in the year in which the expenditure is
incurred.
(F) Revenue
Revenue comprises the total amount receivable by the Group in the ordinary
course of business with outside customers for goods and services supplied,
exclusive of trade discounts and value added tax.
In general, revenue is recognised to the extent that it is subject to reliable
measurement, that it is probable that economic benefits will flow to the Group
and that the significant risks and rewards of ownership have passed to the
customer. Revenue on long term contracts is recognised in accordance with the
percentage-of-completion method with the percentage-of-completion being computed
on an input cost basis. No revenue is recognised if there is uncertainty
regarding recovery of the consideration due at the outset of the transaction,
associated costs or the possible return of goods.
(G) Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and returns different to those of other segments. Stemming
from the Group's internal organisational and management structure and its system
of internal financial reporting, segmentation by business is regarded as being
the predominant source and nature of the risks and returns facing the Group and
is thus the primary segment. Geographical segmentation is therefore the
secondary segment.
(H) Inventories
Inventories are stated at the lower of cost and net realisable value. In the
case of raw materials, cost means purchase price including transport and
handling costs, less trade discounts, calculated on a first in first out basis.
For work in progress and finished goods, cost consists of direct materials,
direct labour and attributable production overheads.
Net realisable value comprises the actual or estimated selling price (less trade
discounts), less all further costs to completion, and less all costs to be
incurred in marketing, selling and distribution.
(I) Income Tax
Current tax:
Current tax for the current and prior periods is, to the extent unpaid,
recognised as a liability. If the amount already paid in respect of current and
prior periods exceeds the amount payable, the excess is recognised as an asset.
The benefits relating to a tax loss that can be carried back to recover current
tax of a previous period are held as an asset.
Deferred tax:
Deferred income taxes are calculated using the liability method on temporary
differences.
In accordance with IAS 12 no deferred taxes are recognised in conjunction with
the initial recognition of goodwill. This applies also to temporary differences
associated with shares in subsidiaries if reversal of these temporary
differences can be controlled by the Group and it is probable that reversal will
not occur in the foreseeable future. In addition, tax losses available to be
carried forward as well as other income tax credits to the Group are assessed
for recognition as deferred tax assets.
Deferred tax liabilities are provided in full. Deferred tax assets are
recognised to the extent that it is probable that they will be able to be offset
against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at the tax rates that are expected to apply to
their respective periods of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Most changes in deferred tax assets and liabilities are recognised as a
component of tax expense in the income statement. Only changes in deferred tax
assets and liabilities that relate to a change in value of assets or liabilities
that is charged directly to equity, are charged or credited directly to equity.
(J) Grants
Capital grants received in respect of the purchase of tangible assets are
treated as a reduction in the purchase price of the tangible asset.
(K) Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation and any impairment in value. Certain items of property that had
been revalued to fair value prior to the date of transition to IFRS (I January
2004) are measured on the basis of deemed cost, being the revalued amount as at
the date the revaluation was performed.
The carrying values of plant and equipment are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be
recoverable. The recoverable amount of plant and equipment is the greater of
net selling price and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. If any such indication of
impairment exists and where the carrying values exceed the estimated recoverable
amount, the assets or cash-generating units are written down to their
recoverable amount. Impairment losses are recognised in the income statement as
an exceptional item.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the
item) is included in the income statement in the year the item is derecognised.
Tangible fixed assets, excluding freehold land, are depreciated at appropriate
rates in order to write them off over their expected useful life. The
depreciation rates generally applied are:
Freehold buildings 2% on cost
Plant and machinery 10% to 20% on cost
Fixtures and fittings 10% to 20% on cost
Computer hardware and software 25% to 33% on cost
Motor vehicles 20% to 25% on cost
Leased assets 10% to 25% on cost
Leasehold property improvements over the period of the lease
(L) Amortisation of patents
Purchased patents are amortised on a straight line basis over their estimated
useful economic life. The amortisation rate generally applied is 12.5% on cost.
(M) Leasing
Assets held under leasing arrangements, that transfer substantially all the
risks and rewards of ownership to the Group, are capitalised. The capital
element of the related rental obligation is shown on the Balance Sheet. The
interest element of the rental obligation is charged to the Income Statement so
as to produce a constant periodic rate of charge. Any liability associated with
onerous leasing agreements is recognised immediately.
Rentals in respect of operating leases are charged to the Income Statement as
incurred.
(N) Investments
Investments are initially recognised at cost being the fair valuation of the
consideration given.
(O) Pension costs
The Group operates a number of defined benefit pension schemes which are closed
to new members and a number of defined contribution pension schemes.
A defined benefit plan is a pension plan that defines an amount of pension
benefit that an employee will receive on retirement, usually dependent on one or
more factors such as age, years of service and compensation.
A defined contribution plan is a pension plan under which the Group pays fixed
contributions into an independent entity. The Group has no legal or constructive
obligations to pay further contributions after payment of fixed contributions.
The liability recognised in the balance sheet for defined benefit pension plans
is the present value of the defined benefit obligation (DBO) at the balance
sheet less the fair value of plan assets, together with adjustments for
unrecognised actuarial gains or losses and past service costs. The DBO is
calculated annually by independent actuaries using the projected unit method.
The present value of the DBO is determined by discounting the estimated future
cash outflows using interest rates of high quality corporate bonds that are
denominated in the currency in which the benefits will be paid and that have
terms to maturity approximating to the terms of the related pension liability.
In accordance with IFRS actuarial gains and losses are not recognised as an
expense and are posted to reserves.
The contributions recognised in respect of defined contribution plans are
expensed as they fall due. Liabilities and assets may be recognised if
underpayment or prepayment has occurred and are included in current liabilities
or current assets as they are normally of a short term nature.
Interest expenses related to pension obligations are included in 'finance costs'
in the income statement. All other pension related benefit expenses are included
in 'Employee compensation and benefit expense'.
(P) Research and Development
Expenditure on research and development is charged to the Income Statement in
the year in which it is incurred.
Internal development expenditure is charged to income in the year in which it is
incurred unless it meets the criteria of IAS 38 Intangible Assets. Regulatory
and other uncertainties generally mean that such criteria are not met. Where,
however the recognition criteria are met, intangible assets are capitalised and
amortised over their useful economic lives from product launch.
(Q) Foreign currencies
The Financial Statements are expressed in Euro. Monetary assets and liabilities
denominated in foreign currencies are translated at the exchange rate ruling at
the balance sheet date (or, where relevant, at a forward exchange rate) and
revenues, costs and non-monetary assets, at the exchange rates ruling at the
dates of the transactions. Profits and losses arising from foreign currency are
dealt with through the Income Statement. Monetary assets are amounts held or
receivable in money; all other assets are non-monetary assets.
On consolidation, the assets and liabilities of overseas subsidiary companies
are translated into Euro at the rates of exchange ruling at the balance sheet
date. Exchange differences arising from the restatement of the opening balance
sheets of these subsidiary companies are dealt with through reserves. The
operating results of overseas subsidiary companies are translated into Euro at
the average rates applicable during the year.
(R) Share-Based Payment Transactions
Employees (including directors) of the Group receive remuneration in the form of
share-based payment transactions, whereby employees render services in exchange
for shares or rights over shares ('equity-settled transactions').
The cost of equity-settled transactions with employees is measured by reference
to the fair value at the date at which they are granted. The fair value is
determined using a recognised valuation methodology for the pricing of financial
instruments (i.e. the trinomial model).
The cost of equity-settled transactions is recognised over the period in which
the performance conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award ('vesting date'). The
cumulative expense recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the vesting period has
expired and the number of awards that, in the opinion of the directors of the
Group and based on the best available estimates at that date, will ultimately
vest. The income statement charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that
period. No expense is recognised for awards that do not ultimately vest.
(S) Dividends
Final Dividend on Ordinary Shares is recognised as a liability in the Group's
financial statements when the shareholders' right to receive the payment is
established by approval at the Annual General Meeting.
Interim Dividend on Ordinary Shares is recognised as a liability in the Group's
financial statements on a cash paid basis.
(T) Hedging
The Group uses fair value hedges and cash flow hedges in its treasury
activities. For the purposes of hedge accounting, hedges are classified either
as fair value hedges (which entail hedging the exposure to movements in the fair
value of a recognised asset or liability) or cash flow hedges (which hedge
exposure to fluctuations in future cash flows derived from a particular risk
associated with a recognised asset or liability, a firm commitment or a highly
probable forecast transaction).
In the case of fair value hedges any gain or loss stemming from the
re-measurement of the hedging instrument to fair value is reported in the income
statement.
In the case of cash flow hedges the effective part of any gain or loss on the
derivative financial instrument is recognised as a separate component of equity.
Any ineffective or over effective portion of a cash flow hedge is reported in
the income statement.
If a hedged forecast transaction subsequently results in the recognition of a
financial asset or liability, the associated gains or losses that were
recognised directly to equity shall be reclassified to the Income Statement in
the same period or periods during which the asset acquired or liability assumed
affects profit or loss. To the extent it is expected that all or a portion of a
loss recognised directly in equity will not be recovered in one or more future
periods, the loss is reclassified into the Income Statement.
This information is provided by RNS
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Friday, 5th July 2024
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