RNS Number:0392S
DCC PLC
30 September 2005
DCC plc
30 September 2005
SUMMARY OF RESTATEMENT OF FINANCIAL INFORMATION UNDER IFRS
DCC plc, the value added sales, marketing and business support services group,
today announces the impact of the transition to International Financial
Reporting Standards ("IFRS") on its 2005 interim and final results previously
prepared in accordance with accounting practice generally accepted in the
Republic of Ireland ("Irish GAAP"). The Group's financial statements for the six
months ending 30 September 2005 will be prepared under IFRS expected to be in
place at 31 March 2006. The financial statements for the year ending 31 March
2006 will be prepared under IFRS.
The impact on the selected audited key financial data for the year ended 31
March 2005 is summarised as follows:
Irish GAAP IFRS Change Comments on principal
changes under IFRS
€'m €'m %
Turnover
- Group 2,627.9 2,627.9 -
- Associates 103.6 - -100.0% Share of associates'
turnover no longer
included
- Total 2,731.5 2,627.9 -3.8%
Operating profit (1)
- Parent and subsidiaries 109.7 110.0 +0.3%
- Associates 21.8 - -100.0% Share of associates'
operating profit no
longer included in
operating profit
- Total 131.5 110.0 -16.4%
Net interest payable (5.5) (5.6)
Share of associates' profit
after tax - 18.2 Share of associates'
profit after tax now
included in profit
before tax
Profit before amortisation,
net exceptional
items and tax 126.0 122.6 -2.6%
Amortisation (10.1) (1.2) Amortisation of
intangibles
- see footnote (2)
Profit before
net exceptional
items 115.9 121.4 +4.8%
Net exceptional items (16.0) (20.8) Net exceptional items
under IFRS increase
due to inclusion of
translation differences
on foreign currency
intercompany loans
previously charged to
reserves
Profit before tax 99.9 100.6 +0.7%
Taxation (15.1) (11.8) Share of associates'
taxation is now
charged in arriving
at profit before tax
Profit after tax 84.8 88.8 +4.7%
Basic earnings per share
(cent) 104.69c 109.68c +4.8%
Adjusted earnings per share
(cent) (1) 137.25c 137.22c -0.0%
Total equity 498.1 492.2 -1.2% Recognition in full
of defined benefit
pension schemes'
liabilities
Non provision for
dividends declared
after balance sheet
date
Non amortisation of
goodwill and
amortisation of other
intangible assets
Net debt 8.2 8.2 - No change
(1) Excluding amortisation and net exceptional items
(2) Goodwill previously amortised over 20 years under Irish GAAP is now
capitalised on the balance sheet and is subject to an annual impairment
review. Under IFRS, intangibles, other than goodwill, are amortised over
their expected economic life.
Summary
IFRS has a negligible impact on DCC's adjusted earnings per share and balance
sheet. Also, the Group's cashflow is unchanged from that previously reported
under Irish GAAP.
For reference, please contact:
Jim Flavin, Chief Executive/Deputy Chairman
Fergal O'Dwyer, Chief Financial Officer
Conor Murphy, Investor Relations Manager
Tel: +353 1 2799 400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
A copy of this announcement is available in PDF format on DCC's website.
DCC plc
Restatement of Financial Information under
International Financial Reporting Standards
30 September 2005
DCC plc - Restatement of Financial Information Under IFRS
CONTENTS PAGES
1. Introduction 2
2. Summary of IFRS Impact 3-4
3. Basis of Preparation 5-6
4. Principal Exemptions Availed of on Transition to IFRS 7-8
5. Principal Changes on Transition to IFRS 8-12
Appendix 1
- Independent Auditors' Report 13-14
Appendix 2
- Group Income Statement for the year ended 31 March 2005
restated under IFRS 15
- Group Statement of Changes in Shareholders' Equity 15
- Reconciliation from Irish GAAP to IFRS (Income Statement) 16
- Group Balance Sheet as at 31 March 2005 17
- Reconciliation from Irish GAAP to IFRS (Balance Sheet) 18
Appendix 3
- Unaudited Group Income Statement for the six months ended
30 September 2004 restated under IFRS 19
- Group Statement of Changes in Shareholders' Equity 19
- Reconciliation from Irish GAAP to IFRS (Income Statement) 20
- Group Balance Sheet as at 30 September 2004 21
- Reconciliation from Irish GAAP to IFRS (Balance Sheet) 22
Appendix 4
- Adjustments required to Irish GAAP Group Balance Sheet as at
1 April 2004, the transition date, for compliance with IFRS 23-24
Appendix 5
- Unaudited restatement under IFRS of segmental information for
the year ended 31 March 2005 25
Appendix 6
- Provisional Accounting policies under IFRS 26-37
1. INTRODUCTION
Up to and including 31 March 2005, DCC plc ("the Group") prepared its financial
statements in accordance with generally accepted accounting practices in Ireland
("Irish GAAP"). For periods commencing on or after 1 January 2005, it is
mandatory for all European entities whose securities are listed on a regulated
exchange in the European Union to prepare their financial statements in
accordance with International Financial Reporting Standards ("IFRS").
Consequently, the Group's first IFRS financial statements will be for the year
ending 31 March 2006. The interim results for the six months ending 30 September
2005 will be prepared on the basis of the IFRS accounting policies expected to
apply at 31 March 2006. It is a requirement that the first IFRS statements
include full comparative information for the year ended 31 March 2005. The date
of transition to IFRS for all standards is 1 April 2004, this being the start of
the earliest period for which the Group presents full comparative information
under IFRS in its first IFRS Financial Statements other than the impact of IAS
32 and IAS 39 where the date of transition is 1 April 2005.
This announcement addresses the transition to IFRS under the following sections:
2. Summary of IFRS impact
3. Basis of preparation of financial statements under IFRS
4. Principal exemptions availed of on transition to IFRS
5. Principal changes on transition to IFRS
The impact of the transition to IFRS on reported performance, financial position
and other key financial information previously reported under Irish GAAP is set
out in the attached appendices as follows:
Appendix 1: Independent Auditors' Report to the Directors of DCC plc on the
Preliminary IFRS Consolidated Financial statements for the year ended 31 March
2005.
Appendix 2: Group Income Statement and Group Statement of Changes in
Shareholders' Equity for the year ended 31 March 2005 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 and Group Statement of Changes in
Shareholders' Equity for the six months ended 30 September 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 as at 1
April 2004, the transition date, for compliance with IFRS.
Appendix 5: Unaudited restatement under IFRS of selected segmental information
published in the 2004/2005 Annual Report.
Appendix 6: Provisional accounting policies under IFRS.
The restatements of the Group's Income Statement, Statement of Changes in
Shareholders' Equity and Balance Sheet for the full year ended 31 March 2005 and
the Transition Balance Sheet dated 1 April 2004 have been audited by the Group's
auditors, PricewaterhouseCoopers, Chartered Accountants.
The financial information in respect of the six months ended 30 September 2004
is unaudited.
2. SUMMARY OF IFRS IMPACT
The standards giving rise to the principal changes to the consolidated results
of the Group arising from the change to IFRS are:
IFRS 2 Expensing of share-based payments at fair value
IFRS 3/IAS 38 Amortisation of intangible assets, other than goodwill, arising
on business combinations; non-amortisation of goodwill
IAS 12 Deferred tax computed on the basis of temporary differences
IAS 19 Recognition of defined benefit pension schemes' liabilities
IAS 21 Effects of change in foreign currency rates.
The impact of the change to IFRS on the Group's financial statements is
summarised as follows:
Year ended Six months ended
31 March 2005 30 September 2004
(Audited) (Unaudited)
Irish GAAP IFRS Irish GAAP IFRS
€'m €'m €'m €'m
Group Income Statement
Turnover 2,627.9 2,627.9 1,103.0 1,103.0
Operating profit before
amortisation and net
exceptional items 131.5 110.0 46.0 36.8
Profit before amortisation,
net exceptional items and tax 126.0 122.6 43.8 42.4
Profit before tax (PBT) 99.9 100.6 37.9 38.3
Profit after tax 84.8 88.8 32.4 34.3
Tax rate (as a % of PBT) 15.1% 11.7% 14.5% 10.5%
Basic EPS (cent) 104.69c 109.68c 39.99c 42.31c
Adjusted EPS (cent) 137.25c 137.22c 47.44c 47.43c
Group Balance Sheet
Total assets 1,403.3 1,410.5 1,251.2 1,250.4
Total liabilities (905.2) (918.3) (787.7) (804.3)
Total equity 498.1 492.2 463.5 446.1
Net debt (8.2) (8.2) (24.9) (24.9)
IFRS has a negligible impact on DCC's adjusted earnings per share and Balance
Sheet. Also, the Group's cash flow is unchanged from that previously reported
under Irish GAAP.
Reconciliation
A reconciliation from Irish GAAP to IFRS of certain figures in the previous
table is as follows:
Year ended 31 March 2005
Income Statement Balance Sheet
------------------------------------ ---------------------
Operating Profit before Profit Adjusted Total
profit before amortisation, before EPS* Equity
amortisation net exceptional tax
and net items and tax
exceptional
items
€'m €'m €'m cent €'m
As reported under
Irish GAAP 131.5 126.0 99.9 137.25 498.1
Associated
undertakings (21.9) (3.2) (3.2)
Employee benefits
(pensions) 1.6 1.2 1.2 1.32 (30.2)
Share options (1.0) (1.0) (1.0) (1.05) 0.2
Non-amortisation of
goodwill 10.1 10.1
Amortisation
of intangible assets (1.3) (1.3)
Foreign exchange
losses on intercompany
loans previously
charged to reserves (4.8)
Non-provision
for dividend 19.1
Other (0.2) (0.4) (0.3) (0.30) (3.8)
---------------------------------------------------------
(21.5) (3.4) 0.7 (0.03) (5.9)
---------------------------------------------------------
As reported
under IFRS 110.0 122.6 100.6 137.22 492.2
=========================================================
* Before amortisation and net exceptional items.
Six months ended 30 September 2004
Income Statement Balance Sheet
------------------------------------ ---------------------
Operating Profit before Profit Adjusted Total
profit before amortisation, before EPS* Equity
amortisation net exceptional tax
and net items and tax
exceptional
items
€'m €'m €'m cent €'m
As reported under
Irish GAAP 46.0 43.8 37.9 47.44 463.5
Associated
undertakings (9.5) (1.5) (1.5)
Employee benefits
(pensions) 0.8 0.5 0.5 0.59 (29.0)
Share options (0.4) (0.4) (0.4) (0.44)
Non-amortisation of
goodwill 4.5 4.5
Amortisation
of intangible assets (0.1) (0.1)
Foreign exchange
losses on intercompany
loans previously
charged to reserves (2.6)
Non-provision
for dividend 10.8
Other (0.1) (0.16) (3.6)
-------------------------------------------------------------
(9.2) (1.4) 0.4 (0.01) (17.4)
-------------------------------------------------------------
As reported
under IFRS 36.8 42.4 38.3 47.43 446.1
=============================================================
* Before amortisation and net exceptional items.
3. BASIS OF PREPARATION OF FINANCIAL STATEMENTS UNDER IFRS
For the year ending 31 March 2006, DCC plc will be required to prepare
consolidated financial statements under IFRS as adopted by the European Union
("EU"). The financial information presented in this announcement has been
prepared in accordance with the measurement criteria required by International
Financial Reporting Standards and Interpretations issued by the International
Accounting Standards Board ("IASB") and with International Accounting Standards
("IAS") and Standard Interpretations Committee Interpretations approved by the
predecessor International Accounting Standards Committee that have been
subsequently authorised by the IASB and remain in effect.
The Group's transition date to IFRS is 1 April 2004 and the comparative
financial information for the year ended 31 March 2005 has been restated on a
consistent basis with those accounting policies expected to be applied by the
Group in preparing its first full financial statements in accordance with IFRS
at 31 March 2006, except where otherwise required or permitted by IFRS 1 "First
time adoption of International Accounting Standards".
The transition to IFRS is accounted for in accordance with IFRS 1. This standard
sets out how to adopt IFRS for the first time and mandates that most IFRS are to
be fully applied retrospectively. There are certain limited exemptions from this
requirement. The significant decisions taken in respect of availing, or
otherwise, of the exemptions available are outlined in the section "Principal
Exemptions Availed of on Transition to IFRS".
The majority of the IASs/IFRSs have been approved by the EU. However, a number
of IASs/IFRSs remain to be approved at the date of publication of this document.
In particular the EU has not yet considered the adoption of an amendment to IAS
19 "Employee Benefits" which would allow recognition of actuarial gains and
losses in the Statement of Changes in Shareholders' Equity in the same manner as
FRS 17 permitted under Irish GAAP.
The preliminary IFRS comparatives for the year ended 31 March 2005 and the six
months ended 30 September 2004 have been prepared on the basis of the
recognition and measurement requirements of IFRSs in issue that either are
adopted by the EU and effective (or available for early adoption) at 31 March
2006 or are expected to be adopted and effective (or available for early
adoption) at 31 March 2006, the first annual reporting date at which the Group
is required to use accounting standards adopted by the EU. Based on these
recognition and measurement requirements management has made assumptions about
the accounting policies expected to be applied, which are as set out below, when
the first annual financial statements are prepared in accordance with accounting
standards adopted by the EU for the year ending 31 March 2006.
In particular, management has assumed that the following IFRSs issued by the
International Accounting Standards Board and IFRIC Interpretations issued by the
International Financial Reporting Interpretations Committee will be adopted by
the EU such that they will be available for use in the annual IFRS financial
statements for the year ending 31 March 2006:
• Amendment to IAS 19: Actuarial Gains and Losses, Group Plans and Disclosures
• Amendment to IAS 39: Financial Instruments: Recognition and Measurement
- Fair Value Option
In addition, the accounting standards adopted by the EU that will be effective
(or available for early adoption) in the annual financial statements for the year
ending 31 March 2006 are still subject to change and to additional interpretations
and therefore cannot be determined with certainty. Accordingly, the accounting
policies for 2005/2006 will only be finally determined when the annual financial
statements are prepared for the year ending 31 March 2006.
Details of the exemptions availed of on transition to IFRS are set out in
Section 4 including the exemption from restatement of the 2004/2005 numbers
relating to IAS 32 and IAS 39. No adjustments have been made for any changes in
estimates made at the time of approval of the consolidated financial statements
for the year ended 31 March 2005 under Irish GAAP on which the preliminary IFRS
information is based.
4. PRINCIPAL EXEMPTIONS AVAILED OF ON TRANSITION TO IFRS
IFRS 1 "First-time Adoption of International Financial Reporting Standards" sets
out the procedures that the Group must follow when adopting IFRS for the first
time as the basis for preparing its Consolidated Financial Statements.
The Group is required to establish its IFRS accounting policies for the year
ending 31 March 2006 and, in general, apply these retrospectively to determine
the IFRS opening balance sheet at its date of transition, 1 April 2004.
This standard permits a number of optional exemptions from the general principle
of retrospective restatement and the Group has elected, in common with other
listed companies, to avail of a number of these exemptions as follows:
(i) Business Combinations
Business combinations undertaken prior to the transition date of 1 April 2004
have not been subject to restatement; goodwill as at the transition date is
carried forward at its carrying amount 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
by IFRS 1, an impairment review of goodwill was carried out at the transition
date. This review indicated that no impairment provision was required.
(ii) Property, Plant & Equipment
The Group has retained its existing carrying value of occupied properties, plant
and equipment at 1 April 2004 as deemed cost, rather than either reverting to
historical cost or carrying out a valuation at the date of transition as
permitted by IFRS 1.
(iii) Employee Benefits
The Group has elected to recognise all cumulative actuarial gains and losses
applicable to defined benefit pension schemes in the transition balance sheet
and to adjust them against retained income.
(iv) Currency Translation Adjustments
IFRS require that on disposal of a foreign operation, the cumulative amount of
currency translation differences previously recognised directly in reserves for
that operation be transferred to the income statement as part of the profit or
loss on disposal. The Group has elected to deem the cumulative currency
translation differences applicable to foreign operations to be zero as at the
transition date. The cumulative currency translation differences arising after
the transition date (i.e. during the year ended 31 March 2005) have been
re-classified from retained income to a separate component of equity (termed the
'foreign currency translation reserve' in the attached documentation) with no
net impact on capital and reserves attributable to the Group's equity holders.
(v) IAS 32 / IAS 39
Given the delay encountered in receiving EU approval, the effective date of the
revised versions of IAS 32 'Financial Instruments: Disclosure and Presentation'
and IAS 39 'Financial Instruments: Recognition and Measurement' is 1 April 2005
and therefore the Group is adopting these standards with effect from that date.
The Group has availed of the exemption under the transition rules of IFRS 1 not
to restate the comparative information under IAS 32 and IAS 39. Comparative
information on financial instruments for the year ended 31 March 2005 in the
financial statements at 31 March 2006 will be presented on the existing Irish
GAAP basis.
Other Options availed of on Transition
In compliance with the transitional arrangements set out in IFRS 2 "Share-based
Payment", this standard will be applied in respect of share options granted
after 7 November 2002 and which have not vested before 1 January 2005.
On the introduction of FRS 17 "Retirement Benefits" in 2001, DCC 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. FRS 17 requires
immediate recognition of actuarial gains and losses on defined benefit pension
schemes in the Statement of Total Recognised Gains and Losses. The Group has
elected to avail of early application of the amendment to IAS 19 which enables
the recognition of actuarial gains and losses through retained income via the
Statement of Changes in Shareholders' Equity.
5. PRINCIPAL CHANGES ON TRANSITION TO IFRS
The standards which result in the most significant changes for DCC arising from
the transition to IFRS from Irish GAAP are summarised in the following
paragraphs. The impact of these changes on the financial results for the year
ended 31 March 2005 and the interim accounts for the six months ended 30
September 2004 are shown in Appendices 2 and 3. The accounting policies which
will apply under IFRS are set out in Appendix 6.
(i) IFRS 2 "Share-based Payment"
IFRS 2 Share-based Payment requires the recognition of an expense in the income
statement representing the fair value at the date of grant of share-based
payments (mainly share options in the case of DCC). This expense is recognised
over the vesting period of the options. In accordance with the transitional
arrangements contained in the standard, only share options granted after 7
November 2002 and which have not vested before 1 January 2005 are included in the
calculations.
The fair value of the share based payments have been calculated using a binomial
model for the DCC plc 1998 Employee Share Option Scheme and Black Scholes for
the DCC Sharesave Scheme. The following are the main inputs used in determining
the fair value of share options:
• The exercise price which is the market price at the grant date except in
the case of Save As You Earn (SAYE) share options which were issued at a 20%
discount to the market price at the date of grant;
• Future share price volatility is based on historical volatility over a
period consistent with the expected term of the option;
• The risk free interest rate used is the rate applicable to zero-coupon
euro-denominated Government bonds with a remaining term equal to the
expected term of the option;
• Expected dividend payments
An expense of €1.0 million has been recognised in the Group Income Statement in
respect of the year ended 31 March 2005 (€0.4 million for the six month period
to 30 September 2004).
(ii) IFRS 3 "Business Combinations" / IAS 38 "Intangible Assets"
The Group has availed of the exemption under IFRS 1 enabling non-restatement of
business combinations prior to the date of transition to IFRS.
Under IFRS 3, goodwill is no longer amortised but rather is subject to annual
impairment testing. At 1 April 2004, the date of transition, the Group had a net
goodwill asset of €129.6 million which is carried forward and, together with
goodwill arising on subsequent business combinations, is subject to annual
impairment testing. Accordingly, the goodwill amortisation charge of €10.1
million for the year ended 31 March 2005 (€4.6 million for the six months ended
30 September 2004) is not charged under IFRS.
Under IAS 38 "Intangible Assets", there is a requirement to separately identify
intangible assets acquired, other than goodwill. Intangible assets (mainly
comprising customer relationships) are capitalised and subsequently amortised
over their economic lives.
The acquisition balance sheets for business combinations completed in the year
ended 31 March 2005 have been restated to recognise intangible assets which has
resulted in a reduction in the goodwill figure in the acquisition balance
sheets. The amortisation charge recognised in respect of intangible assets
amounted to €1.3 million for the year ended 31 March 2005 (€0.1 million for the
six months ended 30 September 2004). Net intangible assets at 31 March 2005
amounted to €11.3 million (€4.2 million at 30 September 2004).
(iii) IAS 19 "Employee Benefits"
IAS 19 "Employee Benefits" requires the assets and liabilities of defined
benefit pension schemes to be recognised on the face of the balance sheet. In
accordance with the exemption available under 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. In addition, in line with the
amendment to IAS 19, actuarial gains and losses arising after the date of
transition are dealt with in the Statement of Changes in Shareholders' Equity.
The amounts reflected in the Group's transition balance sheet as at 1 April 2004
and the Group's balance sheet as at 31 March 2005 are in accordance with the FRS
17 disclosures previously provided in the Annual Reports at 31 March 2004 and 31
March 2005 save for the recording of assets at bid value under IAS 19 as opposed
to mid-market value.
Application of IAS 19 has resulted in a pre-tax reduction in net assets of €27.7
million as at 1 April 2004 and a pre-tax reduction of €34.3 million as at 31
March 2005 (a pre-tax reduction of €33.2 million as at 30 September 2004). The
decrease in the pre-tax charge to the income statement arising from the adoption
of IAS 19 for the year ended 31 March 2005 is €1.2 million (decrease of €0.5
million for the six months ended 30 September 2004).
(iv) Current and Deferred Tax
Under Irish GAAP, deferred tax is recognised in respect of all timing
differences that have originated but not reversed by the balance sheet date and
which could give rise to an obligation to pay more or less taxation in the
future.
Deferred tax under IAS 12, "Income Taxes", is recognised in respect of all
temporary differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying value for financial reporting purposes. IAS
12 also requires that deferred tax assets and liabilities must be disclosed
separately on the balance sheet. IAS 12 results in an overall increase in the
net deferred tax liability of the Group. The adjustments made to deferred tax
assets and liabilities as at the transition date of 1 April 2004, and reflected
in the transition balance sheet, principally relate to the following issues:
• Under Irish GAAP, deferred tax was not provided on fair value asset
adjustments in business combinations if these adjustments did not give rise
to timing differences between the tax base and the book value of the assets
acquired. The requirement under IAS 12 to provide deferred tax on the
differences arising from the assets acquired gave rise to a deferred tax
liability of €1.3 million as at the transition date. This liability
increased to €1.8 million as at 31 March 2005.
• IAS 12 requires that a deferred tax provision be made for all
rolled-over capital gains rather than those expected to crystallise. The
IFRS transition balance sheet includes a deferred tax liability of €0.2
million in respect of rolled-over capital gains, which did not arise under
Irish GAAP.
• The deferred tax impact of defined benefit pension scheme surpluses and
deficits accounted for in accordance with IAS 19, "Employee Benefits", has
resulted in the creation of a deferred tax asset of €2.1 million in the
transition balance sheet. The deferred tax liability reduces by €1.3 million
as a result of a reversal of the SSAP 24 pension prepayment in the Irish
GAAP balance sheet.
A net deferred tax asset of €1.9 million, as set out above, has been provided in
the transition balance sheet.
IAS 12 requires deferred tax to be provided in respect of undistributed profits
of overseas subsidiaries unless the parent is able to control the timing of
remittances and it is probable that such remittances will not be made in the
foreseeable future. As the Group is able to control the timing of remittances
from overseas subsidiaries and no such remittances are anticipated in the
foreseeable future, no provision has been made for any tax on undistributed
profits of overseas subsidiaries. Similarly, no deferred tax assets or
liabilities have been recognised in respect of temporary differences associated
with investments in subsidiaries.
In addition to the provisions of IAS 12 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 therefore contain re-classifications of deferred tax assets previously
netted within the Group's overall deferred tax liability; these amounts were
€6.7 million, €6.8 million and €7.0 million as at the transition date, 30
September 2004 and 31 March 2005 respectively.
(v) Dividend Payments
IAS 10, "Events after the Balance Sheet Date", requires that dividends declared
after the balance sheet date should not be recognised as a liability at the
balance sheet date as the liability does not represent a present obligation as
defined by IAS 37, "Provisions, Contingent Liabilities and Contingent Assets".
Instead, dividends will be recognised in the period in which they are declared
and approved. This has the effect of increasing the opening net assets at 1
April 2004 by €16.8 million. The results for 2004/2005, as restated under IFRS,
include the 2003/2004 final dividend of €16.8 million and the 2004/2005 interim
dividend of €10.8 million. The 2004/2005 final dividend of €19.1 million will be
reflected in the results for the first half of 2005/2006.
(vi) Exceptional Items
Under IFRS, all exceptional items of an operating nature, apart from the results
of discontinued operations, are disclosed in the appropriate operating line item
before operating profit, with separate disclosure for items which are material
by virtue of their size or nature.
This results in a reclassification of exceptional items reported by the Group
for the year ended 31 March 2005.
(vii) Associated Undertakings
Under Irish GAAP, the appropriate share of the results of associated
undertakings (split between sales, operating profit, interest, tax and minority
interest) was included in the consolidated profit and loss account by way of the
equity method of accounting. Associated undertakings were stated in the
consolidated balance sheet at cost plus the attributable portion of their
retained reserves from the date of acquisition less goodwill amortised.
Under IAS 28, a single figure (being profit after tax) for results of associated
undertakings is disclosed after operating profit. Given the importance of the
contributions of associated undertakings to the Group, sufficient information
will be provided to allow operating profit to be calculated on a basis that is
consistent with previous statements (see Appendix 5).
(viii) Foreign Currencies
Under Irish GAAP currency translation differences on foreign currency net
investments have been written off to revenue reserves.
Under IAS 21 "The Effect of Changes in Foreign Exchange Rates", translation
differences are recorded in a separate currency translation reserve. On disposal
of a foreign operation, the cumulative translation differences relating to that
operation are transferred to the income statement as part of the profit or loss
on disposal.
The Group has availed of the IFRS 1 exemption allowing it to deem all cumulative
translation differences that have arisen up to the transition date to be equal
to zero. These translation differences will therefore remain written off against
revenue reserves and will no longer be separately disclosed in the notes to the
accounts.
IAS 21 provides specific guidance on how the functional currency (i.e. the
currency that an entity should use to record its transactions) of a company
should be determined and the functional currencies of a small number of group
companies have altered as a result of the application of this guidance.
Certain intercompany loans had been treated under Irish GAAP as part of net
investment in foreign operations and foreign exchange gains or losses arising on
these loans had been recognised directly in reserves. On transition from Irish
GAAP, certain of these loans between fellow subsidiaries do not qualify under
IFRS as part of net investment in foreign operations and therefore gains or
losses on these loans must be recognised in the Income Statement.
The financial impact of the above is a charge to the Income Statement of €4.8
million for the year ended 31 March 2005 (a charge of €2.6 million for the six
months ended 30 September 2004) in respect of foreign exchange losses previously
charged to reserves. Accordingly, there is no net impact in the Group's Balance
Sheet at either 30 September 2004 or 31 March 2005 and the amounts are included
in net exceptional items.
The majority of the intercompany balances which gave rise to these accounting
charges (previously taken to reserves) were eliminated during the year ended 31
March 2005 and the half year ended 30 September 2005 so as to eliminate
accounting volatility from 30 September 2005 onwards.
(ix) Other
There are a number of other restatements which are not individually material
including accruals for holiday pay which have been reflected in this financial
information.
Appendix 1
SPECIAL PURPOSE AUDIT REPORT OF PRICEWATERHOUSECOOPERS TO DCC plc (THE
'COMPANY') ON ITS INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS')
FINANCIAL INFORMATION
We have audited the accompanying consolidated IFRS balance sheets of DCC plc and
its subsidiaries (the 'Group') as at 1 April 2004 and 31 March 2005, the related
consolidated IFRS income statement for the year ended 31 March 2005 and the
associated IFRS 1 reconciliations and consolidated IFRS statement of changes in
equity for the year ended 31 March 2005 set out on pages 15 to 24 prepared in
accordance with the basis of preparation and the provisional IFRS accounting
policies set out on pages 26 to 37 (hereinafter referred to as the 'IFRS
financial information').
In addition to the above noted opening and year end balance sheets, full year
income statement and associated IFRS reconciliations, included with the
financial information set out on pages 19 to 22 are the half-year balance
sheet, half-year income statement and associated IFRS reconciliations. We have
not audited the half-year balance sheet, half-year income statement, associated
IFRS reconciliations and selected segmental information and these are not
covered by this opinion and do not form part of the above defined IFRS financial
information.
The IFRS financial information has been prepared by the Group as part of its
transition to IFRS and to establish the financial position, and results of
operations of the Group to provide the comparative financial information
expected to be included in the first complete set of consolidated IFRS financial
statements of the Group for the year ending 31 March 2006.
Respective responsibilities of Directors and PricewaterhouseCoopers
The Directors of the Company are responsible for the preparation of the
consolidated IFRS financial information which has been prepared as part of the
Group's transition to IFRS. Our responsibilities, as independent auditors, are
established in Ireland by the Auditing Practices Board, our profession's ethical
guidance and the terms of our engagement. Under the terms of engagement we are
required to report to you our opinion as to whether the IFRS financial
information has been prepared, in all material respects, in accordance with the
basis of preparation and provisional IFRS accounting policies set out on pages
26 to 37.
This report, including the opinion, has been prepared for, and only for, the
Company for the purposes of assisting with the Group's transition to IFRS and
for no other purpose. To the fullest extent permitted by law, we do not, in
giving this opinion, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
We read the other information contained in this document and consider its
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the above defined IFRS financial information.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the IFRS financial
information. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the IFRS financial
information, and of whether the accounting policies are appropriate to the
Group's circumstances and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the IFRS financial
information is free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of the IFRS financial information.
Emphasis of matter
Without qualifying our opinion, we draw your attention to the fact that the IFRS
financial information may require adjustment before its inclusion as comparative
information in the Group's first set of IFRS financial statements for the year
ending 31 March 2006. This is because Standards currently in issue and adopted
by the EU are subject to interpretations issued from time to time by the
International Financial Reporting Interpretations Committee (IFRIC) and further
Standards may be issued by the International Accounting Standards Board (IASB)
that will be adopted for financial years beginning on or after 1 April 2005.
Additionally, without qualifying our opinion, IFRS is currently being applied in
the Republic of Ireland and in a large number of other countries simultaneously
for the first time. Furthermore, due to a number of new and revised Standards
included within the body of Standards that comprise IFRS, there is not yet a
significant body of established practice on which to draw in forming opinions
regarding interpretation and application. Accordingly, practice is continuing to
evolve. At this preliminary stage, therefore, the full financial effect of
reporting under IFRS as it will be applied and reported on in the Group's first
IFRS financial statements for the year ending 31 March 2006 may be subject to
change.
Furthermore, without qualifying our opinion, we draw attention to the fact that
under IFRS, only a complete set of financial statements, comprising a balance
sheet, income statement, statement of changes in equity and cash flow statement,
together with comparative financial information and explanatory notes can
provide a fair presentation of the Group's financial position, results of
operations and cash flows in accordance with IFRS.
Opinion
In our opinion, the accompanying IFRS financial information comprising the
consolidated IFRS balance sheets as at 1 April 2004 and 31 March 2005, the
related consolidated IFRS income statement for the year ended 31 March 2005, set
out on pages 23, 17 and 15 and the associated IFRS 1 reconciliations and
consolidated IFRS statement of changes in equity for the year ended 31 March
2005 set out on pages 15, 16, 18 and 24, have been prepared, in all material
respects, in accordance with the basis of preparation and the provisional
accounting policies set out on pages 26 to 37, which describe how IFRS have been
applied under IFRS 1 including the assumptions made by the directors about the
standards and interpretations expected to be effective and the policies expected
to be adopted when the directors prepare the first complete set of IFRS Accounts
for the Group for the year ending 31 March 2006.
PricewaterhouseCoopers
Chartered Accountants
Dublin
29 September 2005
Appendix 2
DCC plc
GROUP INCOME STATEMENT
for the year ended 31 March 2005
Restated under IFRS
Audited
Pre net Net
exceptionals exceptionals Total
2004/2005 2004/2005 2004/2005
€'000 €'000 €'000
Revenue 2,627,927 - 2,627,927
Cost of sales (2,248,576) - (2,248,576)
Gross profit 379,351 - 379,351
Operating costs (270,589) (15,967) (286,556)
Operating profit 108,762 (15,967) 92,795
Finance costs (net) (5,630) (4,809) (10,439)
Share of associates
profit after tax 18,245 - 18,245
Profit before tax 121,377 (20,776) 100,601
Income tax expense (11,819)
Profit after tax for the financial year 88,782
Profit attributable to:
Equity holders of the Company 87,760
Minority interests 1,022
Profit after tax for the financial year 88,782
Earnings per Ordinary Share - basic (cent) 109.68c
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended 31 March 2005
Share Other Retained Attributable to Minority Total
Capital Reserves Earnings Equity Holders Interests Equity
€'000 €'000 €'000 €'000 €'000 €'000
At 1 April 2004 22,035 126,387 310,313 458,735 4,081 462,816
Actuarial loss (7,742) (7,742) (7,742)
Currency translation
adjustments and other (5,565) 796 (4,769) (4,769)
Recognised directly in
equity (5,565) (6,946) (12,511) (12,511)
Profit for the period 87,760 87,760 573 88,333
Total recognised income (5,565) 80,814 75,249 573 75,822
Issue of
share capital 7 68 6,783 6,858 6,858
Share based payment 1,003 1,003 1,003
Share buyback (26,762) (26,762) (26,762)
Dividends (27,212) (27,212) (176) (27,388)
Business combinations (130) (130)
Other equity
movements 7 1,071 (47,191) (46,113) (306) (46,419)
At 31 March 2005 22,042 121,893 343,936 487,871 4,348 492,219
DCC plc
GROUP INCOME STATEMENT FOR THE YEAR TO 31 MARCH 2005 - RECONCILIATION FROM IRISH GAAP TO IFRS
IFRS 2
Previous Share IAS 19 IFRS 3 Restated
Irish Based Employee Business Under
GAAP Payment Benefits Combinations Associates IAS 21 Reclassifications Other IFRS
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Revenue 2,627,927 2,627,927
Cost of
sales (2,248,576) (2,248,576)
Gross
profit 379,351 379,351
Operating
costs (269,670) (1,003) 1,622 (277) (269,328)
Exceptional
items
- Irish GAAP (3,815) 3,815 -
Exceptional
items
- IFRS - (3,815) (12,152) (15,967)
Goodwill
amortisation (10,089) 10,089 -
Amortisation
of intangible
assets - (1,261) (1,261)
Share of
associates
operating
profit 21,855 (21,855) -
Operating
profit 117,632 (1,003) 1,622 8,828 (21,855) - (12,429) 92,795
Non
operating
net exceptional
items
- Irish GAAP (12,152) 12,152 -
Net finance
costs (5,576) (423) 369 (5,630)
Foreign exchange
losses on
intercompany
financing
loans * - (4,809) (4,809)
Share of
associates
profit after
tax - 18,245 18,245
Profit on
ordinary
activities
before
taxation 99,904 (1,003) 1,199 8,828 (3,241) (4,809) - (277) 100,601
Taxation (15,115) 166 (144) 3,241 33 (11,819)
Profit for
the financial
year 84,789 (837) 1,055 8,828 - (4,809) - (244) 88,782
Attributable to:
Equity
holders
of the
Company 83,767 (837) 1,055 8,828 (4,809) - (244) 87,760
Minority
interest 1,022 1,022
-----------------------------------------------------------------------------------------------------------
84,789 (837) 1,055 8,828 - (4,809) - (244) 88,782
Basic
earnings per
share (cent) 104.69c (1.05c) 1.32c 11.03c - (6.01c) - (0.30c) 109.68c
Adjusted
earnings per
share (cent)** 137.25c (1.05c) 1.32c - - - - (0.30c) 137.22c
* Treated as an exceptional item
** Before net exceptional items and amortisation.
DCC plc
GROUP BALANCE SHEET AS AT 31 MARCH 2005
Restated
under IFRS
Audited
31 March 2005
€'000
ASSETS
Non-current assets
Property, plant and equipment 247,647
Intangible assets 206,295
Investment in associates 64,535
Deferred income tax assets 6,957
Total non-current assets 525,434
Current assets
Inventories 123,734
Trade and other receivables 408,904
Cash and cash equivalents 352,399
Total current assets 885,037
Total assets 1,410,471
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 22,042
Share premium account 124,506
Other reserves 1,400
Other reserves - shares to be issued 1,552
Foreign currency translation reserve (5,565)
Retained earnings 343,936
Minority interests 4,348
Total equity 492,219
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 315,464
Deferred income tax liabilities 9,844
Retirement benefit obligations 25,380
Deferred acquisition consideration 10,839
Capital grants 958
Total non-current liabilities 362,485
Current liabilities
Interest-bearing loans and borrowings 45,127
Trade and other payables 466,434
Current income tax liabilities 37,122
Deferred acquisition consideration 7,084
Total current liabilities 555,767
Total liabilities 918,252
Total equity and liabilities 1,410,471
DCC plc
GROUP BALANCE SHEET AS AT 31 MARCH 2005 - Reconciliation from Irish GAAP to IFRS
IFRS 2
Previous Share IAS 19 IFRS 3 Restated
Irish Based Employee Business Deferred Reclassifications Under
GAAP Payment Benefits Combinations Tax Dividend and other IFRS
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
ASSETS
Non-current
assets
Property,
plant and
equipment 247,647 247,647
Intangible
assets -
goodwill 193,762 (2,848) 3,503 545 194,962
Intangible
assets -
other - 11,333 11,333
Financial
assets 64,192 343 64,535
Deferred tax
assets 3,720 191 3,046 6,957
509,321 191 3,046 8,828 3,503 545 525,434
Current
Assets
Inventories 123,734 123,734
Trade and
other
receivables 417,814 (8,910) 408,904
Cash and cash
equivalents 352,399 352,399
893,947 (8,910) 885,037
---------------------------------------------------------------------------------------------------------
Total 1,403,268 191 (5,864) 8,828 3,503 545 1,410,471
assets
EQUITY
Capital and
reserves
attributable
to equity
holders
Share
capital 22,042 22,042
Share premium
account 124,506 124,506
Other
reserves 1,400 1,400
Other
reserves
- shares to
be issued - 1,552 1,552
Foreign
currency
translation
reserve - (5,565) (5,565)
Retained
earnings 345,748 (1,361) (30,175) 8,828 19,070 1,826 343,936
Minority
interests 4,348 4,348
Total 498,044 191 (30,175) 8,828 19,070 (3,739) 492,219
equity
LIABILITIES
Non-current
liabilities
Interest
bearing loans
and
borrowings 315,464 315,464
Retirement
benefit
obligations - 25,380 25,380
Deferred
income tax
liabilities 5,350 (1,069) 3,503 2,060 9,844
Deferred
acquisition
consideration 10,839 10,839
Capital
grants 958 958
332,611 24,311 3,503 2,060 362,485
Current liabilities
Interest
bearing loans
and
borrowings 45,127 45,127
Trade and
other
payables 464,210 2,224 466,434
Current
income
tax
liabilities 37,122 37,122
Deferred
acquisition
consideration 7,084 7,084
Proposed
dividend 19,070 (19,070)
572,613 (19,070) 2,224 555,767
Total
liabilities 905,224 24,311 3,503 (19,070) 4,284 918,252
-------------------------------------------------------------------------------------------------------
Total equity
and
liabilities 1,403,268 191 (5,864) 8,828 3,503 - 545 1,410,471
Net debt (8,192) (8,192)
Appendix 3
DCC plc
GROUP INCOME STATEMENT
for the six months ended 30 September 2004
Restated under IFRS
Unaudited
Pre net exceptionals Net exceptionals Total
6 months ended 6 months ended 6 months ended
30 Sep. 2004 30 Sep. 2004 30 Sep. 2004
€'000 €000 €000
Revenue 1,103,047 1,103,047
Cost of sales (926,022) (926,022)
Gross profit 177,025 177,025
Operating costs (140,373) (1,376) (141,749)
Operating profit 36,652 (1,376) 35,276
Finance costs (net) (2,203) (2,572) (4,775)
Share of associates
profit after tax 7,787 7,787
Profit before tax 42,236 (3,948) 38,288
Income tax expense (4,024)
Profit after tax
for the period 34,264
Profit attributable to:
Equity holders
of the Company 33,822
Minority interests 442
Profit after tax
for the period 34,264
Earnings per Ordinary Share
- basic (cent) 42.31c
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the six months ended 30 September 2004
Share Other Retained Attributable to Minority
Capital Reserves Earnings Equity Holders Interests Total Equity
€'000 €'000 €'000 €'000 €'000 €'000
At 1 April 2004 22,035 126,387 310,313 458,735 4,081 462,816
Actuarial loss (4,938) (4,938) (4,938)
Currency
translation
adjustments
and other (7,492) 750 (6,742) (6,742)
Recognised
directly in
equity (7,492) (4,188) (11,680) (11,680)
Profit for
the period 33,822 33,822 209 34,031
Total
recognised
income (7,492) 29,634 22,142 209 22,351
Issue of
share capital 3,842 3,842 3,842
Share based
payment 352 352 352
Share
buyback (26,762) (26,762) (26,762)
Dividends (16,401) (16,401) (122) (16,523)
Other
equity
movements 352 (39,321) (38,969) (122) (39,091)
At 30 Sep. 2004 22,035 119,247 300,626 441,908 4,168 446,076
DCC plc
GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 -
RECONCILIATION FROM IRISH GAAP TO IFRS
IFRS 2
Previous Share IAS 19 IFRS 3 Restated
Irish Based Employee Business Under
GAAP Payment Benefits Combinations IAS 21 Associates Other IFRS
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Revenue 1,103,047 1,103,047
Cost of sales (926,022) (926,022)
Gross profit 177,025 177,025
Operating costs (140,499) (352) 770 (147) (140,228)
Net exceptional
items - (1,376) (1,376)
Goodwill
amortisation (4,583) 4,583 -
Amortisation
of intangible
assets - (145) (145)
Share of
associates
operating
profit 9,486 (9,486) -
Operating
profit 41,429 (352) 770 4,438 (9,486) (1,523) 35,276
Non operating
exceptional
items -
Irish GAAP (1,376) 1,376 -
Net finance
costs (2,167) (229) 193 (2,203)
Foreign
exchange
losses on
intercompany
financing
loans * (2,572) (2,572)
Share of
associates
profit after
tax - 7,787 7,787
Profit on ordinary
activities before
taxation 37,886 (352) 541 4,438 (2,572) (1,506) (147) 38,288
Taxation (5,481) (68) 1,506 19 (4,024)
Profit for the
financial year 32,405 (352) 473 4,438 (2,572) - (128) 34,264
Attributable to:
Equity holders
of the Company 31,963 (352) 473 4,438 (2,572) - (128) 33,822
Minority interest 442 442
---------------------------------------------------------------------------------------------------
32,405 (352) 473 4,438 (2,572) - (128) 34,264
Basic earnings per
share (cent) 39.99c (0.44c) 0.59c 5.55c (3.22c) - (0.16c) 42.31c
Adjusted earnings per
share (cent)** 47.44c (0.44c) 0.59c - - - (0.16c) 47.43c
* Treated as an exceptional item
** Before net exceptional items and amortisation.
DCC plc
GROUP BALANCE SHEET AS AT 30 SEPTEMBER 2004
Restated
under IFRS
Unaudited
30 Sept 2004
€'000
ASSETS
Non-current assets
Property, plant and equipment 222,952
Intangible assets 170,334
Investment in associates 53,879
Deferred income tax assets 6,763
Total non-current assets 453,928
Current assets
Inventories 126,552
Trade and other receivables 344,870
Cash and cash equivalents 325,037
Total current assets 796,459
----------
Total assets 1,250,387
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 22,035
Share premium account 124,438
Other reserves 1,400
Other reserves - shares to be issued 901
Foreign currency translation reserve (7,492)
Retained earnings 300,626
Minority interests 4,168
Total equity 446,076
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 321,690
Deferred income tax liabilities 3,803
Retirement benefit obligations 23,434
Deferred acquisition consideration 9,549
Capital grants 1,039
Total non-current liabilities 359,515
Current liabilities
Interest-bearing loans and borrowings 28,222
Trade and other payables 373,934
Current income tax liabilities 36,611
Deferred acquisition consideration 6,029
Total current liabilities 444,796
Total liabilities 804,311
---------
Total equity and liabilities 1,250,387
DCC plc
GROUP BALANCE SHEET AS AT 30 SEPTEMBER 2004 - Reconciliation from Irish GAAP to IFRS
IFRS 2
Previous Share IAS 19 IFRS 3 Restated
Irish Based Employee Business Deferred Reclassifications Under
GAAP Payment Benefits Combinations Tax Dividends and other IFRS
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
ASSETS
Non-current assets
Property,
plant and
equipment 222,952 222,952
Intangible
assets -
goodwill 164,506 14 1,038 545 166,103
Intangible
assets -
other - 4,231 4,231
Financial
assets 53,686 193 53,879
Deferred tax
assets 3,834 2,929 6,763
444,978 2,929 4,438 1,038 545 453,928
Current Assets
Inventories 126,552 126,552
Trade and
other receivables 354,594 (9,724) 344,870
Cash and cash
equivalents 325,037 325,037
806,183 (9,724) 796,459
------------------------------------------------------------------------------------------------------
Total assets 1,251,161 (6,795) 4,438 1,038 545 1,250,387
EQUITY
Capital and
reserves
attributable
to equity
holders
Share capital 22,035 22,035
Share premium
account 124,438 124,438
Other reserves 1,400 1,400
Other reserves
- shares to
be issued - 901 901
Foreign
currency
translation
reserve - (7,492) (7,492)
Retained
earnings 311,417 (901) (29,013) 4,438 10,802 3,883 300,626
Minority
interests 4,168 4,168
Total equity 463,458 - (29,013) 4,438 10,802 (3,609) 446,076
LIABILITIES
Non-current
liabilities
Interest
bearing loans
and borrowings 321,690 321,690
Retirement
benefit
obligations - 23,434 23,434
Deferred
income tax
liabilities 1,921 (1,216) 1,038 2,060 3,803
Deferred
acquisition
consideration 9,549 9,549
Capital grants 1,039 1,039
334,199 22,218 1,038 2,060 359,515
Current liabilities
Interest
bearing loans
and borrowings 28,222 28,222
Trade and
other payables 371,840 2,094 373,934
Current income
tax liabilities 36,611 36,611
Deferred
acquisition
consideration 6,029 6,029
Proposed dividend 10,802 (10,802) -
453,504 (10,802) 2,094 444,796
Total liabilities 787,703 22,218 1,038 (10,802) 4,154 804,311
-----------------------------------------------------------------------------------------------------
Total equity
and liabilities 1,251,161 - (6,795) 4,438 1,038 - 545 1,250,387
Net debt (24,875) (24,875)
Appendix 4
DCC plc
GROUP BALANCE SHEET AS AT 1 APRIL 2004 ("TRANSITION DATE")
Restated
under IFRS
Audited
2004
€'000
ASSETS
Non-current assets
Property, plant and equipment 212,252
Intangible assets 129,566
Financial assets 53,780
Deferred income tax assets 6,673
Total non-current assets 402,271
Current assets
Inventories 110,577
Trade and other receivables 315,320
Cash and cash equivalents 320,616
Total current assets 746,513
Total assets 1,148,784
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 22,035
Share premium account 124,438
Other reserves 1,400
Other reserves - shares to be issued 549
Foreign currency translation reserve -
Retained earnings 310,313
Minority interests 4,081
Total equity 462,816
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 114,167
Deferred income tax liabilities 2,271
Retirement benefit obligations 17,164
Deferred acquisition consideration 6,799
Capital grants 1,112
Total non-current liabilities 141,513
Current liabilities
Interest-bearing loans and borrowings 143,732
Trade and other payables 359,968
Current income tax liabilities 36,077
Deferred acquisition consideration 4,678
Total current liabilities 544,455
Total liabilities 685,968
Total equity and liabilities 1,148,784
DCC plc
GROUP BALANCE SHEET AS AT 1 APRIL 2004 - Reconciliation from Irish GAAP to IFRS
Previous IFRS 2 IAS 19
Irish Share Based Employee Restated Under
GAAP Payment Benefits Dividends Other IFRS
€'000 €'000 €'000 €'000 €'000 €'000
ASSETS
Non-current assets
Property, plant and equipment 212,252 212,252
Intangible
assets - goodwill 129,566 129,566
Intangible
assets - other - -
Financial assets - associates 53,780 53,780
Deferred tax assets 4,527 2,146 6,673
400,125 2,146 402,271
Current Assets
Inventories 110,577 110,577
Trade and other receivables 325,858 (10,538) 315,320
Cash and cash equivalents 320,616 320,616
757,051 (10,538) 746,513
-------------------------------------------------------------------------
Total assets 1,157,176 (8,392) 1,148,784
EQUITY
Capital and reserves attributable
to equity holders
Share capital 22,035 22,035
Share premium account 124,438 124,438
Other reserves 1,400 1,400
Other reserves - shares to
be issued - 549 549
Foreign currency
translation reserve - -
Retained earnings 321,739 (549) (24,239) 16,824 (3,462) 310,313
Minority interest 4,081 4,081
Total equity 473,693 - (24,239) 16,824 (3,462) 462,816
LIABILITIES
Non-current liabilities
Interest bearing loans
and borrowings 114,167 114,167
Retirement benefit obligations - 17,164 17,164
Deferred income tax liabilities 2,073 (1,317) 1,515 2,271
Capital grants 1,112 1,112
Deferred acquisition consideration 6,799 6,799
124,151 15,847 1,515 141,513
Current liabilities
Interest bearing loans
and borrowings 143,732 143,732
Trade and other payables 358,021 1,947 359,968
Current income tax liabilities 36,077 36,077
Proposed dividend 16,824 (16,824) -
Deferred acquisition consideration 4,678 4,678
559,332 (16,824) 1,947 544,455
Total liabilities 683,483 15,847 (16,824) 3,462 685,968
-------------------------------------------------------------------------
Total equity and liabilities 1,157,176 (8,392) - - 1,148,784
Net cash 62,717 62,717
Appendix 5
DCC plc
Unaudited Restatement under IFRS of Selected Segmental Information
- Year ended 31 March 2005
Revenue Profit before Tax
--------- -----------------------------------------------
Pre net Net Profit before
exceptionals exceptionals tax
€'000 €'000 €'000 €'000
Energy 1,240,551 51,806 (154) 51,652
IT 878,153 27,460 (1,107) 26,353
Healthcare 162,279 15,441 (1,460) 13,981
Food & Beverage 215,834 11,037 (427) 10,610
Environmental 25,780 5,447 612 6,059
Other 105,330 (1,168) (8,631) (9,799)
Other Group
exceptionals (4,800) (4,800)
---------------------------------------------------------------
2,627,927 110,023 (15,967) 94,056
Amortisation of
intangible assets (1,261) (1,261)
Profit after tax of
associated
undertakings 18,245 18,245
Interest (5,630) (5,630)
Foreign exchange
losses on
intercompany loans (4,809) (4,809)
--------------------------------------------------------------
2,627,927 121,377 (20,776) 100,601
Associated undertakings are an important contributor to the Group's profits.
Including the Group's share of turnover (€103.597 million) and operating profit
before interest and tax (€21.855 million), the analysis of turnover and
operating profit before net exceptional items and amortisation of intangible
assets is as follows:
Turnover Operating
Profit
€'000 €'000
Energy 1,240,551 51,697
IT Distribution 878,153 27,460
Healthcare 170,686 16,207
Food & Beverage 242,332 13,256
Environmental 25,823 5,447
Other 173,979 17,811
------------ ------------
2,731,524 131,878
============ ============
Reported under Irish GAAP 2,731,524 131,536
============ ============
Appendix 6
Provisional Accounting Policies under IFRS
Statement of Compliance
The restated financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS), including Interpretations
issued by the International Accounting Standards Board ('IASB') and its
committees and endorsed by the European Union expected to apply at 31 March 2006
with the exception that IAS 32 and IAS 39 have not been applied as permitted
under the transition rules of IFRS 1. Previous Irish GAAP financial information
has been prepared in accordance with the accounting policies set out in the DCC
plc Annual Report 2005.
Basis of Preparation
The restated financial information has been prepared under the historical cost
convention except for the measurement at fair value of share options and
derivative instruments.
The currency used in these financial statements is the euro, denoted by the
symbol €.
Basis of Consolidation
The restated consolidated financial statements include the Company and all
subsidiary and associated undertakings.
All inter-company balances and transactions, including unrealised profits
arising from inter-group transactions, are eliminated on consolidation.
Subsidiaries
The results of subsidiary undertakings acquired or disposed of during the year
are included in the consolidated income statement from the date of their
acquisition or up to the date of their disposal.
A subsidiary is one where the Group has the power, directly or indirectly, to
govern the financial and operating policies of the entity, so as to obtain
benefits from its activities. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered in assessing
whether the Group controls the entity.
Associated Undertakings
Associated undertakings are companies other than subsidiaries in which the Group
holds, on a long-term basis, a participating interest in the voting equity share
capital and exercises significant influence.
Associated undertakings are included in the Company balance sheet at cost less
provision for any impairment in value. Income from associated undertakings
included in the Company profit and loss account comprises dividends received and
receivable.
The appropriate share of results of associated undertakings is included in the
consolidated profit and loss account by way of the equity method of accounting.
Associated undertakings are stated in the consolidated balance sheet at cost
plus the attributable portion of their retained reserves from the date of
acquisition less any impairment in value.
Goodwill attributable to investments in associated undertakings is treated in
accordance with the accounting policy for goodwill.
Turnover and Revenue Recognition
Revenue comprises the invoiced value, including excise duty and excluding value
added tax, of goods supplied and services rendered.
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group, that it can be reliably measured and that the
significant risks and rewards of ownership of the goods have passed to the
buyer.
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 rewards that are different from those other segments.
Foreign Currency Translation
Functional and Presentation Currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in euro which is the presentation currency of the
Group.
Transactions and Balances
Transactions in foreign currencies are recorded at the rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the
balance sheet date. Currency translation differences on monetary assets and
liabilities are taken to the consolidated income statement except where hedge
accounting is applied.
Group Companies
Results and cash flows of subsidiary and associated undertakings which do not
have the euro as their functional currency are translated into euro at average
exchange rates for the year, and the related balance sheets are translated at
the rates of exchange ruling at the balance sheet date. Adjustments arising on
translation of the results of such subsidiary and associated undertakings at
average rates, and on the restatement of the opening net assets at closing
rates, are dealt with in a separate translation reserve within equity, net of
differences on related currency instruments designated as hedges of such
investments.
On disposal of a foreign operation, such cumulative currency translation
differences are recognised in the income statement as part of the overall gain
or loss on disposal. Cumulative currency translation differences arising prior
to the transition date have been set to zero for the purposes of ascertaining
the gain or loss on disposal of a foreign operation subsequent to 1 April 2004.
Goodwill and fair value adjustments arising on acquisition of a foreign
operation are regarded as assets and liabilities of the foreign operation, are
expressed in the functional currency of the foreign operation and are recorded
at the exchange rate at the date of the transaction and subsequently
retranslated at the applicable closing rates.
Pensions and Other Post-Employment Obligations
The Group operates defined contribution and defined benefit pension schemes.
The costs arising in respect of the Group's defined contribution schemes are
charged to the income statement in the period in which they are incurred. The
Group has no legal or constructive obligation to pay further contributions after
payment of fixed contributions.
The Group operates a number of defined benefit pension schemes which require
contributions to be made to separately administered funds. The liabilities and
costs associated with the Group's defined benefit pension schemes are assessed
on the basis of the projected unit credit method by professionally qualified
actuaries and are arrived at using actuarial assumptions based on market
expectations at the balance sheet date. The Group's net obligation in respect of
defined benefit pension schemes is calculated separately for each plan by
estimating the amount of future benefits that employees have earned in return
for their service in the current and prior periods. That benefit is discounted
to determine its present value, and the fair value of any plan asset is
deducted.
The discount rate employed in determining the present value of the schemes'
liabilities is determined by reference to market yields at the balance sheet
date on high quality corporate bonds of a currency and term consistent with the
currency and term of the associated post-employment benefit obligations.
The net surplus or deficit arising in the Group's defined benefit pension
schemes are shown within either non-current assets or liabilities on the face of
the Group Balance Sheet. The deferred tax impact of pension scheme surpluses and
deficits is disclosed separately within deferred tax liabilities or assets as
appropriate. The Group has elected to avail of the Amendment to IAS 19 'Employee
Benefits', to recognise post transition date actuarial gains and losses
immediately in the Statement of Changes in Shareholders' Equity.
When the benefits of a defined benefit plan are improved, the portion of the
increased benefit relating to past service by employees is recognised as an
expense in the income statement on a straight line basis over the average period
until the benefits become vested. To the extent that the benefits vest
immediately, the expense is recognised immediately in the income statement.
In accordance with the exemption granted under IFRS 1, IAS 19 has not been
applied retrospectively in preparing the Group's transition balance sheet to
IFRS. All cumulative actuarial gains and losses as at the transition date (1
April 2004) have therefore been recognised in retained income at that date.
Share Based Payment Transactions
Employees (including directors) of the Group receive remuneration in the form of
share-based payment transactions, whereby employees render service in exchange
for shares or rights over shares.
The fair value of share entitlements granted is recognised as an employee
expense in the income statement with a corresponding increase in equity. The
fair value is determined using a binomial model for the DCC plc 1998 Employee
Share Option Scheme and Black Scholes for the DCC Sharesave Scheme. Non-market
based vesting conditions are not taken into account when estimating the fair
value of entitlements as at the grant date. The expense in the income statement
represents the product of the total number of options anticipated to vest and
the fair value of those options. This amount is allocated on a straight line
basis over the vesting period to the Income Statement with a corresponding
credit to Other Reserves - Shares to be Issued. The cumulative charge to the
income statement is only reversed where entitlements do not vest because
non-market performance conditions have not been met or where an employee in
receipt of share entitlements relinquishes service before the end of the vesting
period.
The proceeds received by the company on the vesting of share entitlements are
credited to share capital (nominal value) and share premium when the share
entitlements are exercised. When the share-based payments give rise to the
re-issue of shares from treasury shares, the proceeds of issue are credited to
shareholders equity.
In line with the transitional arrangements set out in IFRS 2, 'Share Based
Payment', the recognition and measurement principles of this standard have been
applied only in respect of share entitlements granted after 7 November 2002 and
which have not vested by 1 January 2005.
The Group does not operate any cash-settled share-based payment schemes or
share-based payment transactions with cash alternatives as defined in IFRS 2.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost is determined on a first in first out basis and in the case of raw
materials, bought-in goods and expense inventories comprises purchase price plus
transport and handling costs less trade discounts and subsidies. Cost, in the
case of products manufactured by the Group, consists of direct material and
labour costs together with the relevant production overheads based on normal
levels of activity.
Net realisable value represents the estimated selling price less costs to
completion and appropriate selling and distribution costs.
Provision is made, where necessary, for slow moving, obsolete and defective
inventories.
Goodwill
Goodwill arising in respect of acquisitions completed prior to 1 April 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 at 1 April
2004, and goodwill amortisation has ceased with effect from the transition date.
Goodwill written off to reserves under Irish GAAP prior to 1 April 1998 has not
been reinstated and is not included in determining any subsequent profit or loss
on disposal.
Goodwill on acquisitions 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. Goodwill relating to acquisitions from 1 April 2004 and
goodwill carried in the balance sheet at 1 April 2004 is not amortised. Goodwill
is reviewed for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
The carrying amount of goodwill in respect of associated undertakings, net of
any impairments, is included in financial assets under the equity method in the
Group balance sheet.
Goodwill was tested for impairment as at 1 April 2004, the date of transition to
IFRS, and no impairment resulted from this exercise.
Goodwill acquired in a business combination is allocated, from the acquisition
date, to the cash-generating units that are anticipated to benefit from the
combination's synergies. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill is subject to impairment
testing on an annual basis and at any time during the year if an indicator of
impairment is considered to exist; the goodwill impairment tests are undertaken
at a consistent time in each annual period. 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. Impairment
losses arising in respect of goodwill are not reversed following recognition.
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 proportion of the cash-generating unit retained.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
Depreciation is provided on a straight line basis at the rates stated below,
which are estimated to reduce each item of property, plant and equipment to
their residual value levels by the end of their useful lives:
Annual Rate
Freehold and long term leasehold buildings 2%
Plant and machinery 5 - 33 1/3%
Cylinders 6 2/3%
Motor vehicles 10 - 33 1/3%
Fixtures, fittings & office equipment 10 - 33 1/3%
Land is not depreciated. The residual values and useful lives of property, plant
and equipment are reviewed, and adjusted if appropriate, at each balance sheet
date.
In accordance with IAS 36 'Impairment of Assets', the carrying amounts of items
of property, plant and equipment are reviewed at each balance sheet date to
determine whether there is any indication of impairment. An impairment loss is
recognised whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount.
Impairment losses are recognised in the income statement. Following the
recognition of an impairment loss, the depreciation charge applicable to the
asset or cash-generating unit is adjusted prospectively in order to
systematically allocate the revised carrying amount, net of any residual value,
over the remaining useful life.
Subsequent costs are included in an asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
replaced item can be measured reliably. All other repair and maintenance costs
are charged to the income statement during the financial period in which they
are incurred.
Business Combinations
The purchase method of accounting is employed in accounting for the acquisition
of subsidiaries by the Group. The Group has elected to avail of the exemption
under IFRS 1, 'First-time Adoption of International Financial Reporting
Standards', whereby business combinations prior to the transition date of 1
April 2004 are not restated. IFRS 3, 'Business Combinations', has been applied
with effect from the transition date of 1 April 2004 and goodwill amortisation
ceased from that date.
The cost of a business combination is measured as the aggregate of the fair
value at the date of exchange of assets given, liabilities incurred or assumed
and equity instruments issued in exchange for control together with any directly
attributable expenses. Deferred expenditure arising on business combinations is
determined through discounting the amounts payable to their present value at the
date of exchange. The discount component is reflected as an interest charge in
the income statement over the life of the obligation. When the initial
accounting for a business combination is determined provisionally, any
adjustments to the provisional values allocated to assets and liabilities are
made within twelve months of the acquisition date and reflected as a restatement
of the acquisition balance sheet.
Intangible Assets (other than Goodwill)
Intangible assets acquired separately are capitalised at cost. Intangible assets
acquired in the course of a business combination are capitalised at fair value
being their deemed cost as at the date of acquisition.
Following initial recognition, intangible assets which have a finite life are
carried at cost less any applicable accumulated amortisation and any accumulated
impairment losses. Where amortisation is charged on assets with finite lives
this expense is taken to the income statement.
The amortisation of intangible assets is calculated to write-off the book value
of intangible assets over their useful lives on a straight-line basis on the
assumption of zero residual value. In general, definite-lived intangible assets
are amortised over periods ranging from three to five years, depending on the
nature of the intangible asset.
Leases
Tangible fixed assets, acquired under a lease which transfers substantially all
of the risks and rewards of ownership to the Group, are capitalised as fixed
assets and are depreciated over their useful lives with any impairment being
recognised in accumulated depreciation. Amounts payable under such leases
(finance leases), net of finance charges, are shown as short, medium or long
term lease obligations, as appropriate. Finance charges on finance leases are
charged to the income statement over the term of the lease on an actuarial
basis.
Leases where the lessor retains substantially all the risks and rewards of
ownership are classified as operating leases. The annual rentals under operating
leases are charged to the income statement as incurred.
Deferred Consideration
Where acquisitions involve further payments which are deferred or contingent on
levels of performance achieved in the years following the acquisition, a
discounted deferred acquisition creditor is accrued. Notional interest is
charged to the income statement over the relevant period by reference to the
period of deferral, current interest rates and the amount of the likely
payments.
Grants
Grants are recognised at their fair value when there is a reasonable assurance
that the grant will be received and all attaching conditions have been complied
with.
Capital grants received and receivable by the Group are credited to capital
grants and are amortised to the income statement on a straight line basis over
the expected useful lives of the assets to which they relate.
Revenue grants are recognised as income over the periods necessary to match the
grant on a systematic basis to the costs that it is intended to compensate.
Trade and other Receivables and Payables
Trade and other receivables and payables are stated at cost, which approximates
to fair value given the short-dated nature of these assets and liabilities.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term
deposits with an original maturity of three months or less. Deposits with a
maturity of greater than three months from the date of acquisition are
recognised either in held-for-trading financial assets or as loans and
receivables.
Derivative Financial Instruments
The Group uses derivative financial instruments (principally interest rate and
currency swaps and forward foreign exchange and commodity contracts) to hedge
its exposure to interest rate and foreign exchange risks and to changes in the
prices of certain commodity products arising from operational, financing and
investment activities.
Derivative financial instruments are recognised initially at fair value, being
the present value of estimated future cash flows, and gains or losses on
subsequent re-measurement of fair value are recognised immediately in the income
statement. However, where derivatives qualify for hedge accounting, recognition
of any resultant gain or loss depends on the nature of the item being hedged.
Hedging
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 a firm commitment) 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 or a highly probable
forecast transaction).
In the case of fair value hedges which satisfy the conditions for hedge
accounting, any gain or loss arising from the re-measurement of the fair value
of the hedging instrument is reported in the income statement. In addition, any
gain or loss on the hedged item which is attributable to the hedged risk is
adjusted against the carrying amount of the hedged item and reflected in the
income statement.
Where a derivative financial instrument is designated as a hedge of the
variability in cash flows of a recognised asset or liability or a highly
probable forecasted transaction, the effective part of any gain or loss on the
derivative financial instrument is recognised as a separate component of equity
with the ineffective portion being reported in the income statement. When a
forecast transaction results in the recognition of an asset or a liability, the
cumulative gain or loss is removed from equity and included in the initial
measurement of the asset or liability. Otherwise, the associated gains or losses
that had previously been recognised in equity are transferred to the income
statement in the same reporting period as the hedged transaction.
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting. At that
point in time, any cumulative gain or loss on the hedging instrument recognised
as a separate component of equity is kept in equity until the forecast
transaction occurs. If a hedged transaction is no longer anticipated to occur,
the net cumulative gain or loss recognised in equity is transferred to the
income statement in the period.
Where foreign currency instruments provide a hedge against a net investment in a
foreign operation, foreign exchange differences are taken directly to a foreign
currency translation reserve (being a separate component of equity). Cumulative
gains and losses remain in equity until disposal of the net investment in the
foreign operation at which point the related differences are transferred to the
income statement as part of the overall gain or loss on sale.
Interest-Bearing Loans and Borrowings
All loans and borrowings are initially recorded at cost being the fair value of
the consideration received net of transaction costs associated with the
borrowing.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost employing the effective interest yield
method. Amortised cost is calculated by taking into account any issue costs, and
any discount or premium on settlement. Gains and losses are recognised in the
income statement when the liabilities are derecognised or impaired, as well as
through the amortisation process.
Provisions
A provision is recognised in the balance sheet when the Group has a present
obligation (either legal or constructive) as a result of a past event, and it is
probable that a transfer of economic benefits will be required to settle the
obligation.
A provision for restructuring is recognised when the Group has approved a
detailed and formal restructuring plan and announced its main provisions.
Provisions arising on business combinations are only recognised to the extent
that they would have qualified for recognition in the financial statements of
the acquiree prior to the acquisition.
Share Capital
Treasury Shares
Where the Company purchases the Company's equity share capital, the
consideration paid is deducted from total shareholders' equity and classified as
treasury shares until they are cancelled. Where such shares are subsequently
sold or reissued, any consideration received is included in shareholders'
equity.
Dividends
Dividends on Ordinary Shares are recognised as a liability in the Group's
financial statements in the period in which they are declared by the Company.
Dividends declared after the balance sheet date are disclosed in the subsequent
events note.
Income Tax
Current Tax
Current tax represents the expected tax payable or recoverable on the taxable
profit for the year using tax rates enacted or substantively enacted at the
balance sheet date and taking into account any adjustments stemming from prior
years.
Deferred Tax
Deferred tax is provided using the liability method, on all temporary
differences at the balance sheet date which is defined as the difference between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements. Deferred tax assets and liabilities are not subject to
discounting and are measured at the tax rates that are anticipated to apply in
the year in which the asset is realised or the liability is settled.
Deferred tax liabilities are recognised for all taxable temporary differences
with the exception of the following:
i) where the deferred tax liability arises from the initial recognition
of goodwill or the initial recognition of an asset or a liability in a
transaction that is not a business combination and affects neither the
accounting profit nor the taxable profit or loss at the time of the transaction;
and
ii) where, in respect of taxable temporary differences associated with
investments in subsidiary undertakings, the timing of the reversal of the
temporary difference is subject to control and it is probable that reversal
will not occur in the foreseeable future.
Deferred tax assets are recognised in respect of all deductible temporary
differences, carry-forward of unused tax credits and unused tax losses to the
extent that it is probable that taxable profits will be available against which
to offset these items except:
i) where the deferred tax asset arises from the initial recognition of
an asset or a liability in a transaction that is not a business combination
and affects neither the accounting profit nor the taxable profit or loss
at the time of the transaction; and
ii) where, in respect of deductible temporary differences associated
with investment in subsidiaries and associated undertakings, a deferred tax
asset is recognised only if it is probable that the deductible temporary
difference will reverse in the foreseeable future and that sufficient taxable
profits will be available against which the temporary difference can be
utilised.
The carrying amounts of deferred tax assets are reviewed at each balance sheet
date and are reduced to the extent that it is no longer probable that sufficient
taxable profit would be available to allow all or part of the deferred tax asset
to be utilised.
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