Restatement under IFRS

30th Sep 2005 14:48

DCC PLC30 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 FinancialReporting Standards ("IFRS") on its 2005 interim and final results previouslyprepared in accordance with accounting practice generally accepted in theRepublic of Ireland ("Irish GAAP"). The Group's financial statements for the sixmonths ending 30 September 2005 will be prepared under IFRS expected to be inplace at 31 March 2006. The financial statements for the year ending 31 March2006 will be prepared under IFRS. The impact on the selected audited key financial data for the year ended 31March 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 taxProfit before amortisation,net exceptionalitems and tax 126.0 122.6 -2.6% Amortisation (10.1) (1.2) Amortisation of intangibles - see footnote (2)Profit beforenet exceptionalitems 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 reservesProfit 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 balancesheet. Also, the Group's cashflow is unchanged from that previously reportedunder Irish GAAP. For reference, please contact: Jim Flavin, Chief Executive/Deputy ChairmanFergal O'Dwyer, Chief Financial OfficerConor Murphy, Investor Relations Manager Tel: +353 1 2799 400Email: [email protected]: 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 financialstatements in accordance with generally accepted accounting practices in Ireland("Irish GAAP"). For periods commencing on or after 1 January 2005, it ismandatory for all European entities whose securities are listed on a regulatedexchange in the European Union to prepare their financial statements inaccordance with International Financial Reporting Standards ("IFRS").Consequently, the Group's first IFRS financial statements will be for the yearending 31 March 2006. The interim results for the six months ending 30 September2005 will be prepared on the basis of the IFRS accounting policies expected toapply at 31 March 2006. It is a requirement that the first IFRS statementsinclude full comparative information for the year ended 31 March 2005. The dateof transition to IFRS for all standards is 1 April 2004, this being the start ofthe earliest period for which the Group presents full comparative informationunder IFRS in its first IFRS Financial Statements other than the impact of IAS32 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 positionand other key financial information previously reported under Irish GAAP is setout in the attached appendices as follows: Appendix 1: Independent Auditors' Report to the Directors of DCC plc on thePreliminary IFRS Consolidated Financial statements for the year ended 31 March2005. Appendix 2: Group Income Statement and Group Statement of Changes inShareholders' Equity for the year ended 31 March 2005 and Group Balance Sheet asat that date together with reconciliations of profit and equity from Irish GAAPto IFRS. Appendix 3: Unaudited Group Income Statement and Group Statement of Changes inShareholders' Equity for the six months ended 30 September 2004 and GroupBalance Sheet as at that date together with reconciliations of profit and equityfrom Irish GAAP to IFRS. Appendix 4: Adjustments required to the Irish GAAP Group Balance Sheet as at 1April 2004, the transition date, for compliance with IFRS. Appendix 5: Unaudited restatement under IFRS of selected segmental informationpublished in the 2004/2005 Annual Report. Appendix 6: Provisional accounting policies under IFRS. The restatements of the Group's Income Statement, Statement of Changes inShareholders' Equity and Balance Sheet for the full year ended 31 March 2005 andthe Transition Balance Sheet dated 1 April 2004 have been audited by the Group'sauditors, PricewaterhouseCoopers, Chartered Accountants. The financial information in respect of the six months ended 30 September 2004is unaudited. 2. SUMMARY OF IFRS IMPACT The standards giving rise to the principal changes to the consolidated resultsof 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 •'mGroup Income Statement Turnover 2,627.9 2,627.9 1,103.0 1,103.0Operating profit before amortisation and net exceptional items 131.5 110.0 46.0 36.8Profit before amortisation, net exceptional items and tax 126.0 122.6 43.8 42.4Profit before tax (PBT) 99.9 100.6 37.9 38.3Profit after tax 84.8 88.8 32.4 34.3Tax rate (as a % of PBT) 15.1% 11.7% 14.5% 10.5%Basic EPS (cent) 104.69c 109.68c 39.99c 42.31cAdjusted EPS (cent) 137.25c 137.22c 47.44c 47.43c Group Balance Sheet Total assets 1,403.3 1,410.5 1,251.2 1,250.4Total liabilities (905.2) (918.3) (787.7) (804.3)Total equity 498.1 492.2 463.5 446.1Net debt (8.2) (8.2) (24.9) (24.9) IFRS has a negligible impact on DCC's adjusted earnings per share and BalanceSheet. Also, the Group's cash flow is unchanged from that previously reportedunder Irish GAAP. Reconciliation A reconciliation from Irish GAAP to IFRS of certain figures in the previoustable 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) 0.2Non-amortisation of goodwill 10.1 10.1Amortisation of intangible assets (1.3) (1.3)Foreign exchange losses on intercompany loans previously charged to reserves (4.8)Non-provision for dividend 19.1Other (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 4.5Amortisation of intangible assets (0.1) (0.1)Foreign exchange losses on intercompany loans previously charged to reserves (2.6)Non-provision for dividend 10.8Other (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 prepareconsolidated financial statements under IFRS as adopted by the European Union("EU"). The financial information presented in this announcement has beenprepared in accordance with the measurement criteria required by InternationalFinancial Reporting Standards and Interpretations issued by the InternationalAccounting Standards Board ("IASB") and with International Accounting Standards("IAS") and Standard Interpretations Committee Interpretations approved by thepredecessor International Accounting Standards Committee that have beensubsequently authorised by the IASB and remain in effect. The Group's transition date to IFRS is 1 April 2004 and the comparativefinancial information for the year ended 31 March 2005 has been restated on aconsistent basis with those accounting policies expected to be applied by theGroup in preparing its first full financial statements in accordance with IFRSat 31 March 2006, except where otherwise required or permitted by IFRS 1 "Firsttime adoption of International Accounting Standards". The transition to IFRS is accounted for in accordance with IFRS 1. This standardsets out how to adopt IFRS for the first time and mandates that most IFRS are tobe fully applied retrospectively. There are certain limited exemptions from thisrequirement. The significant decisions taken in respect of availing, orotherwise, of the exemptions available are outlined in the section "PrincipalExemptions Availed of on Transition to IFRS". The majority of the IASs/IFRSs have been approved by the EU. However, a numberof 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 IAS19 "Employee Benefits" which would allow recognition of actuarial gains andlosses in the Statement of Changes in Shareholders' Equity in the same manner asFRS 17 permitted under Irish GAAP. The preliminary IFRS comparatives for the year ended 31 March 2005 and the sixmonths ended 30 September 2004 have been prepared on the basis of therecognition and measurement requirements of IFRSs in issue that either areadopted by the EU and effective (or available for early adoption) at 31 March2006 or are expected to be adopted and effective (or available for earlyadoption) at 31 March 2006, the first annual reporting date at which the Groupis required to use accounting standards adopted by the EU. Based on theserecognition and measurement requirements management has made assumptions aboutthe accounting policies expected to be applied, which are as set out below, whenthe first annual financial statements are prepared in accordance with accountingstandards adopted by the EU for the year ending 31 March 2006. In particular, management has assumed that the following IFRSs issued by theInternational Accounting Standards Board and IFRIC Interpretations issued by theInternational Financial Reporting Interpretations Committee will be adopted bythe EU such that they will be available for use in the annual IFRS financialstatements 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 inSection 4 including the exemption from restatement of the 2004/2005 numbersrelating to IAS 32 and IAS 39. No adjustments have been made for any changes inestimates made at the time of approval of the consolidated financial statementsfor the year ended 31 March 2005 under Irish GAAP on which the preliminary IFRSinformation is based. 4. PRINCIPAL EXEMPTIONS AVAILED OF ON TRANSITION TO IFRS IFRS 1 "First-time Adoption of International Financial Reporting Standards" setsout the procedures that the Group must follow when adopting IFRS for the firsttime as the basis for preparing its Consolidated Financial Statements. The Group is required to establish its IFRS accounting policies for the yearending 31 March 2006 and, in general, apply these retrospectively to determinethe IFRS opening balance sheet at its date of transition, 1 April 2004. This standard permits a number of optional exemptions from the general principleof retrospective restatement and the Group has elected, in common with otherlisted 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 2004have not been subject to restatement; goodwill as at the transition date iscarried forward at its carrying amount and, together with goodwill arising onbusiness combinations subsequent to the transition date, is subject to annualimpairment testing in accordance with IAS 36 "Impairment of Assets". As requiredby IFRS 1, an impairment review of goodwill was carried out at the transitiondate. This review indicated that no impairment provision was required. (ii) Property, Plant & Equipment The Group has retained its existing carrying value of occupied properties, plantand equipment at 1 April 2004 as deemed cost, rather than either reverting tohistorical cost or carrying out a valuation at the date of transition aspermitted by IFRS 1. (iii) Employee Benefits The Group has elected to recognise all cumulative actuarial gains and lossesapplicable to defined benefit pension schemes in the transition balance sheetand to adjust them against retained income. (iv) Currency Translation Adjustments IFRS require that on disposal of a foreign operation, the cumulative amount ofcurrency translation differences previously recognised directly in reserves forthat operation be transferred to the income statement as part of the profit orloss on disposal. The Group has elected to deem the cumulative currencytranslation differences applicable to foreign operations to be zero as at thetransition date. The cumulative currency translation differences arising afterthe transition date (i.e. during the year ended 31 March 2005) have beenre-classified from retained income to a separate component of equity (termed the'foreign currency translation reserve' in the attached documentation) with nonet 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 therevised versions of IAS 32 'Financial Instruments: Disclosure and Presentation'and IAS 39 'Financial Instruments: Recognition and Measurement' is 1 April 2005and 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 notto restate the comparative information under IAS 32 and IAS 39. Comparativeinformation on financial instruments for the year ended 31 March 2005 in thefinancial statements at 31 March 2006 will be presented on the existing IrishGAAP basis. Other Options availed of on Transition In compliance with the transitional arrangements set out in IFRS 2 "Share-basedPayment", this standard will be applied in respect of share options grantedafter 7 November 2002 and which have not vested before 1 January 2005. On the introduction of FRS 17 "Retirement Benefits" in 2001, DCC together withthe majority of publicly-listed entities, elected to continue to account for itspension obligations under SSAP 24 "Accounting for Pension Costs" and to disclosethe impact of FRS 17 in the notes to the financial statements. FRS 17 requiresimmediate recognition of actuarial gains and losses on defined benefit pensionschemes in the Statement of Total Recognised Gains and Losses. The Group haselected to avail of early application of the amendment to IAS 19 which enablesthe recognition of actuarial gains and losses through retained income via theStatement of Changes in Shareholders' Equity. 5. PRINCIPAL CHANGES ON TRANSITION TO IFRS The standards which result in the most significant changes for DCC arising fromthe transition to IFRS from Irish GAAP are summarised in the followingparagraphs. The impact of these changes on the financial results for the yearended 31 March 2005 and the interim accounts for the six months ended 30September 2004 are shown in Appendices 2 and 3. The accounting policies whichwill 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 incomestatement representing the fair value at the date of grant of share-basedpayments (mainly share options in the case of DCC). This expense is recognisedover the vesting period of the options. In accordance with the transitionalarrangements contained in the standard, only share options granted after 7November 2002 and which have not vested before 1 January 2005 are included in thecalculations. The fair value of the share based payments have been calculated using a binomialmodel for the DCC plc 1998 Employee Share Option Scheme and Black Scholes forthe DCC Sharesave Scheme. The following are the main inputs used in determiningthe 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 ofbusiness combinations prior to the date of transition to IFRS. Under IFRS 3, goodwill is no longer amortised but rather is subject to annualimpairment testing. At 1 April 2004, the date of transition, the Group had a netgoodwill asset of €129.6 million which is carried forward and, together withgoodwill arising on subsequent business combinations, is subject to annualimpairment testing. Accordingly, the goodwill amortisation charge of €10.1million for the year ended 31 March 2005 (€4.6 million for the six months ended30 September 2004) is not charged under IFRS. Under IAS 38 "Intangible Assets", there is a requirement to separately identifyintangible assets acquired, other than goodwill. Intangible assets (mainlycomprising customer relationships) are capitalised and subsequently amortisedover their economic lives. The acquisition balance sheets for business combinations completed in the yearended 31 March 2005 have been restated to recognise intangible assets which hasresulted in a reduction in the goodwill figure in the acquisition balancesheets. The amortisation charge recognised in respect of intangible assetsamounted to €1.3 million for the year ended 31 March 2005 (€0.1 million for thesix months ended 30 September 2004). Net intangible assets at 31 March 2005amounted 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 definedbenefit pension schemes to be recognised on the face of the balance sheet. Inaccordance with the exemption available under IFRS 1, the Group has elected torecognise all cumulative actuarial gains and losses attributable to its definedbenefit pension schemes as at the transition date. In addition, in line with theamendment to IAS 19, actuarial gains and losses arising after the date oftransition 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 2004and the Group's balance sheet as at 31 March 2005 are in accordance with the FRS17 disclosures previously provided in the Annual Reports at 31 March 2004 and 31March 2005 save for the recording of assets at bid value under IAS 19 as opposedto mid-market value. Application of IAS 19 has resulted in a pre-tax reduction in net assets of €27.7million as at 1 April 2004 and a pre-tax reduction of €34.3 million as at 31March 2005 (a pre-tax reduction of €33.2 million as at 30 September 2004). Thedecrease in the pre-tax charge to the income statement arising from the adoptionof IAS 19 for the year ended 31 March 2005 is €1.2 million (decrease of €0.5million for the six months ended 30 September 2004). (iv) Current and Deferred Tax Under Irish GAAP, deferred tax is recognised in respect of all timingdifferences that have originated but not reversed by the balance sheet date andwhich could give rise to an obligation to pay more or less taxation in thefuture. Deferred tax under IAS 12, "Income Taxes", is recognised in respect of alltemporary differences at the balance sheet date between the tax bases of assetsand liabilities and their carrying value for financial reporting purposes. IAS12 also requires that deferred tax assets and liabilities must be disclosedseparately on the balance sheet. IAS 12 results in an overall increase in thenet deferred tax liability of the Group. The adjustments made to deferred taxassets and liabilities as at the transition date of 1 April 2004, and reflectedin 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 inthe transition balance sheet. IAS 12 requires deferred tax to be provided in respect of undistributed profitsof overseas subsidiaries unless the parent is able to control the timing ofremittances and it is probable that such remittances will not be made in theforeseeable future. As the Group is able to control the timing of remittancesfrom overseas subsidiaries and no such remittances are anticipated in theforeseeable future, no provision has been made for any tax on undistributedprofits of overseas subsidiaries. Similarly, no deferred tax assets orliabilities have been recognised in respect of temporary differences associatedwith investments in subsidiaries. In addition to the provisions of IAS 12 described above, IAS 1, 'Presentation ofFinancial Statements' requires separate disclosure of deferred tax assets andliabilities on the face of the balance sheet. The Group's restated BalanceSheets therefore contain re-classifications of deferred tax assets previouslynetted 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, 30September 2004 and 31 March 2005 respectively. (v) Dividend Payments IAS 10, "Events after the Balance Sheet Date", requires that dividends declaredafter the balance sheet date should not be recognised as a liability at thebalance sheet date as the liability does not represent a present obligation asdefined by IAS 37, "Provisions, Contingent Liabilities and Contingent Assets". Instead, dividends will be recognised in the period in which they are declaredand approved. This has the effect of increasing the opening net assets at 1April 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 interimdividend of €10.8 million. The 2004/2005 final dividend of €19.1 million will bereflected 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 resultsof discontinued operations, are disclosed in the appropriate operating line itembefore operating profit, with separate disclosure for items which are materialby virtue of their size or nature. This results in a reclassification of exceptional items reported by the Groupfor the year ended 31 March 2005. (vii) Associated Undertakings Under Irish GAAP, the appropriate share of the results of associatedundertakings (split between sales, operating profit, interest, tax and minorityinterest) was included in the consolidated profit and loss account by way of theequity method of accounting. Associated undertakings were stated in theconsolidated balance sheet at cost plus the attributable portion of theirretained reserves from the date of acquisition less goodwill amortised. Under IAS 28, a single figure (being profit after tax) for results of associatedundertakings is disclosed after operating profit. Given the importance of thecontributions of associated undertakings to the Group, sufficient informationwill be provided to allow operating profit to be calculated on a basis that isconsistent with previous statements (see Appendix 5). (viii) Foreign Currencies Under Irish GAAP currency translation differences on foreign currency netinvestments have been written off to revenue reserves. Under IAS 21 "The Effect of Changes in Foreign Exchange Rates", translationdifferences are recorded in a separate currency translation reserve. On disposalof a foreign operation, the cumulative translation differences relating to thatoperation are transferred to the income statement as part of the profit or losson disposal. The Group has availed of the IFRS 1 exemption allowing it to deem all cumulativetranslation differences that have arisen up to the transition date to be equalto zero. These translation differences will therefore remain written off againstrevenue reserves and will no longer be separately disclosed in the notes to theaccounts. IAS 21 provides specific guidance on how the functional currency (i.e. thecurrency that an entity should use to record its transactions) of a companyshould be determined and the functional currencies of a small number of groupcompanies have altered as a result of the application of this guidance. Certain intercompany loans had been treated under Irish GAAP as part of netinvestment in foreign operations and foreign exchange gains or losses arising onthese loans had been recognised directly in reserves. On transition from IrishGAAP, certain of these loans between fellow subsidiaries do not qualify underIFRS as part of net investment in foreign operations and therefore gains orlosses on these loans must be recognised in the Income Statement. The financial impact of the above is a charge to the Income Statement of €4.8million for the year ended 31 March 2005 (a charge of €2.6 million for the sixmonths ended 30 September 2004) in respect of foreign exchange losses previouslycharged to reserves. Accordingly, there is no net impact in the Group's BalanceSheet at either 30 September 2004 or 31 March 2005 and the amounts are includedin net exceptional items. The majority of the intercompany balances which gave rise to these accountingcharges (previously taken to reserves) were eliminated during the year ended 31March 2005 and the half year ended 30 September 2005 so as to eliminateaccounting volatility from 30 September 2005 onwards. (ix) Other There are a number of other restatements which are not individually materialincluding accruals for holiday pay which have been reflected in this financialinformation. 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 andits subsidiaries (the 'Group') as at 1 April 2004 and 31 March 2005, the relatedconsolidated IFRS income statement for the year ended 31 March 2005 and theassociated IFRS 1 reconciliations and consolidated IFRS statement of changes inequity for the year ended 31 March 2005 set out on pages 15 to 24 prepared inaccordance with the basis of preparation and the provisional IFRS accountingpolicies set out on pages 26 to 37 (hereinafter referred to as the 'IFRSfinancial information'). In addition to the above noted opening and year end balance sheets, full yearincome statement and associated IFRS reconciliations, included with thefinancial information set out on pages 19 to 22 are the half-year balancesheet, half-year income statement and associated IFRS reconciliations. We havenot audited the half-year balance sheet, half-year income statement, associatedIFRS reconciliations and selected segmental information and these are notcovered by this opinion and do not form part of the above defined IFRS financialinformation. The IFRS financial information has been prepared by the Group as part of itstransition to IFRS and to establish the financial position, and results ofoperations of the Group to provide the comparative financial informationexpected to be included in the first complete set of consolidated IFRS financialstatements 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 theconsolidated IFRS financial information which has been prepared as part of theGroup's transition to IFRS. Our responsibilities, as independent auditors, areestablished in Ireland by the Auditing Practices Board, our profession's ethicalguidance and the terms of our engagement. Under the terms of engagement we arerequired to report to you our opinion as to whether the IFRS financialinformation has been prepared, in all material respects, in accordance with thebasis of preparation and provisional IFRS accounting policies set out on pages26 to 37. This report, including the opinion, has been prepared for, and only for, theCompany for the purposes of assisting with the Group's transition to IFRS andfor no other purpose. To the fullest extent permitted by law, we do not, ingiving this opinion, accept or assume responsibility for any other purpose or toany other person to whom this report is shown or into whose hands it may comesave where expressly agreed by our prior consent in writing. We read the other information contained in this document and consider itsimplications for our report if we become aware of any apparent misstatements ormaterial inconsistencies with the above defined IFRS financial information. Basis of audit opinion We conducted our audit in accordance with Auditing Standards issued by theAuditing Practices Board. An audit includes examination, on a test basis, ofevidence relevant to the amounts and disclosures in the IFRS financialinformation. It also includes an assessment of the significant estimates andjudgements made by the directors in the preparation of the IFRS financialinformation, and of whether the accounting policies are appropriate to theGroup's circumstances and adequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the IFRS financialinformation is free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of the IFRS financial information. Emphasis of matter Without qualifying our opinion, we draw your attention to the fact that the IFRSfinancial information may require adjustment before its inclusion as comparativeinformation in the Group's first set of IFRS financial statements for the yearending 31 March 2006. This is because Standards currently in issue and adoptedby the EU are subject to interpretations issued from time to time by theInternational Financial Reporting Interpretations Committee (IFRIC) and furtherStandards 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 inthe Republic of Ireland and in a large number of other countries simultaneouslyfor the first time. Furthermore, due to a number of new and revised Standardsincluded within the body of Standards that comprise IFRS, there is not yet asignificant body of established practice on which to draw in forming opinionsregarding interpretation and application. Accordingly, practice is continuing toevolve. At this preliminary stage, therefore, the full financial effect ofreporting under IFRS as it will be applied and reported on in the Group's firstIFRS financial statements for the year ending 31 March 2006 may be subject tochange. Furthermore, without qualifying our opinion, we draw attention to the fact thatunder IFRS, only a complete set of financial statements, comprising a balancesheet, income statement, statement of changes in equity and cash flow statement,together with comparative financial information and explanatory notes canprovide a fair presentation of the Group's financial position, results ofoperations and cash flows in accordance with IFRS. Opinion In our opinion, the accompanying IFRS financial information comprising theconsolidated IFRS balance sheets as at 1 April 2004 and 31 March 2005, therelated consolidated IFRS income statement for the year ended 31 March 2005, setout on pages 23, 17 and 15 and the associated IFRS 1 reconciliations andconsolidated IFRS statement of changes in equity for the year ended 31 March2005 set out on pages 15, 16, 18 and 24, have been prepared, in all materialrespects, in accordance with the basis of preparation and the provisionalaccounting policies set out on pages 26 to 37, which describe how IFRS have beenapplied under IFRS 1 including the assumptions made by the directors about thestandards and interpretations expected to be effective and the policies expectedto be adopted when the directors prepare the first complete set of IFRS Accountsfor the Group for the year ending 31 March 2006. PricewaterhouseCoopersChartered AccountantsDublin29 September 2005 Appendix 2 DCC plcGROUP INCOME STATEMENTfor 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 - 2,627,927Cost 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 87,760Minority interests 1,022Profit after tax for the financial year 88,782 Earnings per Ordinary Share - basic (cent) 109.68c GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYfor 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 88,333Total recognised income (5,565) 80,814 75,249 573 75,822 Issue of share capital 7 68 6,783 6,858 6,858Share based payment 1,003 1,003 1,003Share 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 2,627,927Cost of sales (2,248,576) (2,248,576)Gross profit 379,351 379,351 Operatingcosts (269,670) (1,003) 1,622 (277) (269,328)Exceptionalitems - Irish GAAP (3,815) 3,815 - Exceptionalitems - IFRS - (3,815) (12,152) (15,967)Goodwillamortisation (10,089) 10,089 -Amortisationof intangible assets - (1,261) (1,261)Share ofassociatesoperatingprofit 21,855 (21,855) - Operatingprofit 117,632 (1,003) 1,622 8,828 (21,855) - (12,429) 92,795 Nonoperatingnet exceptionalitems - Irish GAAP (12,152) 12,152 -Net financecosts (5,576) (423) 369 (5,630)Foreign exchangelosses onintercompanyfinancingloans * - (4,809) (4,809)Share ofassociatesprofit aftertax - 18,245 18,245 Profit onordinaryactivitiesbeforetaxation 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 forthe financial year 84,789 (837) 1,055 8,828 - (4,809) - (244) 88,782 Attributable to:Equityholders of theCompany 83,767 (837) 1,055 8,828 (4,809) - (244) 87,760Minorityinterest 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 plcGROUP BALANCE SHEET AS AT 31 MARCH 2005 Restated under IFRS Audited 31 March 2005 •'000 ASSETSNon-current assetsProperty, plant and equipment 247,647Intangible assets 206,295Investment in associates 64,535Deferred income tax assets 6,957Total non-current assets 525,434 Current assetsInventories 123,734Trade and other receivables 408,904Cash and cash equivalents 352,399Total current assets 885,037 Total assets 1,410,471 EQUITYCapital and reserves attributable to the Company's equity holdersEquity share capital 22,042Share premium account 124,506Other reserves 1,400Other reserves - shares to be issued 1,552Foreign currency translation reserve (5,565)Retained earnings 343,936Minority interests 4,348Total equity 492,219 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 315,464Deferred income tax liabilities 9,844Retirement benefit obligations 25,380Deferred acquisition consideration 10,839Capital grants 958Total non-current liabilities 362,485 Current liabilitiesInterest-bearing loans and borrowings 45,127Trade and other payables 466,434Current income tax liabilities 37,122Deferred acquisition consideration 7,084Total current liabilities 555,767 Total liabilities 918,252 Total equity and liabilities 1,410,471 DCC plcGROUP 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 ASSETSNon-current assetsProperty,plant andequipment 247,647 247,647Intangibleassets -goodwill 193,762 (2,848) 3,503 545 194,962Intangibleassets - other - 11,333 11,333Financialassets 64,192 343 64,535Deferred taxassets 3,720 191 3,046 6,957 509,321 191 3,046 8,828 3,503 545 525,434 Current AssetsInventories 123,734 123,734Trade andotherreceivables 417,814 (8,910) 408,904Cash and cashequivalents 352,399 352,399 893,947 (8,910) 885,037 --------------------------------------------------------------------------------------------------------- Total 1,403,268 191 (5,864) 8,828 3,503 545 1,410,471assets EQUITYCapital andreservesattributableto equityholdersShare capital 22,042 22,042Share premiumaccount 124,506 124,506Other reserves 1,400 1,400Otherreserves- shares to be issued - 1,552 1,552 Foreigncurrencytranslationreserve - (5,565) (5,565)Retainedearnings 345,748 (1,361) (30,175) 8,828 19,070 1,826 343,936Minorityinterests 4,348 4,348Total 498,044 191 (30,175) 8,828 19,070 (3,739) 492,219equity LIABILITIESNon-currentliabilitiesInterestbearing loansand borrowings 315,464 315,464Retirementbenefitobligations - 25,380 25,380Deferredincome taxliabilities 5,350 (1,069) 3,503 2,060 9,844Deferredacquisitionconsideration 10,839 10,839Capital grants 958 958 332,611 24,311 3,503 2,060 362,485 Current liabilities Interestbearing loansand borrowings 45,127 45,127Trade andother payables 464,210 2,224 466,434Currentincometax liabilities 37,122 37,122Deferredacquisitionconsideration 7,084 7,084Proposeddividend 19,070 (19,070) 572,613 (19,070) 2,224 555,767 Totalliabilities 905,224 24,311 3,503 (19,070) 4,284 918,252 ------------------------------------------------------------------------------------------------------- Total equityand 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 STATEMENTfor 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 1,103,047Cost 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 associatesprofit 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 33,822Minority interests 442Profit after tax for the period 34,264 Earnings per Ordinary Share - basic (cent) 42.31c GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYfor 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)Currencytranslationadjustmentsand other (7,492) 750 (6,742) (6,742)Recogniseddirectly inequity (7,492) (4,188) (11,680) (11,680)Profit forthe period 33,822 33,822 209 34,031 Totalrecognisedincome (7,492) 29,634 22,142 209 22,351 Issue ofshare capital 3,842 3,842 3,842Share basedpayment 352 352 352Share buyback (26,762) (26,762) (26,762)Dividends (16,401) (16,401) (122) (16,523) Otherequity 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 1,103,047Cost of sales (926,022) (926,022)Gross profit 177,025 177,025 Operating costs (140,499) (352) 770 (147) (140,228)Net exceptionalitems - (1,376) (1,376)Goodwillamortisation (4,583) 4,583 -Amortisationof intangible assets - (145) (145)Share ofassociatesoperatingprofit 9,486 (9,486) - Operatingprofit 41,429 (352) 770 4,438 (9,486) (1,523) 35,276 Non operatingexceptionalitems - Irish GAAP (1,376) 1,376 -Net financecosts (2,167) (229) 193 (2,203)Foreignexchangelosses onintercompanyfinancingloans * (2,572) (2,572)Share ofassociatesprofit aftertax - 7,787 7,787 Profit on ordinaryactivities beforetaxation 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) 33,822Minority 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 plcGROUP BALANCE SHEET AS AT 30 SEPTEMBER 2004 Restated under IFRS Unaudited 30 Sept 2004 •'000 ASSETS Non-current assetsProperty, plant and equipment 222,952Intangible assets 170,334Investment in associates 53,879Deferred income tax assets 6,763Total non-current assets 453,928 Current assetsInventories 126,552Trade and other receivables 344,870Cash and cash equivalents 325,037Total current assets 796,459 ---------- Total assets 1,250,387 EQUITYCapital and reserves attributable to the Company's equity holdersEquity share capital 22,035Share premium account 124,438Other reserves 1,400Other reserves - shares to be issued 901Foreign currency translation reserve (7,492)Retained earnings 300,626Minority interests 4,168Total equity 446,076 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 321,690Deferred income tax liabilities 3,803Retirement benefit obligations 23,434Deferred acquisition consideration 9,549Capital grants 1,039Total non-current liabilities 359,515 Current liabilitiesInterest-bearing loans and borrowings 28,222Trade and other payables 373,934Current income tax liabilities 36,611Deferred acquisition consideration 6,029Total current liabilities 444,796 Total liabilities 804,311 --------- Total equity and liabilities 1,250,387 DCC plcGROUP 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 ASSETSNon-current assetsProperty,plant andequipment 222,952 222,952Intangibleassets -goodwill 164,506 14 1,038 545 166,103Intangibleassets - other - 4,231 4,231Financialassets 53,686 193 53,879Deferred taxassets 3,834 2,929 6,763 444,978 2,929 4,438 1,038 545 453,928 Current AssetsInventories 126,552 126,552Trade andother receivables 354,594 (9,724) 344,870Cash and cashequivalents 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 EQUITYCapital andreservesattributableto equityholdersShare capital 22,035 22,035Share premiumaccount 124,438 124,438Other reserves 1,400 1,400Other reserves- shares to be issued - 901 901Foreigncurrencytranslationreserve - (7,492) (7,492)Retainedearnings 311,417 (901) (29,013) 4,438 10,802 3,883 300,626Minorityinterests 4,168 4,168Total equity 463,458 - (29,013) 4,438 10,802 (3,609) 446,076 LIABILITIESNon-currentliabilitiesInterestbearing loansand borrowings 321,690 321,690Retirementbenefitobligations - 23,434 23,434Deferredincome taxliabilities 1,921 (1,216) 1,038 2,060 3,803Deferredacquisitionconsideration 9,549 9,549Capital grants 1,039 1,039 334,199 22,218 1,038 2,060 359,515 Current liabilitiesInterestbearing loansand borrowings 28,222 28,222Trade andother payables 371,840 2,094 373,934Current incometax liabilities 36,611 36,611Deferredacquisitionconsideration 6,029 6,029Proposed 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 equityand liabilities 1,251,161 - (6,795) 4,438 1,038 - 545 1,250,387 Net debt (24,875) (24,875) Appendix 4 DCC plcGROUP BALANCE SHEET AS AT 1 APRIL 2004 ("TRANSITION DATE") Restated under IFRS Audited 2004 •'000 ASSETSNon-current assetsProperty, plant and equipment 212,252Intangible assets 129,566Financial assets 53,780Deferred income tax assets 6,673Total non-current assets 402,271 Current assetsInventories 110,577Trade and other receivables 315,320Cash and cash equivalents 320,616Total current assets 746,513 Total assets 1,148,784 EQUITYCapital and reserves attributable to the Company's equity holdersEquity share capital 22,035Share premium account 124,438Other reserves 1,400Other reserves - shares to be issued 549Foreign currency translation reserve -Retained earnings 310,313Minority interests 4,081Total equity 462,816 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 114,167Deferred income tax liabilities 2,271Retirement benefit obligations 17,164Deferred acquisition consideration 6,799Capital grants 1,112Total non-current liabilities 141,513 Current liabilitiesInterest-bearing loans and borrowings 143,732Trade and other payables 359,968Current income tax liabilities 36,077Deferred acquisition consideration 4,678Total current liabilities 544,455 Total liabilities 685,968 Total equity and liabilities 1,148,784 DCC plcGROUP 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 ASSETSNon-current assetsProperty, plant and equipment 212,252 212,252Intangibleassets - goodwill 129,566 129,566Intangible assets - other - -Financial assets - associates 53,780 53,780Deferred tax assets 4,527 2,146 6,673 400,125 2,146 402,271Current AssetsInventories 110,577 110,577Trade and other receivables 325,858 (10,538) 315,320Cash and cash equivalents 320,616 320,616 757,051 (10,538) 746,513 ------------------------------------------------------------------------- Total assets 1,157,176 (8,392) 1,148,784 EQUITYCapital and reserves attributableto equity holdersShare capital 22,035 22,035Share premium account 124,438 124,438Other reserves 1,400 1,400Other reserves - shares to be issued - 549 549Foreign currency translation reserve - -Retained earnings 321,739 (549) (24,239) 16,824 (3,462) 310,313Minority interest 4,081 4,081Total equity 473,693 - (24,239) 16,824 (3,462) 462,816 LIABILITIESNon-current liabilitiesInterest bearing loansand borrowings 114,167 114,167Retirement benefit obligations - 17,164 17,164Deferred income tax liabilities 2,073 (1,317) 1,515 2,271Capital grants 1,112 1,112Deferred acquisition consideration 6,799 6,799 124,151 15,847 1,515 141,513 Current liabilitiesInterest bearing loansand borrowings 143,732 143,732Trade and other payables 358,021 1,947 359,968Current income tax liabilities 36,077 36,077Proposed 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 plcUnaudited 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) 51,652IT 878,153 27,460 (1,107) 26,353Healthcare 162,279 15,441 (1,460) 13,981Food & Beverage 215,834 11,037 (427) 10,610Environmental 25,780 5,447 612 6,059Other 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 ofassociated undertakings 18,245 18,245Interest (5,630) (5,630)Foreign exchangelosses onintercompany 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 profitbefore interest and tax (€21.855 million), the analysis of turnover andoperating profit before net exceptional items and amortisation of intangibleassets is as follows: Turnover Operating Profit •'000 •'000 Energy 1,240,551 51,697IT Distribution 878,153 27,460Healthcare 170,686 16,207Food & Beverage 242,332 13,256Environmental 25,823 5,447Other 173,979 17,811 ------------ ------------ 2,731,524 131,878 ============ ============ Reported under Irish GAAP 2,731,524 131,536 ============ ============ Appendix 6Provisional Accounting Policies under IFRS Statement of Compliance The restated financial information has been prepared in accordance withInternational Financial Reporting Standards (IFRS), including Interpretationsissued by the International Accounting Standards Board ('IASB') and itscommittees and endorsed by the European Union expected to apply at 31 March 2006with the exception that IAS 32 and IAS 39 have not been applied as permittedunder the transition rules of IFRS 1. Previous Irish GAAP financial informationhas been prepared in accordance with the accounting policies set out in the DCCplc Annual Report 2005. Basis of Preparation The restated financial information has been prepared under the historical costconvention except for the measurement at fair value of share options andderivative instruments. The currency used in these financial statements is the euro, denoted by thesymbol •. Basis of Consolidation The restated consolidated financial statements include the Company and allsubsidiary and associated undertakings. All inter-company balances and transactions, including unrealised profitsarising from inter-group transactions, are eliminated on consolidation. Subsidiaries The results of subsidiary undertakings acquired or disposed of during the yearare included in the consolidated income statement from the date of theiracquisition or up to the date of their disposal. A subsidiary is one where the Group has the power, directly or indirectly, togovern the financial and operating policies of the entity, so as to obtainbenefits from its activities. The existence and effect of potential votingrights that are currently exercisable or convertible are considered in assessingwhether the Group controls the entity. Associated Undertakings Associated undertakings are companies other than subsidiaries in which the Groupholds, on a long-term basis, a participating interest in the voting equity sharecapital and exercises significant influence. Associated undertakings are included in the Company balance sheet at cost lessprovision for any impairment in value. Income from associated undertakingsincluded in the Company profit and loss account comprises dividends received andreceivable. The appropriate share of results of associated undertakings is included in theconsolidated profit and loss account by way of the equity method of accounting.Associated undertakings are stated in the consolidated balance sheet at costplus the attributable portion of their retained reserves from the date ofacquisition less any impairment in value. Goodwill attributable to investments in associated undertakings is treated inaccordance with the accounting policy for goodwill. Turnover and Revenue Recognition Revenue comprises the invoiced value, including excise duty and excluding valueadded tax, of goods supplied and services rendered. Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group, that it can be reliably measured and that thesignificant risks and rewards of ownership of the goods have passed to thebuyer. Segment Reporting A segment is a distinguishable component of the Group that is engaged either inproviding products or services (business segment), or in providing products orservices within a particular economic environment (geographical segment), whichis subject to risks and rewards that are different from those other segments. Foreign Currency Translation Functional and Presentation CurrencyItems included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates ('the functional currency'). The consolidated financialstatements are presented in euro which is the presentation currency of theGroup. Transactions and BalancesTransactions in foreign currencies are recorded at the rate of exchange rulingat the date of the transaction. Monetary assets and liabilities denominated inforeign currencies are retranslated at the rate of exchange ruling at thebalance sheet date. Currency translation differences on monetary assets andliabilities are taken to the consolidated income statement except where hedgeaccounting is applied. Group CompaniesResults and cash flows of subsidiary and associated undertakings which do nothave the euro as their functional currency are translated into euro at averageexchange rates for the year, and the related balance sheets are translated atthe rates of exchange ruling at the balance sheet date. Adjustments arising ontranslation of the results of such subsidiary and associated undertakings ataverage rates, and on the restatement of the opening net assets at closingrates, are dealt with in a separate translation reserve within equity, net ofdifferences on related currency instruments designated as hedges of suchinvestments. On disposal of a foreign operation, such cumulative currency translationdifferences are recognised in the income statement as part of the overall gainor loss on disposal. Cumulative currency translation differences arising priorto the transition date have been set to zero for the purposes of ascertainingthe gain or loss on disposal of a foreign operation subsequent to 1 April 2004. Goodwill and fair value adjustments arising on acquisition of a foreignoperation are regarded as assets and liabilities of the foreign operation, areexpressed in the functional currency of the foreign operation and are recordedat the exchange rate at the date of the transaction and subsequentlyretranslated 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 arecharged to the income statement in the period in which they are incurred. TheGroup has no legal or constructive obligation to pay further contributions afterpayment of fixed contributions. The Group operates a number of defined benefit pension schemes which requirecontributions to be made to separately administered funds. The liabilities andcosts associated with the Group's defined benefit pension schemes are assessedon the basis of the projected unit credit method by professionally qualifiedactuaries and are arrived at using actuarial assumptions based on marketexpectations at the balance sheet date. The Group's net obligation in respect ofdefined benefit pension schemes is calculated separately for each plan byestimating the amount of future benefits that employees have earned in returnfor their service in the current and prior periods. That benefit is discountedto determine its present value, and the fair value of any plan asset isdeducted. The discount rate employed in determining the present value of the schemes'liabilities is determined by reference to market yields at the balance sheetdate on high quality corporate bonds of a currency and term consistent with thecurrency and term of the associated post-employment benefit obligations. The net surplus or deficit arising in the Group's defined benefit pensionschemes are shown within either non-current assets or liabilities on the face ofthe Group Balance Sheet. The deferred tax impact of pension scheme surpluses anddeficits is disclosed separately within deferred tax liabilities or assets asappropriate. The Group has elected to avail of the Amendment to IAS 19 'EmployeeBenefits', to recognise post transition date actuarial gains and lossesimmediately in the Statement of Changes in Shareholders' Equity. When the benefits of a defined benefit plan are improved, the portion of theincreased benefit relating to past service by employees is recognised as anexpense in the income statement on a straight line basis over the average perioduntil the benefits become vested. To the extent that the benefits vestimmediately, the expense is recognised immediately in the income statement. In accordance with the exemption granted under IFRS 1, IAS 19 has not beenapplied retrospectively in preparing the Group's transition balance sheet toIFRS. All cumulative actuarial gains and losses as at the transition date (1April 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 ofshare-based payment transactions, whereby employees render service in exchangefor shares or rights over shares. The fair value of share entitlements granted is recognised as an employeeexpense in the income statement with a corresponding increase in equity. Thefair value is determined using a binomial model for the DCC plc 1998 EmployeeShare Option Scheme and Black Scholes for the DCC Sharesave Scheme. Non-marketbased vesting conditions are not taken into account when estimating the fairvalue of entitlements as at the grant date. The expense in the income statementrepresents the product of the total number of options anticipated to vest andthe fair value of those options. This amount is allocated on a straight linebasis over the vesting period to the Income Statement with a correspondingcredit to Other Reserves - Shares to be Issued. The cumulative charge to theincome statement is only reversed where entitlements do not vest becausenon-market performance conditions have not been met or where an employee inreceipt of share entitlements relinquishes service before the end of the vestingperiod. The proceeds received by the company on the vesting of share entitlements arecredited to share capital (nominal value) and share premium when the shareentitlements are exercised. When the share-based payments give rise to there-issue of shares from treasury shares, the proceeds of issue are credited toshareholders equity. In line with the transitional arrangements set out in IFRS 2, 'Share BasedPayment', the recognition and measurement principles of this standard have beenapplied only in respect of share entitlements granted after 7 November 2002 andwhich have not vested by 1 January 2005. The Group does not operate any cash-settled share-based payment schemes orshare-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 rawmaterials, bought-in goods and expense inventories comprises purchase price plustransport and handling costs less trade discounts and subsidies. Cost, in thecase of products manufactured by the Group, consists of direct material andlabour costs together with the relevant production overheads based on normallevels of activity. Net realisable value represents the estimated selling price less costs tocompletion and appropriate selling and distribution costs. Provision is made, where necessary, for slow moving, obsolete and defectiveinventories. 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, whichequates to its net book value recorded under previous GAAP. In line with theprovisions applicable to a first-time adopter under IFRS the accountingtreatment of business combinations undertaken prior to the transition date hasnot been reconsidered in preparing the opening IFRS balance sheet at 1 April2004, 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 notbeen reinstated and is not included in determining any subsequent profit or losson disposal. Goodwill on acquisitions is initially measured at cost being the excess of thecost of the business combination over the acquirer's interest in the net fairvalue of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulatedimpairment losses. Goodwill relating to acquisitions from 1 April 2004 andgoodwill carried in the balance sheet at 1 April 2004 is not amortised. Goodwillis 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 ofany impairments, is included in financial assets under the equity method in theGroup balance sheet. Goodwill was tested for impairment as at 1 April 2004, the date of transition toIFRS, and no impairment resulted from this exercise. Goodwill acquired in a business combination is allocated, from the acquisitiondate, to the cash-generating units that are anticipated to benefit from thecombination's synergies. Following initial recognition, goodwill is measured atcost less any accumulated impairment losses. Goodwill is subject to impairmenttesting on an annual basis and at any time during the year if an indicator ofimpairment is considered to exist; the goodwill impairment tests are undertakenat a consistent time in each annual period. Impairment is determined byassessing the recoverable amount of the cash-generating unit to which thegoodwill relates. Where the recoverable amount of the cash-generating unit isless than the carrying amount, an impairment loss is recognised. Impairmentlosses arising in respect of goodwill are not reversed following recognition. Where goodwill forms part of a cash-generating unit and part of the operationwithin that unit is disposed of, the goodwill associated with the operationdisposed of is included in the carrying amount of the operation when determiningthe gain or loss on disposal of the operation. Goodwill disposed of in thiscircumstance is measured on the basis of the relative values of the operationdisposed of and the proportion of the cash-generating unit retained. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciationand 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 totheir residual value levels by the end of their useful lives: Annual RateFreehold 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, plantand equipment are reviewed, and adjusted if appropriate, at each balance sheetdate. In accordance with IAS 36 'Impairment of Assets', the carrying amounts of itemsof property, plant and equipment are reviewed at each balance sheet date todetermine whether there is any indication of impairment. An impairment loss isrecognised whenever the carrying amount of an asset or its cash generating unitexceeds its recoverable amount. Impairment losses are recognised in the income statement. Following therecognition of an impairment loss, the depreciation charge applicable to theasset or cash-generating unit is adjusted prospectively in order tosystematically 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 aseparate asset, as appropriate, only when it is probable that future economicbenefits associated with the item will flow to the Group and the cost of thereplaced item can be measured reliably. All other repair and maintenance costsare charged to the income statement during the financial period in which theyare incurred. Business Combinations The purchase method of accounting is employed in accounting for the acquisitionof subsidiaries by the Group. The Group has elected to avail of the exemptionunder IFRS 1, 'First-time Adoption of International Financial ReportingStandards', whereby business combinations prior to the transition date of 1April 2004 are not restated. IFRS 3, 'Business Combinations', has been appliedwith effect from the transition date of 1 April 2004 and goodwill amortisationceased from that date. The cost of a business combination is measured as the aggregate of the fairvalue at the date of exchange of assets given, liabilities incurred or assumedand equity instruments issued in exchange for control together with any directlyattributable expenses. Deferred expenditure arising on business combinations isdetermined through discounting the amounts payable to their present value at thedate of exchange. The discount component is reflected as an interest charge inthe income statement over the life of the obligation. When the initialaccounting for a business combination is determined provisionally, anyadjustments to the provisional values allocated to assets and liabilities aremade within twelve months of the acquisition date and reflected as a restatementof the acquisition balance sheet. Intangible Assets (other than Goodwill) Intangible assets acquired separately are capitalised at cost. Intangible assetsacquired in the course of a business combination are capitalised at fair valuebeing their deemed cost as at the date of acquisition. Following initial recognition, intangible assets which have a finite life arecarried at cost less any applicable accumulated amortisation and any accumulatedimpairment losses. Where amortisation is charged on assets with finite livesthis expense is taken to the income statement. The amortisation of intangible assets is calculated to write-off the book valueof intangible assets over their useful lives on a straight-line basis on theassumption of zero residual value. In general, definite-lived intangible assetsare amortised over periods ranging from three to five years, depending on thenature of the intangible asset. Leases Tangible fixed assets, acquired under a lease which transfers substantially allof the risks and rewards of ownership to the Group, are capitalised as fixedassets and are depreciated over their useful lives with any impairment beingrecognised in accumulated depreciation. Amounts payable under such leases(finance leases), net of finance charges, are shown as short, medium or longterm lease obligations, as appropriate. Finance charges on finance leases arecharged to the income statement over the term of the lease on an actuarialbasis. Leases where the lessor retains substantially all the risks and rewards ofownership are classified as operating leases. The annual rentals under operatingleases are charged to the income statement as incurred. Deferred Consideration Where acquisitions involve further payments which are deferred or contingent onlevels of performance achieved in the years following the acquisition, adiscounted deferred acquisition creditor is accrued. Notional interest ischarged to the income statement over the relevant period by reference to theperiod of deferral, current interest rates and the amount of the likelypayments. Grants Grants are recognised at their fair value when there is a reasonable assurancethat the grant will be received and all attaching conditions have been compliedwith. Capital grants received and receivable by the Group are credited to capitalgrants and are amortised to the income statement on a straight line basis overthe expected useful lives of the assets to which they relate. Revenue grants are recognised as income over the periods necessary to match thegrant 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 approximatesto 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 termdeposits with an original maturity of three months or less. Deposits with amaturity of greater than three months from the date of acquisition arerecognised either in held-for-trading financial assets or as loans andreceivables. Derivative Financial Instruments The Group uses derivative financial instruments (principally interest rate andcurrency swaps and forward foreign exchange and commodity contracts) to hedgeits exposure to interest rate and foreign exchange risks and to changes in theprices of certain commodity products arising from operational, financing andinvestment activities. Derivative financial instruments are recognised initially at fair value, beingthe present value of estimated future cash flows, and gains or losses onsubsequent re-measurement of fair value are recognised immediately in the incomestatement. However, where derivatives qualify for hedge accounting, recognitionof 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 valuehedges (which entail hedging the exposure to movements in the fair value of arecognised asset or liability or a firm commitment) or cash flow hedges (whichhedge exposure to fluctuations in future cash flows derived from a particularrisk associated with a recognised asset or liability or a highly probableforecast transaction). In the case of fair value hedges which satisfy the conditions for hedgeaccounting, any gain or loss arising from the re-measurement of the fair valueof the hedging instrument is reported in the income statement. In addition, anygain or loss on the hedged item which is attributable to the hedged risk isadjusted against the carrying amount of the hedged item and reflected in theincome statement. Where a derivative financial instrument is designated as a hedge of thevariability in cash flows of a recognised asset or liability or a highlyprobable forecasted transaction, the effective part of any gain or loss on thederivative 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 thatpoint in time, any cumulative gain or loss on the hedging instrument recognisedas a separate component of equity is kept in equity until the forecasttransaction occurs. If a hedged transaction is no longer anticipated to occur,the net cumulative gain or loss recognised in equity is transferred to theincome statement in the period. Where foreign currency instruments provide a hedge against a net investment in aforeign operation, foreign exchange differences are taken directly to a foreigncurrency translation reserve (being a separate component of equity). Cumulativegains and losses remain in equity until disposal of the net investment in theforeign operation at which point the related differences are transferred to theincome 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 ofthe consideration received net of transaction costs associated with theborrowing. After initial recognition, interest-bearing loans and borrowings aresubsequently measured at amortised cost employing the effective interest yieldmethod. Amortised cost is calculated by taking into account any issue costs, andany discount or premium on settlement. Gains and losses are recognised in theincome statement when the liabilities are derecognised or impaired, as well asthrough the amortisation process. Provisions A provision is recognised in the balance sheet when the Group has a presentobligation (either legal or constructive) as a result of a past event, and it isprobable that a transfer of economic benefits will be required to settle theobligation. A provision for restructuring is recognised when the Group has approved adetailed and formal restructuring plan and announced its main provisions. Provisions arising on business combinations are only recognised to the extentthat they would have qualified for recognition in the financial statements ofthe acquiree prior to the acquisition. Share Capital Treasury SharesWhere the Company purchases the Company's equity share capital, theconsideration paid is deducted from total shareholders' equity and classified astreasury shares until they are cancelled. Where such shares are subsequentlysold or reissued, any consideration received is included in shareholders'equity. DividendsDividends on Ordinary Shares are recognised as a liability in the Group'sfinancial statements in the period in which they are declared by the Company.Dividends declared after the balance sheet date are disclosed in the subsequentevents note. Income Tax Current TaxCurrent tax represents the expected tax payable or recoverable on the taxableprofit for the year using tax rates enacted or substantively enacted at thebalance sheet date and taking into account any adjustments stemming from prioryears. Deferred TaxDeferred tax is provided using the liability method, on all temporarydifferences at the balance sheet date which is defined as the difference betweenthe tax bases of assets and liabilities and their carrying amounts in thefinancial statements. Deferred tax assets and liabilities are not subject todiscounting and are measured at the tax rates that are anticipated to apply inthe year in which the asset is realised or the liability is settled. Deferred tax liabilities are recognised for all taxable temporary differenceswith 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 temporarydifferences, carry-forward of unused tax credits and unused tax losses to theextent that it is probable that taxable profits will be available against whichto 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 sheetdate and are reduced to the extent that it is no longer probable that sufficienttaxable profit would be available to allow all or part of the deferred tax assetto be utilised. This information is provided by RNS The company news service from the London Stock Exchange

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DCC