Exel preliminary comparative IFRS information for the year 2004
EXEL OYJ STOCK EXCHANGE RELEASE 3.5.2005 at 10.00
EXEL PRELIMINARY COMPARATIVE IFRS INFORMATION FOR THE YEAR 2004
Summary of material differences
Exel has converted from Finnish Accounting Standards to International Financial
Reporting Standards in the year 2005. The transition date was 1.1.2004.
This Stock Exchange Release presents for each quarter of the year 2004 the
material effects of the transition to IFRS compared to the financial information
presented earlier according to Finnish Accounting Standards (FAS). FAS accounting
principles are included in the financial statements presented in the annual
report for the year 2004. IFRS opening balance sheet and the preliminary
reconciliation of equity as per 1st January 2004 has been published in the Stock
Exchange Release of 24 February 2005.
The current information has been prepared according to the IAS/IFRS standards in
force at the time of reporting. The comparative figures according to the Finnish
accounting principles equal the information published in the Interim reports and
the Annual Report of Exel. Comparative figures for the Cash flow statement will
not be presented because there are no material differences between the statements
according to IFRS and FAS.
The most material impacts on the Income statement, Balance sheet and Equity arise
from the treatment of goodwill, valuation principles of inventories, accounting
for financial leases and Finnish disability pension liabilities.
Goodwill has been allocated to cash-generating units. According to IFRS 3
goodwill will not be amortized. Instead all cash-generating units to which
goodwill has been allocated shall be tested for impairment annually. If the
recoverable amount of a cash-generating unit is lower than the carrying amount of
the same unit then an impairment loss will be recognized and charged to the
income statement. Exel has chosen to apply the exemption rule included in IFRS 1
on business combinations exercised before the transition date. Exel has tested
the cash-generating units to which goodwill has been allocated for impairment as
on 1 January and 31 December 2004. Based on these calculations, the recoverable
amounts of the cash-generating units were higher than the carrying amounts, i.e.
there was no need to write down goodwill. Due to the non-amortization of goodwill
the 2004 profits reported according to IFRS was higher.
Previously, only variable costs were included in Exel's inventories valuation,
but not the related fixed production costs. According to IAS 2, the cost of
inventories comprises the acquisition price of the materials, direct labour and
other direct production costs and additionally the relevant overhead costs. The
value of inventories has been calculated according to the weighted average price
method. This will increase the value of the finished goods inventory ín the
balance sheet.
According to IAS 17, assets acquired through a finance lease must be recognised
in the balance sheet and, correspondingly, lease liabilities under interest-
bearing liabilities. The transition has not had a material impact on the profit
for the period, but it has increased the total assets in the balance sheet.
In compliance with IAS 19, Exel recognises future disability pension liabilities
related to the Finnish employees' pension act system (TEL). The liability related
to the future disability pensions within the TEL system is treated on a defined
benefit basis in the opening balance sheet for 2004, decreasing shareholders'
equity. In addition, Exel has defined benefit plans in other countries, for which
the resulting liability is recognised in full, decreasing shareholders' equity at
the time of IFRS adoption. In the year 2004 the Finnish disability pension system
was changed to a defined contribution system. Therefore the pension liability
included in the opening balance sheet was released in the income statement, which
increased the net profit compared to the net profit according to FAS.
Deferred tax assets and liabilities, in compliance with IAS 12, increase the
Group's deferred tax liabilities and decrease its deferred tax assets.
This stock exchange release's figures are unaudited.
IFRS COMPARATIVE FIGURES FOR THE FIRST QUARTER OF 2004
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
1-3/2004 transition 1-3/2004
in E thousands to IFRS
Sales 20 514 0 20 514
Other operating income 21 0 21
Costs and expenses -17 653 -242 -17 895
Depreciation -815 95 -720
Operating Profit 2 067 -147 1 920
Net financial items -97 -10 -107
Profit before tax 1 970 -157 1 813
Income taxes -658 60 -598
Profit for the period 1 312 - 97 1 215
CONSOLIDATED BALANCE SHEET FAS Effect of IFRS
in E thousands 31.3.2004 transition to 31.3.2004
IFRS
ASSETS
NON-CURRENT ASSETS
Intangible assets 436 0 436
Goodwill 2 845 343 3 188
Tangible assets 12 973 1 252 14 225
Deferred tax assets 159 83 242
Other non-current assets 95 6 101
Non-current assets 16 508 1 684 18 192
CURRENT ASSETS
Inventories 10 409 395 10 804
Trade and other receivables 12 736 799 13 536
Cash and cash equivalents 3 423 7 3 430
Current assets 26 568 1 201 27 770
TOTAL ASSETS 43 076 2 886 45 962
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share capital 1 884 1 884
Share issue
Share premium reserve 3 149 3 149
Retained earnings 12 503 - 74 12 428
Profit for the period 1 312 - 97 1 215
Total equity 18 847 - 171 18 676
Liabilities
Non-current liabilities 8 508 2 245 10 753
Current liabilities 15 720 813 16 533
Total liabilities 24 228 3 058 27 286
TOTAL EQUITY AND LIABILITIES 43 076 2 886 45 962
IFRS COMPARATIVE FIGURES FOR THE SECOND QUARTER OF 2004
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
1-6/2004 transition 1-6/2004
in E thousands to IFRS
Sales 43 695 0 43 695
Other operating income 120 0 120
Costs and expenses -35 316 73 -35 243
Depreciation -1 689 202 -1 487
Operating Profit 6 810 275 7 085
Net financial items -202 4 -198
Profit before tax 6 608 279 6 887
Income taxes -2 138 -74 -2 212
Profit for the period 4 469 206 4 675
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
4-6/2004 transition 4-6/2004
in E thousands to IFRS
Sales 23 181 0 23 181
Other operating income 99 0 99
Costs and expenses -17 663 315 -17 348
Depreciation -874 107 -767
Operating Profit 4 743 422 5 165
Net financial items -105 14 -91
Profit before tax 4 638 436 5 074
Income taxes -1 480 -134 -1614
Profit for the period 3 157 303 3 460
CONSOLIDATED BALANCE SHEET FAS Effect of IFRS
in E thousands 30.6.2004 transition to 30.6.2004
IFRS
ASSETS
NON-CURRENT ASSETS
Intangible assets 865 -343 522
Goodwill 2 840 348 3 188
Tangible assets 12 689 1 597 14 286
Deferred tax assets 330 20 350
Other non-current assets 95 3 98
Non-current assets 16 819 1 625 18 444
CURRENT ASSETS
Inventories 12 218 789 13 007
Trade and other receivables 12 986 11 12 997
Cash and cash equivalents 5 504 9 5 513
Current assets 30 708 809 31 517
TOTAL ASSETS 47 527 2 434 49 961
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share capital 1 884 0 1 884
Share issue
Share premium reserve 3 149 0 3 149
Retained earnings 8 196 -74 8 122
Profit for the period 4 469 206 4 675
Total equity 17 698 132 17 830
Liabilities
Non-current liabilities 7 783 2 377 10 160
Current liabilities 22 046 -75 21 971
Total liabilities 29 829 2 302 32 131
TOTAL EQUITY AND LIABILITIES 47 527 2 434 49 961
IFRS COMPARATIVE FIGURES FOR THE THIRD QUARTER OF 2004
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
1-9/2004 transition 1-9/2004
in E thousands to IFRS
Sales 64 081 0 64 081
Other operating expenses 78 0 78
Costs and expenses -51 635 88 -51 547
Depreciation -2 548 325 -2 223
Operating Profit 9 976 413 10 389
Net financial items -297 -38 -335
Profit before tax 9 680 373 10 053
Income taxes -3 097 -91 -3 188
Profit for the period 6 582 283 6 865
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
7-9/2004 transition 7-9/2004
in E thousands to IFRS
Sales 20 386 0 20 386
Other operating expenses -42 0 -42
Costs and expenses -16 319 15 -16 304
Depreciation -859 123 -736
Operating Profit 3 166 138 3 304
Net financial items -95 -42 -137
Profit before tax 3 072 94 3 166
Income taxes -959 -17 -976
Profit for the period 2 113 77 2 190
CONSOLIDATED BALANCE SHEET FAS Effect of IFRS
in E thousands 30.9.2004 transition to 30.9.2004
IFRS
ASSETS
NON-CURRENT ASSETS
Intangible assets 796 -325 471
Goodwill 2 695 493 3 188
Tangible assets 12 708 1 558 14 266
Deferred tax assets 176 33 209
Other non-current assets 95 4 99
Non-current assets 16 471 1 762 18 233
CURRENT ASSETS
Inventories 11 983 751 12 734
Trade and other receivables 11 815 -7 11 808
Cash and cash equivalents 3 361 8 3 369
Current assets 27 159 752 27 911
TOTAL ASSETS 43 630 2 514 46 144
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share capital 1 884 0 1 884
Share issue 4 0 4
Share premium reserve 3 149 0 3 149
Retained earnings 5 506 -75 5 431
Profit for the period 6 582 283 6 865
Total equity 17 125 208 17 333
Liabilities
Non-current liabilities 7 167 2409 9 576
Current liabilities 19 338 -103 19 235
Total liabilities 26 505 2 306 28 811
TOTAL EQUITY AND LIABILITIES 43 630 2 514 46 144
IFRS COMPARATIVE FIGURES FOR THE FOURTH QUARTER OF 2004
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
1-12/2004 transition to 1-12/2004
in E thousands IFRS
Sales 83 857 0 83 857
Other operating income 111 0 111
Costs and expenses -67 783 698 -67 085
Depreciation -3 654 473 -3 181
Operating Profit 12 531 1 171 13 702
Net financial items -402 64 -466
Profit before tax 12 129 1 107 13 236
Income taxes -3 807 303 -4 110
Profit for the period 8 322 804 9 126
CONSOLIDATED INCOME STATEMENT FAS Effect of IFRS
10-12/2004 transition 10-12/2004
in E thousands to IFRS
Sales 19 776 0 19 776
Other operating income 33 0 33
Costs and expenses -16 148 610 -15538
Depreciation -1 106 148 -958
Operating Profit 2 555 758 3 313
Net financial items -105 -26 -131
Profit before tax 2 449 734 3 183
Income taxes -710 -212 -922
Profit for the period 1 740 521 2 261
CONSOLIDATED BALANCE SHEET FAS Effect of IFRS
in E thousands 31.12.2004 transition to 31.12.2004
IFRS
ASSETS
NON-CURRENT ASSETS
Intangible assets 1 214 -288 926
Goodwill 2 545 643 3 188
Tangible assets 12 225 1 517 13 742
Deferred tax assets 319 -9 310
Other non-current assets 95 5 100
Non-current assets 16 398 1 868 18 266
CURRENT ASSETS
Inventories 12 397 872 13 269
Trade and other receivables 9 522 46 9 568
Cash and cash equivalents 5 140 10 5 150
Current assets 27 059 928 27 987
TOTAL ASSETS 43 457 2796 46 253
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share capital 1 932 0 1 932
Share issue 817 0 817
Share premium reserve 3 390 0 3 390
Retained earnings 5 502 -75 5 427
Profit for the period 8 322 804 9 126
Total equity 19 963 729 20 692
Liabilities
Non-current liabilities 6 787 1 966 8 753
Current liabilities 16 707 100 16 807
Total liabilities 23 494 2 066 25 560
TOTAL EQUITY AND LIABILITIES 43 457 2 796 46 253
Reconciliation of profit for 2004
in E thousands 1-3/2004 4-6/2004 7-9/2004 10-12/20 1-12/200
04 4
FAS Profit for the 1 312 3 157 2 113 1 740 8 322
period
IFRS 3 Goodwill
depreciation 135 147 163 187 632
IAS 2 Inventories -291 263 -38 121 55
IAS 17 Financial -1 -1 -1 -3
leases
IAS 19 Employment 466 466
benefits
IAS 27 Group
consolidation
IAS 39 Financial 3 28 -30 -40 -43
instruments 60 -133 -17 -213 -303
IAS 12 Income taxes
IFRS Profit for the 1 215 3 460 2 190 2 261 9 125
period
Reconciliation of equity for 2004
in E thousands 1.1. 31.3. 30.6. 30.9. 31.12.
2004 2004 2004 2004 2004
FAS equity 17 536 18 847 17 698 17 125 19 963
IFRS 3 Goodwill
depreciation 135 282 445 632
IAS 2 Inventories 540 249 512 474 595
IAS 17 Financial -90 -91 -92 -93
leases -93
IAS 19 Employment -556 -556 -556 -556
benefits -90
IAS 27 Group 3 3 3 3
consolidation - 3
IAS 39 Financial 8 -8 19 -11
instruments 36 96 -37 -54 -51
IAS 12 Income taxes -267
17 462 18 676 17 830 17 333
IFRS equity 20 692
Consolidated key figures - IFRS
1-3/2004 4-6/200 7-9/2004 10-12/20 1-12/200
4 04 4
Earnings per share,
euros 0,23 0,64 0,41 0,42 1,69
Earning per share,
euros 0,22 0,62 0,38 0,37 1,59
(diluted) 3,47 3,31 3,22 3,69 3,69
Equity per share, euros
47,8
Return on equity (ROE), 45,2
% 40,8 35,8 37,7 44,9 44,9
Return on investment, % 65,5 76,6 73,6 36,0 36,0
Equity ratio, %
Net gearing, %
NOTES AND COMMENTS TO THE RECONCILIATION
Consolidation principles
The consolidated financial statements of Exel include the parent company Exel Oyj
and its subsidiaries Exel GmbH, Exel Composites N.V., International Gateway AB,
Exel USA Inc. and Pro Stick Oy. In the consolidation financial statements of the
subsidiaries have been adjusted to ensure consistency with the policies adopted
by the Group. Acquisitions of subsidiaries are accounted for using the purchase
method of accounting. Compared to the financial statements according to Finnish
Accounting Standards the difference comes from including also Pro Stick Oy in the
Consolidated financial statements. The effect is not material.
Foreign currency translations
Foreign currency transactions are translated into euros using the exchange rates
prevailing at the date of the transactions. Receivables and liabilities
denominated in foreign currency are translated at the exchange rate in effect at
the end of the period. Foreign exchange differences in respect of the operating
business are included in the operating profit in the appropriate income statement
account, and those arising in respect of financial assets and liabilities are
included in financial items.
Exel applies the transitional option of IFRS 1, according to which the cumulative
translation differences for all foreign operations are deemed to be zero at the
date of transition to IFRS.
Employee benefits
In Finland the personnel's pension benefits have been insured in local insurance
companies. In foreign subsidiaries the Group operates according to the local
conditions and practices. Contributions to defined contribution plans are charged
to the income statement in the period to which the contributions relate. Defined
benefit obligations are calculated by independent actuaries and the costs are
charged to the income statement based on those calculations.
In Exel's foreign subsidiaries the impact of defined benefit pension schemes on
the IFRS profit before taxes was -5 thousand euros in 2004.
A liability was recognized in the opening balance sheet as per 1.1.2004 relating
to the Finnish disability pension liability. This liability has mainly been
released to the income statement during 2004, because the disability pension
payment system was changed in Finland. The impact of the release on the IFRS
profit before taxes of 2004 was +471 thousand euros. The rest of the provision 41
thousand euros will be released in 2005.
Equity compensation benefits
IFRS 2 applies to option rights granted after 7.12.2002 and in which the
subscription period has not started before 1.1.2005. Such options will be valued
at fair value at the date they are granted and charged to the income statement
during the period they are vested. Exel's current option rights have been granted
before 7.12.2002 and their subscription period has started before
1.1.2005.Therefore IFRS 2 has not been applied.
Goodwill
Goodwill is according to IFRS 3 not to be amortised according to plan. Instead,
there will be an impairment test performed annually. The goodwill has been
allocated to cash-generating units and tested for impairment. If the discounted
cash flow of a cash-generating unit is lower than the carrying amount of the same
unit then an impairment loss will be recognized and charged to the income
statement.
Exel has performed the impairment testing for both the opening balance at
1.1.2004 and the closing balance at 31.12.2004. Test results indicated no need
for impairment loss bookings.
Due to the non-amortisation of goodwill the profit before taxes of 2004 was 632
thousand euros higher compared to FAS.
Financial leases
According to IAS 17, assets acquired through a finance lease must be recognised
at fair value at the beginning of the lease agreement in the balance sheet and,
correspondingly, lease liabilities reported under interest-bearing liabilities.
The leased assets will be depreciated and the interest element will be a
financial cost.
Exel has one financial lease agreement covering the enlargement of the Mäntyharju
plant. This agreement will be treated according to IAS 17. The impact on the
result in 2004 was -3 thousand euros. At the end of 2004 the tangible assets
include 1518 thousand euros worth of assets financed through lease agreement. The
lease obligations of the agreement has been included in interest bearing
liabilities. The total amount of those liabilities at the end of 2004 was 1 450
thousand euros.
Inventories
Previously, only variable costs were included in Exel's inventories valuation,
but not the related fixed production costs. According to IAS 2, the cost of
inventories comprises the acquisition price of the materials, direct labour and
other direct production costs and additionally the relevant overhead costs. The
value of inventories has been calculated according to the weighted average price
method.
Valuating inventories according to IAS 2 increased the balance sheet and equity
by 872 thousand euros at the end of 2004. The impact on the IFRS profit before
taxes in 2004 was 332 thousand euros. The rest of the difference in the change of
the inventory is due to the acquisition in Belgium, where the purchase price is
allocated according to IFRS 3 standard.
Financial instruments
Foreign currency and interest hedging has been accounted for according to IAS 39
and the derivative financial instruments are recognized on the balance sheet at
fair value. The impact of fair value changes in the income statement 2004 was -43
thousand euros and the impact on the equity was -51 thousand euros at the end of
2004.
Deferred tax liabilities
IFRS requires the recognition of deferred tax liabilities for all temporary
taxable differences. Differences between Finnish and IFRS reporting practices for
taxable temporary differences and the transition differences have given rise to
additional net tax liabilities of -267 thousand affecting the equity in the end
of 2004 and the impact on the IFRS profit of 2004 of -303 thousand euros.
Mäntyharju, 3 May 2005
EXEL OYJ
Ari Jokelainen
President & CEO
Additional information:
Ari Jokelainen, President & CEO tel. +358 50 590 6750
Ilkka Silvanto, CFO, tel. +358 50 598 9553
Exel Oyj is a Finnish company specialised in composite technology. The Group's
operations consist of sporting goods and industrial applications. Exel's best-
known products include cross-country and alpine poles, Nordic Walking poles,
surfboard masts, floorball clubs and industrial profiles in general. The Group's
six factories are located in Finland, Germany, Belgium, Austria and Spain. Over
80% of production is exported. In 2004 the Group's net sales totalled EUR 83.9
million. Exel personnel numbers 420. Exel's share is listed on Helsinki Exchanges
Main List.
