M-REAL?S COMPARATIVE IFRS INFORMATION
M-real Corporation Stock Exchange Bulletin 19.4.2005 klo 11.15 1(16)
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
M-REALS COMPARATIVE IFRS INFORMATION
M-real changed its financial reporting standards from Finnish
Accounting Standards (FAS) to International Financial Reporting
Standards (IFRS) at the start of 2005. In August 2004, the company
released its preliminary estimate of the impacts of this transition
on its opening IFRS balance sheet. The purpose of this release, and
the appendix to it, is to provide specified information on the
effects of adoption of IFRS on the companys consolidated income
statement and balance sheet. For M-real the main effects of the
adoption of IFRS relate to the reporting of pension liabilities,
deferred taxes, derivative contracts and some financing arrangements,
and the recognition of certain impairment losses in the opening IFRS
balance sheet.
The transition date is January 1, 2004 and on that date M-real has
prepared its opening IFRS balance sheet. In preparing the opening
balance sheet the company has applied some exemptions available to
first-time adopters of IRFS, which are explained in more detail in
the appendix to this release.
The following tables address the effects of adoption of IFRS on the
companys consolidated key figures.
1-12/2004 1-9/2004 1-6/2004 1-3/2004
Year 2004 FAS IFRS FAS IFRS FAS IFRS FAS IFRS
Operating profit, -75 27 -47 41 -19 33 1 24
EUR million
Profit/loss -15 45 49 91 111 123 142 141
attributable
to shareholders of
parent
company, EUR
million
Earnings per share,
EUR
From continuing -0.79 -0.52 -0.58 -0.40 -0.29 -0.25 -0.14 -0.17
operations
From discontinued 0.71 0.72 0.81 0.83 0.81 0.83 0.81 0.83
operations
From continuing -0.08 0.20 0.23 0.43 0.52 0.58 0.67 0.66
and
discontinued
operations
Equiry attributable 2627 2 393 2241 2004 2303 2033 2328 2038
to shareholders of
parent company at
the end of period,
EUR million
Net interest 2161 2183 2278 2293 2614 2669 2551 2619
bearing liabilities
at the end of
period, EUR million
Total assets at the 6394 6486 6447 6510 6489 6540 6 550 6589
end of period, EUR
million
Return on capital -1.0 0.9 -0.8 1.6 -0.3 1.8 0.3 2.0
employed, %
Equity ratio, % 41.5 37.5 37.2 31.4 35.8 31.5 35.8 31.4
Gearing, % 82 90 100 112 113 129 109 127
Opening balance FAS
sheet IFRS
1 Jan 2004
Total equity, EUR 2 245 1 960
million
Net interest 3 109 3 171
bearing
liabilities, EUR
million
Total assests, EUR 7 106 7 162
Equity ratio, % 31.9 27.8
Gearing ratio, % 137 159
The companys consolidated operating profit for 2004 was EUR 102
million higher under IFRS than FAS. IFRS-based operating profit was
improved in comparison to FAS reporting by the discontinuance of
goodwill amortisation (EUR 52 million) and the inclusion of fixed
asset write-downs of Reflex and Savon Sellu mills (EUR 62 million) on
the opening IFRS balance sheet but in income statement under FAS.
Other IFRS effects resulted in a net reduction of EUR 12 million in
operating profit.
The adoption of IFRS had a negative effect on the consolidated
shareholders equity reported on the opening IFRS balance sheet in
the amount of EUR 285 million, contrary to the EUR 320 million
anticipated in the August 18, 2004 estimate. The reduction in
negative effect is mainly due to changes in Finnish pension plan
related to the principles applied in calculating disability pension
contribution that will go into effect on January 1, 2006 and,
contrary to earlier interpretation, will cause disability pension
arrangements to be treated as defined contribution plans. The most
significant negative effects on shareholders equity originate from
the inclusion of pension liabilities on the balance sheet (EUR 115
million), reversal of sale and leaseback agreement (EUR 45 million),
recognition of a deferred tax liability with respect to the fair
value of forest assets in excess of their tax basis (EUR 40 million),
valuation of derivatives at fair value and discontinuing the
application of hedge accounting (EUR 30 million), and the recognition
of impairment losses on certain assets (EUR 126 million). The
combined effect of positive adjustments totals EUR 71 million on the
opening balance sheet, EUR 24 million of which relates to tax assets
due to decrease in the Finnish corporate tax rate, EUR 26 million to
other deferred tax assets, and EUR 21 million to other items.
By the end of 2004, the negative effect of IFRS adoption on
shareholders equity had fallen to EUR 234 million.
The appended tables and notes further describe the effects of IFRS on
the companys 2004 consolidated income statement and its opening and
year-end 2004 balance sheets.
M-REAL CORPORATION
Corporate Communications
For more information contact Juhani Pöhö, Executive Vice President
and CFO, tel. +358 10469 5283
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Comparative IFRS figures with notes; year 2004 by quarter and opening
IFRS balance sheet as of January 1, 2004 (both unaudited)
General
M-real changed its financial reporting standards from Finnish
Accounting Standards (FAS) to International Financial Reporting
Standards (IFRS) from January 1, 2005. The transition date is January
1, 2004 and on that date M-real has prepared its opening IFRS balance
sheet. The first interim report prepared in accordance with the
accounting and valuation principles defined in IFRS will be released
for the first quarter of 2005.
This release describes key changes in accounting principles and the
effects of the adoption of IFRS on M-reals consolidated financial
statements and opening IFRS balance sheet. Accounting principles
under IFRS will be addressed in full in the companys annual report
of 2005.
M-real has applied exemptions permitted by IFRS 1 First time
adoption of International Financial Reporting Standards in the
following areas:
- property, plant and equipment; valuation
- financial instruments / derivative contracts
- business combinations
- pension obligations
- cumulative translation differences
The transition from FAS to IFRS reporting will have an effect on the
accounting treatment of such items as
- pension arrangements
- derivative contracts
- asset revaluations
- deferred taxes
- finance leases and other similar contracts
- provisions
- business combinations
Application of certain exemptions as permitted by IFRS 1 (First-time
adoption of International Financial Reporting Standards)
1. Presentation of comparative data
M-real will prepare and release its first annual financial statements
under IFRS for year ending December 31, 2005. As permitted by IFRS 1
the company shall present one year of comparative data for the income
statement, balance sheet, cash flow statement and shareholders
equity, as well as for the notes to the financial statements.
2. Property, plant and equipment
In the opening IFRS balance sheet M-real has valued its property,
plant and equipment at cost less accumulated depreciation and
impairment, added with revaluations made under FAS as permitted under
IFRS 1. Forest assets constitute an exception to this rule. and have
been reported at fair value in accordance with IAS 41 (Biological
Assets).
3. Intangible assets
M-reals intangible assets are included in its opening IFRS balance
sheet at cost less accumulated amortisation and impairment.
4. Business combinations
M-real has applied an exemption permitted under IFRS 1 with respect
to business combinations in preparing its opening IFRS balance sheet.
The assets and liabilities of subsidiaries have not been restated
retrospectively at their fair value but have been included in the
opening IFRS balance sheet at their book value under previously
applied accounting standards (FAS), less impairment losses recognised
on the balance sheet date.
5. Pension obligations
M-real has elected an exemption to recognise all cumulative actuarial
gains and losses relating to its defined benefit pension plans in the
opening IRFS balance sheet. The 10 percent corridor approach as
defined in IAS 19 is applied to actuarial gains and losses arising
after the transition date.
6. Financial instruments/derivative contracts
M-real has applied an exemption allowed by IFRS 1, and has classified
financial instruments in the opening IFRS balance sheet in accordance
with the requirements under IAS 32 (Financial Instruments: Disclosure
and Presentation) and IAS 39 (Financial Instruments: Recognition and
Measurement). Gains and losses arising from the fair value
measurement of derivative contracts established to hedge financial
assets and liabilities and currency and interest rate exposures have
thus been recognised in the shareholders equity on the opening IFRS
balance sheet.
7. Cumulative translation differences
M-real applies the transitional option of IFRS 1, and assumes that no
cumulative translation differences exist on the transition date. This
means that cumulative exchange differences arising from the
translation of the financial statements of foreign subsidiaries into
euro have been included in retained earnings at the date of
transition.
Changes in accounting principles and their impacts
1. Employee benefits (IAS 19)
Under FAS pension expenses have been recognised on the consolidated
financial statements in accordance with the local accounting practice
in countries where M-real operates. IFRS requires that pension
arrangements are classified as either defined contribution or defined
benefit plans. In the case of latter the plans assets and
liabilities are calculated using actuarial methods and the difference
between them is recognised as either an asset or liability on the
balance sheet.
Under FAS, the Finnish employee pension plan (TEL) was regarded as a
defined contribution plan. According to the original IFRS
interpretation the disability element of TEL was considered as a
defined contribution plan. In December 2004, Finnish authorities
approved changes regarding the principles applied in calculating
disability pension contributions that will take effect on January 1,
2006. As a consequence of the changes, the TEL pension arrangement as
whole (incl. disability element) will be classified as defined
contribution plan. M-reals opening IFRS balance sheet includes TEL
disability pension liabilities for the years 2004 and 2005 in the
amount of EUR 7 million (EUR 5 million after tax). and the balance
sheet as of December 31, 2004 EUR 4 million for 2005 (EUR 3 million
after tax).
A total of EUR 108 million of the pension liabilities of foreign
subsidiaries have been recognised on the opening IFRS balance sheet.
The negative impact of this on the shareholders equity was EUR 91
million, net of taxes. Due to changes made for the pension plans
during 2004 and the disposal of Metsä Tissue, the liability decreased
to EUR 95 million by the end of 2004 (impact on equity EUR 79 million
net of taxes).
2. Business combinations (IFRS 3)
IFRS 3 requires that any goodwill arising from business acquisitions
should be recorded at cost less accumulated impairment losses.
Goodwill is not to be amortised after the adoption of IFRS. but
instead must be tested for impairment on an annual basis. Since M-
real has applied transitional option permitted by IFRS and thus has
not restated the effects of business acquisitions retrospectively,
goodwill has been recognised on the opening IFRS balance sheet at
cost, net of accumulated amortisations up to the date of transition
and impairment losses recognised on the date of transition.
Total goodwill included in the opening IFRS balance sheet was EUR 643
million, and EUR 568 million in the balance sheet as of December 31,
2004. The reduction is mainly due to the disposal of Metsä Tissue in
January 2004. Goodwill amortisation made under FAS in 2004 totalled
EUR 52 million. Goodwill has been allocated to business segments.
The company has included Kemiart Liners on its opening IFRS balance
sheet as a fully-owned subsidiary due to prior binding agreement on
the purchase price and on the final execution of the transaction
during 2004. Negative goodwill totalling EUR 11 million was
recognised on the opening balance sheet. Under FAS reporting Kemiart
Liners was fully consolidated in M-reals financial statements from
the beginning of July 2004.
3. Impairment of assets (IAS 36)
M-real tests the value of assets of its cash generating units for
possible impairment using the discounted future cash flow method.
Tests are performed annually or whenever there is an indication that
the unit may be impaired, as required by IAS 36. Based on the tests
the company has recognised impairment losses of EUR 126 million in
the transition date balance sheet. This total consists of EUR 26
million related to the companys Consumer Packaging business (fixed
assets of Savon Sellu mill). EUR 36 million relating to the
Commercial Printing business (fixed assets of Zanders Reflex mill).
and EUR 60 million pertaining to goodwill allocated to the companys
paper merchanting business. The after-tax effect of impairment losses
on sharehoders equity totalled EUR 120 million.
The fixed assets of the above mills have been written down in their
entirety, with the exception of land. This is due to the current
operating losses of these units as well as their poor prospects. The
impairment of goodwill allocated to the paper merchanting business
related to the poor financial performance of some operating units
within the business.
The annual impairment tests performed for the cash generating units
did not result in requirement for recognition of impairment losses in
the financial statements of 2004.
The definition of cash-generating units employed in the impairment
testing of assets is based on the business segmentation used as a
basis for segment reporting. Business segmentation has changed
slightly in the course of 2004 as a result of organisational changes.
but this has had no material effect on the outcome of impairment
tests.
4. Property, plant and equipment / Capitalisation of borrowing
costs (IAS 16, IAS 23)
M-real reports tangible fixed assets on its balance sheet at cost
less accumulated depreciation according to plan and impairment
losses. After the IFRS transition date the company also capitalises
borrowing costs that are directly attributable to the purchase,
construction or manufacture of fixed asset as part of the cost of
such asset. Such capitalisation only applies to long-term projects.
Under FAS, such costs have mainly been expensed during the reporting
period incurred. A total of EUR 0.5 million of interest expenses
related to the construction of the Kaskinen BCTMP mill were
capitalised during 2004. This change in capitalisation policy has no
effect on the opening IFRS balance.
5. Valuation of forest assets (IAS 41. Biological Assets)
Under FAS, M-reals forest assets have been valued at cost added with
revaluations (write-ups) recognised over the years. Under IAS 41
forest assets have been classified as biological assets on the
opening IFRS balance sheet and reported at fair value. Accordingly, a
total of EUR 135 million of revaluation amounts, recognised in
addition to acquisition costs, have been reversed.
The carrying value of M-reals forest assets, including land,
totalled EUR 168 million on December 31, 2003 under FAS. Based on the
valuation made by an external expert the carrying value was estimated
to roughly correspond to the fair value.
During 2004, M-real entered into a binding agreement regarding the
sale of its forest assets (shares of Forestia Oy). This transaction
took effect on January 31, 2005. The sale generated a loss of EUR 7
million, which was recognised on the 2004 IFRS income statement.
M-reals consolidated financial statements also included a 47 percent
share of Metsä-Botnias Finnish and Uruguayan forest assets. The fair
value of M-reals share in them was EUR 25 million on the opening
balance sheet. This amount includes increase of EUR 5 million as a
result of measurement at fair value compared to the carrying value
under FAS.
6. Leases (IAS 17)
M-real is a party to certain agreements relating to power plants and
other facilities and also mill equipment leases that under FAS have
been treated as off-balance sheet rental or supply contracts, but
that under IFRS are included on the balance sheet as either finance
leases or special purpose entities (SPEs). The negative impact of
these items on the shareholdes equity reported on the opening IFRS
balance sheet was EUR 6 million after tax, and they increased the
total assets by EUR 129 million and the total liabilities by EUR 85
million.
The company has a sale & leaseback contract concerning the real
estate of the Tako Board mill in Tampere, Finland. As this agreement
includes a binding repurchase obligation at the end of the lease
period at the original selling price, under IFRS the agreement is
considered as a financing arrangement. This agreement and the
recorded gain on sale have been reversed on the opening IFRS balance
sheet. This reduces shareholders equity and increases interest-
bearing liabilities by EUR 45 million.
7 Income taxes (IAS 12)
Under FAS it was permitted alternative approaches to the recognition
of deferred tax liabilities and assets. Under the approach applied by
M-real, deferred taxes have not been recognised on all taxable
temporary differences between the financial statements and tax basis
of assets and liabilities. IFRS requires the recognition of deferred
tax liabilities for all temporary taxable differences. The most
significant difference between the approach applied by M-real under
FAS and IFRS is an increase in deferred tax liabilities in respect of
the fair value of forest assets in excess of their tax basis
(acquisition cost). The opening IFRS balance sheet reflects a related
deferred tax liability of EUR 40 million and a corresponding
reduction in shareholders equity. Other divergences between Finnish
and IFRS reporting practices for taxable temporary differences have
given rise to a EUR 12 million deferred tax liability. A deferred tax
asset of EUR 38 million has been recorded, in turn, on the opening
IFRS balance sheet for the IFRS adjustments with the negative impact
on shareholders equity.
A deferred tax asset and a related increase in shareholders equity
in the amount of EUR 24 million has been recognised on the opening
IFRS balance sheet due to a change in the Finnish corporate tax rate.
Under FAS reporting this asset was recognised in the second quarter
of 2004. The corporate tax rate was reduced from 29 to 26 percent as
of January 1, 2005. The positive impact of this rate reduction
related almost entirely to the accumulated difference between
depreciation of fixed assets made in the financial statements and
taxation.
8. Provisions (IAS 37)
Provisions for future liabilities and charges have been permitted to
be recognised earlier in some cases under FAS than will be allowed
under IFRS. Such cases include provisions for reorganisation or
restructuring expenses, for example. M-real has reversed EUR 21
million of provisions on its opening IFRS balance sheet that does not
meet IFRS recognition criteria. Of this total, EUR 16 million relates
to the sale and winding-up of Price & Pierce trading business. This
sale was finalised in 2004, and the IFRS income statement reflects a
corresponding negative difference compared to the income statement
reported under FAS.
9. Financial instruments (IAS 32, IAS 39)
In the transition IFRS balance sheet M-real has classified and valued
its financial assets and liabilities as well as derivative contracts.
made to hedge currency and interest rate exposure. according to the
requirements under IAS 32 and IAS 39. Under FAS the company also has
reported currency derivatives at their market value but recognised
related hedging income or losses over the remaining hedging period.
The company has decided to discontinue the application of hedge
accounting (recognition of hedging profits and losses over the
hedging period) in hedging its currency flow upon the adoption of
IFRS. M-real will continue to enter in to derivative contracts to
hedge its cash flows, but will now recognise any income or losses
relating to the measurement at fair value of such contracts directly
on the income statement. However, hedge accounting will be applied to
equity hedging and in selected cases in hedging of interest rate
exposure related to financial liabilities.
Open interest rate derivative contracts have not been measured at
fair value under FAS and are thus not recognised on the balance
sheet.
The valuation at fair value of financial instruments resulted in a
negative net effect of EUR 22 million on shareholders equity on the
opening IFRS balance sheet.
Under FAS, where hedge accounting has been applied to currency
derivatives. hedging income and losses have been recognised as
adjustments to sales, cost of goods sold or financing expenses
depending on the item hedged. As the company has discontinued the
application of hedge accounting, all exchange rate differences have
been recognised as financing items on the IFRS income statement.
10. Sales
Reported sales in 2004 were EUR 69 million higher under IFRS than
FAS. This is mainly due to the full inclusion of Kemiart Liners in
the consolidated IFRS statements as of January 1, 2004.
Changes in the treatment of currency exchange differences did not
have an effect on the sales reported under IFRS because foreign
exchange gains and losses recognised under FAS fully offset one
another.
11 Profit on discontinued operations
M-real disposed its tissue operations at the start of 2004. The
related gain on disposal has been treated as extraordinary income in
the income statement under FAS and taxes payable on the gain have
been included in tax expense. IFRS does not recognise a corresponding
concept of extraordinary items. On the IFRS income statement the
after-tax gain on sale has been presented as a separate line item
after profit on continuing operations.
12 Interest-bearing net liabilities
1
Some pension liabilities of foreign subsidiaries have been
transferred from interest-bearing liabilities to pension liabilities
on the opening IFRS balance sheet. Under FAS these liabilities were
included in the interest-bearing liabilities but under IFRS they are
considered as non-interest bearing obligations. The transferred
amount totalled EUR 122 million on January 1, 2004 and EUR 96 million
on December 31, 2004. The reduction in the liability was mainly due
to the sale of Metsä Tissue.
13. Costs of share issue
Under FAS costs of share issue have been expensed during the
accounting period incurred. Under IFRS they are recorded directly
under shareholders equity as a reduction of retained earnings.
Expenses relating to M-reals share issue in 2004 totalled EUR 12
million after tax (EUR 17 million pre-tax), which has been recorded
as an adjustment of the companys IFRS earnings for the year.
14. Cash flow statements
M-real has not prepared reconciliation of consolidated cash flow
statement since the adoption of IFRS does not have material effect on
that.
Reconciliation of shareholders equity
EUR million 31 Dec 1 Jan 04
04
Shareholders equity 2 627 2 245
according
to FAS
Effects of adopting
IFRS
Pension obligations -98 -115
Other post-employment -2 -2
benefit
obligations
Financial leases, sale -58 -58
&
leaseback
Impairment losses -127
Reversal of goodwill 52 0
amortizations
Restatement of 1 14
business
combinations
Biological assets -1 5
Provisions 2 22
Financial instruments -35 -30
Deferred taxes on IFRS -27 10
adjustments
Other -2 -4
Equity attributable to 2 393 1 960
shareholders of parent
company, according to
IFRS
Difference -234 -285
Reconciliation of net profit for the period
EUR million 1-12/04 1-9/04 1-6/04 1-3/04
Profit according to FAS -15 49 111 142
Effects of adopting
IFRS
Pension obligations 18 14 14 8
Other post-employment 0 0 0 0
benefit
obligations
Financial leases. sale 0 0 0 1
&
leaseback
Impairment losses 61 56 2 1
Reversal of goodwill 52 37 25 12
amortizations
Restatement of -13 -13 1 0
business
combinations
Biological assets -6 -9 0 0
Provisions -20 -9 0 0
Financial instruments -5 -1 -3 -30
Share issue expenses 17 0 0 0
Deferred taxes on IFRS -39 -27 -21 7
adjustments
Other -5 -6 -6 0
Profit attributable to 45 91 123 141
shareholders of parent
company. according to
IFRS
CONSOLIDATED INCOME STATEMENT AND BALANCE SHEET
CONSOLIDATED INCOME 1-12/2004 1-9/2004
STATEMENT
EUR million FAS Effects IFRS FAS Effects IFRS
of of
transit transit
ion to ion to
IFRS IFRS
Sales 5 460 69 5 529 4 078 86 4 164
Other operating 86 3 89 64 4 68
income
Operating expenses -5 152 -47 -5 199 -3 822 -68 -3 890
Share of results in -7 7 0 -5 5 0
associated
companies
Depreciation and -462 70 -392 -362 61 -301
impairment losses
Operating profit -75 102 27 -47 88 41
Share of results in 0 0 0 0 1 1
associated
companies
Net exchange gains 13 -9 4 4 -21 -17
and losses
Other financial -147 7 -140 -94 -4 -98
income and
expenses. net
Profit on -209 100 -109 -137 64 -73
continuing
operations before
tax
Income taxes 19 -37 -18 15 -25 -10
Profit on -190 63 -127 -122 39 -83
continuing
operations
Profit on 176 -1 175 173 3 176
discontinued
operations
Profit for the -14 62 48 51 42 93
period
Minority interests -1 -2 -3 -2 0 -2
Profit/loss -15 60 45 49 42 91
attributable to
shareholders of
parent company
CONSOLIDATED INCOME 1-6/2004 1-3/2004
STATEMENT
EUR million FAS Effects IFRS FAS Effects IFRS
of of
transit transit
ion to ion to
IFRS IFRS
Sales 2 715 60 2 775 1 382 30 1 412
Other operating 40 1 41 16 1 17
income
Operating expenses -2 556 -26 -2 582 -1 288 -18 -1 306
Share of results in -4 4 0 -2 2 0
associated
companies
Depreciation and -214 13 -201 -107 8 -99
impairment losses
Operating profit -19 52 33 1 23 24
Share of results in 0 0 0 0 0 0
associated
companies
Net exchange gains 4 -25 -21 5 -23 -18
and losses
Other financial -63 1 -62 -34 -14 -48
income and
expenses. net
Profit on -78 29 -49 -28 -14 -42
continuing
operations before
tax
Income taxes 17 -20 -3 -2 9 7
Profit on -61 9 -52 -30 -5 -35
continuing
operations
Profit on 173 3 176 173 3 176
discontinued
operations
Profit for the 112 12 124 143 -2 141
period
Minority interests -1 0 -1 -1 1 0
Profit/loss 111 12 123 142 -1 141
attributable to
shareholders of
parent company
CONSOLIDATED 31 Dec 31 Dec 1 Jan
BALANCE SHEET 2004 2003 2004
EUR million FAS Effects IFRS FAS Effects IFRS
of of
transit transit
ion to ion to
IFRS IFRS
ASSETS
Non-current assets
Intangible assets 666 -22 644 789 -64 725
Tangible assets 3 182 80 3 262 3 588 83 3 671
Biological assets 187 2 189 186 6 192
Financial assets
Interest bearing 40 3 43 54 2 56
Deferred tax 26 13 39 22 16 38
receivables
Other non-interest 128 8 136 156 0 156
bearing
4 229 84 4 313 4 795 43 4 838
Current assets
Inventories 727 -1 726 802 5 807
Receivables
Interest bearing 41 -3 38 78 -4 74
Non-interest 1 155 10 1 167 1 247 10 1 257
bearing
Cash and cash 242 0 242 184 2 186
equivalents
2 165 8 2 173 2 311 13 2 324
Total assets 6 394 92 6 486 7 106 56 7 162
SHAREHOLDERS 31 Dec 31 Dec 1 Jan
EQUITY AND 2004 2003 2004
LIABILITIES
Shareholders
equity
Equity attributable 2 627 -234 2 393 2 245 -285 1 960
to shareholders of
parent company
Minority interest 24 13 37 19 10 29
Total equity 2 651 -221 2 430 2 264 -275 1 989
Non-current
liabilities
Deferred tax 379 42 421 432 8 440
liabilities
Post employment 21 195 216 26 241 267
benefit obligations
Provisions 37 -1 36 52 -14 38
Interest bearing 1 629 11 1 640 2 583 65 2648
Other non-interest 12 3 15 15 29 44
bearing
2 078 250 2 328 3 108 330 3 438
Current liabilities
Interest bearing 855 11 866 841 -3 838
Non-interest 810 52 862 893 4 897
bearing
1 665 63 1 728 1 734 1 1 735
Total liabilities 3 743 313 4 056 4 842 331 5 173
Total shareholders 6 934 92 6 486 7 106 56 7 162
equity and
liabilities
CONSOLIDATED 31 Dec 30 Sep 30 Jun
BALANCE SHEET 2004 2004 2004
EUR million FAS IFRS FAS IFRS FAS IFRS
ASSETS
Non-current assets
Intangible assets 666 644 675 640 686 644
Tangible assets 3 182 3 262 3 177 3 262 3 243 3 311
Biological assets 187 189 189 185 189 194
Financial assets
Interest bearing 40 43 43 44 42 43
Deferred tax 26 39 17 31 16 30
receivables
Other non-interest 128 136 143 150 144 148
bearing
4 229 4 313 4 244 4 312 4 320 4 370
Current assets
Inventories 727 726 748 742 734 744
Receivables
Interest bearing 41 38 40 33 76 73
Non-interest 1 155 1 167 1 165 1 230 1 223 1 226
bearing
Cash and cash 242 242 242 193 136 127
equivalents
2 165 2 173 2 173 2 198 2 169 2 170
Total assets 6 394 6 486 6 486 6 510 6 489 6 540
SHAREHOLDERS 31 Dec 30 Sep 30 Jun
EQUITY AND 2004 2004 2004
LIABILITIES
Shareholders FAS IFRS FAS IFRS FAS IFRS
equity
Equity attributable 2 627 2 393 2 241 2 004 2 303 2 033
to shareholders of
parent company
Minority interest 24 37 28 39 19 30
Total equity 2 651 2 430 2 269 2 043 2 322 2 063
Non-current
liabilities
Deferred tax 379 421 381 417 391 423
liabilities
Post employment 21 216 27 239 25 240
benefit obligations
Provisions 37 36 29 23 39 25
Interest bearing 1 629 1 640 1 606 1 610 1 833 1 847
Other non-interest 12 15 12 7 13 11
bearing
2 078 2 328 2 054 2 297 2 302 2 546
Current liabilities
Interest bearing 855 866 952 953 1 035 1 065
Non-interest 810 862 1 172 1 217 830 866
bearing
1 665 1 728 2 124 2 170 1 865 1 931
Total liabilities 3 743 4 056 4 178 4 467 4 167 4 477
Total shareholders 6 394 6 486 6 447 6 510 6 489 6 540
equity and
liabilities
CONSOLIDATED BALANCE 31 Mar 31 Dec 1 Jan
SHEET 2004 2003 2004
EUR million FAS IFRS FAS IFRS
ASSETS
Non-current assets
Intangible assets 696 643 789 725
Tangible assets 3 271 3 338 3 588 3 671
Biological assets 187 192 186 192
Financial assets
Interest bearing 54 56 54 56
Deferred tax 16 31 22 38
receivables
Other non-interest 152 154 156 156
bearing
4 376 4 414 4 795 4 838
Current assets
Inventories 725 732 802 807
Receivables
Interest bearing 89 89 78 75
Non-interest bearing 1 215 1 208 1 247 1 256
Cash and cash 145 146 184 186
equivalents
2 174 2 175 2 311 2 324
Total assets 6 550 6 589 7 106 7 162
SHAREHOLDERS EQUITY 31 Mar 31 Dec 1
AND LIABILITIES 2004 2003 Jan2004
Shareholders equity FAS IFRS FAS IFRS
Equity attributable to 2 328 2 038 2 245 1 960
shareholders of parent
company
Minority interest 19 29 19 29
Total equity 2 347 2 067 2 264 1 989
Non-current liabilities
Deferred tax 412 412 432 440
liabilities
Post employment benefit 24 244 26 267
obligations
Provisions 40 25 52 38
Interest bearing 1 841 1 862 2 583 2 648
Other non-interest 24 71 15 44
bearing
2 341 2 614 3 108 3 438
Current liabilities
Interest bearing 999 1 048 841 838
Non-interest bearing 863 860 893 897
1 862 1 908 1 734 1 735
Total liabilities 4 203 4 522 4 842 5 173
Total shareholders 6 550 6 589 7 106 7 162
equity and liabilities
KEY FIGURES Jan-Dec, Jan-Sep, Jan-Sep, Jan-Mar,
2004 2004 2004 2004
Year 2004 FAS IFRS FAS IFRS FAS IFRS FAS IFRS
Operating profit, -75 27 -47 41 -19 33 1 24
EUR million
Profit/loss -15 45 49 91 111 123 142 141
attributable to
shareholders of
parent company, EUR
million
Earnings per share,
EUR
From continuing -0.79 -0.52 -0.58 -0.40 -0.29 -0.25 -0.14 -0.17
operations
From discontinued 0.71 0.72 0.81 0.83 0.81 0.83 0.81 0.83
operations
From continuing -0.08 0.20 0.23 0.43 0.52 0.58 0.67 0.66
operations
and discontinued
operations
Equity attributable 2627 2393 2241 2004 2303 2033 2328 2038
to shareholders of
parent Company at
the end of period,
EUR million
Net interest 8.01 7.29 10.54 9.42 10.83 9.56 10.95 9.59
bearing liabilities
at the end of
period, EUR million
Net interest 2161 2183 2278 2293 2614 2669 2551 2619
bearing liabilities
at the end of
period, EUR million
Total assets at the 6 394 6486 6447 6510 6489 6540 6550 6589
end of period, EUR
million
Return on capital -1.0 0.9 -0.8 1.6 -0.3 1.8 0.3 2.0
employed, %
Equity ratio, % 41.5 37.5 37.2 31.4 35.8 31.5 35.8 31.4
Gearing, % 82 90 100 112 113 129 109 127
Adjusted number of 32816 21261 21261 21261
shares (1000) 5 4 4 4
Opening balance FAS IFRS
sheet
1 Jan 2004
Total equity, EUR 2 245 1 960
million
Net interest 3 109 3 171
bearing
liabilities, EUR
million
Total assets, EUR 7 106 7 162
million
Equity ratio, % 31.9 27.8
Gearing, % 137 159
Computation of key figures
Earning per share = Profit for the period/ Adjusted average number of
shares in issue during the reporting period
Equity per share = (Shareholders´equity/ Adjusted number of shares at
the end of the reporting period) x 100
Return on capital employed % = (Profit on continuing operations
before tax + interest expenses + net exchange gains or losses + other
financial expenses /Capital employed (average)) x 100
Capital employed = Total assets non interest bearing liabilities
Interest-bearing net liabilities = Interest-bearing liabilities -
interest-bearing assets
Equity ratio % = (Equity/Total assets advance payment received) x
100
Gearing ratio % = (Interest-bearing net liabilities/Equity) x 100
Equity = Shareholders equity + minority interest
M-REAL CORPORATION
Corporate Communications
