Understanding the financial statements required by IAS 1 A 86045 Accounting and Financial Reporting

Objective of financial statements According to IAS1, the objective of general purpose financial statements is "to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions". This is similar to the equivalent definition given in the IASB Conceptual Framework. A 86045 Accounting and Financial Reporting

General Requirements for Financial statements – IAS 1 Fair presentation and compliance with IFRSs Going concern basis Accrual basis of accounting Materiality and aggregation Offsetting Frequency of reporting Comparative information Consistency of presentation A 86045 Accounting and Financial Reporting

Fair presentation and compliance with international standards Financial statements must present fairly the financial position, financial performance and cash flows of the entity to which they relate. It is assumed that the application of international standards will result in a fair presentation. An entity which complies with international standards must make an explicit and unreserved statement to that effect in the notes. A 86045 Accounting and Financial Reporting

Going concern and accruals basis Financial statements are generally prepared on the going concern basis unless the entity intends to cease trading or has no realistic alternative but to do so. Financial statements other than the statement of cash flows should be prepared on the accruals basis. A 86045 Accounting and Financial Reporting

Materiality and aggregation Items are "material" if they could influence the economic decisions made by users on the basis of the financial statements. If an item is not individually material it may be aggregated with other items. Each material class of similar items should be presented separately in the financial statements. The requirements of international standards need not be applied to items that are immaterial. A 86045 Accounting and Financial Reporting

A 86045 Accounting and Financial Reporting Offsetting In general, assets and liabilities should be reported separately in the statement of financial position and should not be offset against one another. Similarly, income and expenses should be reported separately in the statement of comprehensive income. However, this rule does not apply if offsetting is permitted or required by an international standard. A 86045 Accounting and Financial Reporting

Frequency of reporting Financial statements should normally be presented at least annually. An entity which presents financial statements for a period which is longer or shorter than one year should disclose: (a) the reason for using a period that is longer or shorter than one year; (b) the fact that the comparative amounts given for the previous period are not directly comparable with those given for the current period. A 86045 Accounting and Financial Reporting

Comparative information and consistency of presentation As a minimum, entities should present comparative information in respect of the previous period for all amounts reported in the financial statements. To maintain comparability, the way in which items are presented and classified should generally be consistent from one accounting period to the next. A 86045 Accounting and Financial Reporting

Identification of the financial statements Name of the reporting entity Whether a single entity or a group Date at the end of the reporting period or the period covered Presentation currency used Level of rounding (e.g. £000 or £m) A 86045 Accounting and Financial Reporting

Understanding the Financial Statements Required by IAS 1 Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements A 86045 Accounting and Financial Reporting

Linkages among the Financial Statements Statement of Cash Flow Change in cash from : +/- Operations +/- Investing +/- Financing Opening Balance Sheet Closing Balance Sheet Cash Other assets Total assets Less (Liabilities) Net assets Or Shareholders equity Cash Other assets Total assets Less (Liabilities) Net assets Or Shareholders equity Statement of Profit or Loss and Other Comprehensive Income Sales Less Expenses = Net income Statement of Changes in Shareholders equity Change in equity from : Operations +/-Capital increases/decrease Dividends +/- OCI A 86045 Accounting and Financial Reporting

The Statement of Profit or Loss and Other Comprehensive Income + Other comprehensive income = Comprehensive income Companies can choose to present either a single statement or two separate statements A 86045 Accounting and Financial Reporting

The Profit and Loss Account Two alternative presentations By Destination By Nature A 86045 Accounting and Financial Reporting

Profit & Loss Account by Nature and by destination SM3 A 86045 Accounting and Financial Reporting

Other Comprehensive Income Items not included in profit and loss such as: Changes in revaluation surplus relating to property, plant and equipment and intangible assets Actuarial profits and losses on defined benefit plans Gains and losses arising from translating the financial statements of a foreign operation Gains and losses on re-measuring available-for sale financial assets The effective portion of gains and losses on hedging instruments in a cash flow hedge Categorized according to whether they will subsequently be reclassified to P&L A 86045 Accounting and Financial Reporting

Information to be presented in the statement of comprehensive income revenue finance costs tax expense profit or loss from discontinued operations profit or loss for the period each class of other comprehensive income total comprehensive income for the period. Additional items of income or expense should be disclosed if material The first five items on this list may be presented in a separate statement of profit or loss. A 86045 Accounting and Financial Reporting

The Statement of Financial Position Generally, Current/Non-Current Distinction Exceptionally, in order of liquidity A 86045 Accounting and Financial Reporting

Statement of financial position formerly referred to in the standards as the "balance sheet" the current/non-current distinction information that must be presented in the statement of financial position information that may be presented in the statement of financial position or in the notes A 86045 Accounting and Financial Reporting

A 86045 Accounting and Financial Reporting Currents Assets When an asset satisfies any of the following criteria: It expects to realize the asset or intends to sell it or consume it in the entity’s normal operating cycle It holds the asset primarily for the purposes of trading It expects to realize the asset within twelve months after the end of the reporting period The asset is cash or a cash equivalent (unless it is restricted for at least 12 months after the reporting period) as defined by IAS7.   All other assets are non-current assets. A 86045 Accounting and Financial Reporting

A 86045 Accounting and Financial Reporting Current Liabilities When a liability satisfies any of the following criteria:  It is expected to be settled in the entity’s normal operating cycle It is held primarily for the purposes of trading It is due to be settled within twelve months after the end of the reporting period The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period All other liabilities are non-current liabilities. A 86045 Accounting and Financial Reporting

Information to be presented in the statement of financial position property, plant and equipment investment property intangible assets financial assets inventories trade receivables cash and cash equivalents trade payables provisions financial liabilities tax assets and liabilities equity capital and reserves A 86045 Accounting and Financial Reporting

To be presented in the statement of financial position or in the notes Sub-classification of line items as appropriate to the entity's operations and/or as required by other international standards. (e.g. analysis of property, plant and equipment as required by IAS16) Analysis of share capital and reserves. A 86045 Accounting and Financial Reporting

Statement of Changes in Equity Shows the changes in net assets between two balance sheet dates and reconciles each component. Profit or loss Other comprehensive income Transactions with owners (equity contributions, dividends, purchase of own shares) A 86045 Accounting and Financial Reporting

Statement of changes in equity shows how each component of equity has changed during an accounting period items presented include: total comprehensive income for the period; effects of any changes in accounting policies; share issues; and dividends paid. provides a reconciliation of the opening and closing balance on each component of equity A 86045 Accounting and Financial Reporting

Statement of Cash Flows Indirect Method Direct Method A 86045 Accounting and Financial Reporting

The Linkages among the 4 Financial Statements Consolidated statement of cash flows Operating activities Profit before tax from continuing operations 11.108 Profit/(loss) before tax from discontinued operations 213 Profit before tax 11.321 Adjustments to reconcile profit before tax to net cash flows: Depreciation and impairment of property, plant & equipment 3.907 Amortization and impairment of intangible assets 325 Contribution of prpoerty, plant & equipment by customers (190) Share-based payment expense 412 Decrease in investment properties 306 Gain on disposal of property, plant & equipment (532) Fair value adjustment of a contingent consideration 358 Finance income (1.186) Finance costs 2.766 Share of profit of an associate and a joint venture (671) Movements in provisions , pensions and government grants (732) Working capital adjustments: Increase in trade and other receivables (9.265) Decrease in inventories 4.192 Increase in trade and other payables 4.095 15.106 Interest received 336 Interest paid (484) Income tax paid (3.131) Net cash flows from operating activities 11.827 Investing activities Proceeds from sale of property, plant & equipment 1.990 Purchase of property, plant & equipment (10.162) Purchase of investment properties (1.216) Purchase of financial instruments (3.054) Proceeds from sale of financial instruments Development expenditures (587) Acquisition of a subsidiary, net cash acquired 230 Receipt of government grants 2.951 Net cash flows used in investing activities (9.848) Financing activities Proceeds from exercise of share options 175 Acquisition of non-controlling interests (325) Transaction costs on issue of shares (32) Payment of finance lease liabilities (51) Proceeds from borrowings 5.577 Repayment of borrowings (122) Dividends paid to equity holders of the parent (1.972) Dividends paid to non-controlling interests (30) Net cash flows from/(used in) financing activities 3.220 Net increase in cash and cash equivalents 5.199 Net foreign exchange differences (25) Cash and cash equivalents aa beginning of year 12.266 Cash and cash equivalents at end of year 17.440 Consolidated statement of profit or loss Continuing Operations Revenues 180.462 Cost of sales (136.448) Gross profit 44.014 Other operating income 1.585 Selling and distribution expenses (14.001) Administrative expenses (18.428) Other operating expenses (1.153) Operating profit 12.017 Finance costs (2.766) Finance income 1.186 Share of profit of associates and JVs 671 Profit before tax continuing operations 11.108 income tax expense (3.098) Profit from continuing operations 8.010 Discontinued operations Profit after tax from discontinued operations 220 Profit for the year 8.230 Attributable to: Equity holders of the parent 7.942 Non-controlling interests 288 Consolidated statement of other comprehensive income Profit for the year 8.230 Other comprehensive income (Net of tax) To be reclassified to profit or loss in subsequent periods Net gain on hedge of a net investment 195 Exchange difference on translation of foreign operations (246) Net movement on cash flow hedges (512) Net loss on available for sale financial assets (40) (603) Not to be reclassified to profit or loss in subsequent periods Re-measurement gains on defined benefit plans 257 Revaluation of land & buildings 592 849 Other comprehensive income for the year (net of tax) 246 Total Comprehensive income for the year (net of tax) 8.476 Attributable to: Equity holders of the parent 8.188 Non-controlling interests 288 Consolidated statement of financial position Assets Non-current assets Property, plant & equipment 32.979 Investment properties 8.893 Intangible assets 6.019 Investment in an associate and a joint venture 3.187 Non-current financial assets 6.425 Deferred tax assets 383 57.886 Current Assets Inventories 23.262 Trade and other receivables 27.672 Prepayments 244 Other current financial assets 551 Cash and short-term deposits 17.112 68.841 Assets classified as held for distribution 13.554 82.395 Total assets 140.281 Equity and liabilities Equity Issued capital 21.888 Share premium 4.780 Treasury shares (508) Other capital reserves 1.171 Retained earnings 35.052 Other componenets of equity (649) Non-cash distribution liability (410) Reserves of a disposal group classified as held for distribution 46 Equity attributable to equity holders of the parent 61.370 Non-controlling interest 2.410 Total equity 63.780 Non-current liabilities Interest-bearing loans and borrowings 20.346 Other non-current financial liabilities 806 Provisions 1.950 Government grants 3.300 Deferred revenue 196 Net employee defined benefit liabilities 3.050 Other liabilities 263 Deferred tax liabilities 2.931 32.842 Current liabilities Trade and othe payables 19.444 interest bearing loans and borrowings 2.460 Other current financial liabilities 3.040 149 220 Income tax payable 3.961 850 410 30.534 Liabilities associated with the asets classified as held for distribution 13.125 43.659 Total liabilities 76.501 Total equity and liabilities Note 23 Reconciliation Cash 11,316 ST Deposits 5,796 17,112 Disposal group 1,294 18,406 Overdrafts (966) 17,440 Consolidated statement of changes in equity Attributable to the equity holders of the parent Foreign Other Cash Flow Available Currency Asset Non- Issued Share Treasury Capital Retained Hedge for sale Translation Revaluation Discontinued Controlling Total Premium Shares Reserves Earnings Reserve Operations Interests Equity As at beginning of the year 19.388 80 (654) 864 28.935 (70) 2 (444) 48.101 740 48.841 Profit for the period 7.942 288 8.230 Other comprehensive income   257 (512) (40) (51) 592 246 Total comprehensive income 8.199 8.188 8.476 Depreciation transfer for land and buildings (80) Discontinued operations (46) 46 Issue of share capital 2.500 4.703 7.203 Exercise of options 29 146 175 Share based payments 307 Transaction costs (32) Cash dividends (1.972) (30) (2.002) Non-cash distributions to owners (410) Acxquisition of a subsidiary 1.547 Acquisition of non-controlling interests (190) (135) (325) At end of the year 21.888 4.780 (508) 1.171 34.642 (582) (84) (495) 512 61.370 2.410 63.780 SM4 A 86045 Accounting and Financial Reporting

Notes to the Financial Statements Accounting policies Sources of estimation uncertainty – nature and carrying amount Capital – objectives, policies and processes Risk management Other disclosures required by IFRSs Other information relevant to understanding the financial statements A 86045 Accounting and Financial Reporting