HALF-YEARLY FINANCIAL STATEMENTS Contents

Transcription

1 HALF-YEARLY FINANCIAL STATEMENTS 2005 Contents Balance sheet Income statement Statement of changes in net borrowing Information on transition to IFRS

2 CONSOLIDATED FINANCIAL STATEMENTS USING IFRS Balance sheet using IFRS Assets (in millions of euros) Notes 30/06/ /12/ /06/2004 Goodwill on acquisition Intangible assets Property, plant and equipment Investments in associates Other financial assets 8 & Deferred taxes Total non-current assets Inventories Trade and other receivables Derivative financial instruments Cash and cash equivalents Current assets Total assets Liabilities (in millions of euros) Notes 30/06/ /12/ /06/2004 Capital Share premium Reserves Goodwill on acquisition 12 (6) 1 Net income (loss) for the period Minority interests Equity Provisions Deferred taxes Loans Non-current liabilities Short-term borrowings Trade and other payables (1) Derivative financial instruments Current liabilities Total liabilities data restated for IFRS (1) Includes the EUR 94 million indemnities on June 30, 2005 relating to the exchange of mining securities, partly repayable in certain conditions (EUR 99 million on December 31, 2004).

3 Income statement using IFRS (in millions of euros) Notes 1st half Full-year 1st half Revenue Other income Cost of sales Administrative and selling expenses Research and development expenses EBITDA Fixed asset amortisation, depreciation and provisions Charge to operating provisions Current operating income Other operating income and charges Operating income Net financial charges Other financial income and expenses Share in the income (loss) of associates Income taxes Income (loss) before minority interests Income (loss) attributable to minority interests Résultat net Net income (loss) per share (EUR) Diluted net income (loss) per share (EUR) data restated for IFRS.

4 Net cash flow statement or statement of changes in net borrowing using IFRS (in millions of euros) 1st half Full-year 1st half Operating activities Net income of consolidated entities Elimination of non-cash items: - Amortisation, depreciation and provisions Change in deferred taxes Losses (gains) on disposal of fixed assets -1 - Share in net income (loss) of equity accounted affiliates -1-1 Operating cash flow before changes in working capital Dividends from equity accounted companies Changes in operating working capital Net cash flow from operating activities Investing activities Purchases of fixed assets Disposals of fixed assets Investment subsidies received 21 Repayments of debts Change in accounts payable for fixed assets Consolidation adjustments Indemnity New Caledonia mining reserves Net cash used in investing activities Financing activities Dividends paid to Group shareholders Dividends paid to minority shareholders Increases in share capital 6 3 Changes in financial working capital 1 Net cash used in financing activities Currency translation adjustments Decrease (increase) in net cash position Opening net (borrowing) position Closing net (borrowing) position data restated for IFRS. (91)

5 Information on the transition to IFRS 1 Transition to IFRS The Eramet Group is applying IAS/IFRS as from the year beginning January 1, 2005, in accordance with Regulation EC 1606/2002. The first financial statements published using IAS/IFRS are those for Comparisons of these with the statements for 2004 were prepared using the same system of reference, except for IAS 32/IAS 39 which were applied as from January 1, The Committee of European Securities Regulators (hereinafter CESR ) on 30 December 2003 issued a recommendation relating to the notification on the transition from national accounting standards to IFRS, as adopted in France by the Financial Market Authority (Autorité des Marchés Financiers, hereinafter AMF ) in February The following information constitutes the implementation of these recommendations and notably includes the following: - A note on the first-time application of IFRS accounting principles by the Group, particularly on the forms of applying IFRS, first-time adoption of IFRS and the presentation formats used for the balance sheet and income statement; - A note summarising the effects of IFRS on the accounting principles used by the Group; - Tables showing the reconciliation of French standards to IFRS for the following statements: Equity on January 1, June 30 and December 31, 2004; Balance sheets on January 1, June 30 and December 31, 2004; and Income statement for the first half of and full-year A note commenting on these tables. The data contained in this document was prepared based on the standards and interpretations in force at the time of writing and accordingly are of a preliminary nature. In fact, if these standards and interpretations were modified by the exposure drafts in progress or due in future, the quantitative data to be presented at the time of publication by the Group of the first accounts under IFRS could differ from those contained in this document. 1.1 First-time application of IFRS Legislative references The bridge tables presented have been prepared in accordance with all IAS/IFRS and the SIC/IFRIC interpretations published in the Official Journal of the European Union prior to March 9, 2005 (Regulations EC 1725/2003, 707/2004, 2086/2004, 2236/2004, 2237/2004, 2238/2004 and 211/2005). The Group has chosen to apply the standards IAS 32 and IAS 39 as from January 1, 2005 (table showing the changes in equity and Note 19) Application of IFRS 1, first-time adoption of IFRS IFRS 1 defines the forms for preparing the first IFRS balance sheet. The general principle is the retrospective application of all the principles in force on December 31, 2005, with the effects of changes in the accounting principles recorded as balances brought forward on the transition date, that is, January 1, Taking into account the practical difficulties of a fully retrospective application, IFRS 1 envisages optional treatment. The choices taken in this respect by the Eramet Group are as follows: - pensions and similar commitments: the group has chosen to record the unamortised actuarial gains and losses appearing in the balance sheet on January 1, 2004 in equity; - unrealised exchange gains or losses: the unrealised exchange gains or losses resulting from exchange rate variations for the financial statements of subsidiaries denominated in a currency other than the euro have been frozen on January 1, 2004 and reclassified in equity. As a result, on the subsequent disposal of assets denominated in a foreign currency they shall not be recognised in the income statement.

6 - Tangible assets: the group has used the possibility offered in IFRS 1 of valuing certain tangible assets - mainly industrial facilities - in the opening balance sheet at fair value. - Business combinations: the Group has chosen not to restate business combinations conducted before January 1, 2004 retrospectively using IFRS Developments in 2005 For 2005, the Group prepared its information and reporting systems in order to monitor the consolidated and management accounts in application of IAS/IFRS. The application of IAS 32 and IAS 39 for January 1, 2005 has a significant impact on the Group accounts. The valuation of the hedging instruments in relation to the closing prices resulted in recording a significant positive net amount for January 1, 2005, mainly due to the valuation of the dollar currency hedging instruments in relation to the closing price on December 31, Financial statement presentation format with IFRS Balance sheet In French standards, the Eramet Group balance sheet uses the presentation recommended in the French Chart of Accounts. The IFRS balance sheet groups together assets and liabilities in accordance with two main headings, current and non-current. The current heading covers assets and liabilities relating to the operating cycle, irrespective of their due date, as well as other assets and liabilities falling due within one year from the date of appearing on the balance sheet, except for cash presented separately. The non-current assets and liabilities include the other assets and liabilities, that is, those assets and liabilities falling due in more than one year and not relating to the operating cycle Income statement In French standards, the Eramet Group income statement is presented by type of expense. In IFRS, the income statement is presented by function. The income statement expenses are necessarily classified with operating income or financial results. Accordingly, within operating income, other operating income and charges should enable identification of the items with a specific or non-recurrent nature in order to determine the level of current operating income. There is no separate presentation of the extraordinary items. 1.2 Effects of IFRS on the accounting principles used by the Eramet Group The notes below aim to specify the nature of divergences existing on the document publication date between the French standards and IFRS, as applied by the Eramet Group, as well as the forms of applying IFRS by the Group, when necessary. There are no material changes in the scope of consolidation. Nevertheless, certain small companies that are not material have been removed from the scope of consolidation IAS 1 Presentation of financial statements The Group has chosen to modify the presentation of its income statement and to change from presentation of expense by type to that of by function. The balance sheet entries are presented using the classification of current and non-current assets and current and non-current liabilities. The cash flow statement is presented using the indirect method IAS 2 Inventories Inventories are valued using the average weighted cost or FIFO methods. The LIFO method, used in French accounting standards in the Nickel activity, has been discontinued since it does not conform to IAS 2.

7 The depreciation of spare parts, calculated using a statistical basis in French accounting standards that is inadmissible in IAS 2, is now calculated in accordance with the extent they are consumed in the year. The stocks of spare parts above the amount used in the year are fully depreciated. Spares corresponding to fixed assets are reclassified in property, plant and equipment IAS 12 Deferred taxes In accordance with IAS 12, all restatements conducted as part of the transition to IFRS have generated calculations of deferred taxes at the tax rate applicable in the country concerned IAS 16 Property, plant and equipment Property, plant and equipment is analysed by component, allowing depreciation based on the different useful lives of each homogenous type of fixed asset. The Group has not assigned residual value to these fixed assets. The application of IAS 16 led the Group to reclassify the capital subsidies as a deduction from the gross value IAS 17 Leases Certain lease contracts have been classified as finance leases pursuant to the criteria in IAS 17. These contracts are capitalised in assets with the entry of a corresponding debt in liabilities IAS 19 Employee benefits In its consolidated financial statements for 2004, prepared using French accounting principles, the Eramet Group applied recommendation N 2003-R01 of the French Accounting Regulation Committee (Conseil National de la Comptabilité, hereinafter CNC ), which recommends provisioning the retirement commitments and similar benefits as from January 1, 2004 using the same principles as those covered by IAS 19. The resulting changes from the first-time application of this standard, which also includes recognising unamortised actuarial gains or losses on January 1, 2004, have been allocated to opening equity in French accounting principles. The pension commitments and other similar benefits using principles in IAS 19 and those from CNC recommendation N 2003-R01 were valued with the help of an international actuarial firm. Actuarial gains and losses exceeding 10% of the market value of the funds or discounted value of the commitment per plan are amortised using the corridor method (see note ) IAS 36 Impairment of assets This standard envisages that the value in use of the tangible and intangible assets is tested when signs of an impairment loss appear and is reviewed on closure of each set of financial statements. This test is conducted at least once a year for assets with an indefinite life, a category limited for the Group to goodwill on acquisition. For this test, the fixed assets are grouped by cash generating unit, or CGU. CGUs are homogenous groups of assets of which the continued use generates cash inflows largely independent of the cash inflows of other asset groups. The value in use of the units is determined in reference to the discounted future net cash flows. When this is less than the net value of the CGU, an impairment loss is recorded for the difference and allocated as a priority to goodwill on acquisition. Within the three main businesses of the Group, that is Nickel, Manganese and Alloys, each production unit represents a UGT IAS 37 Provisions, Contingent Liabilities and Contingent Assets The application of IAS 37 has led to reclassification of the provisions for major repairs in equity. In accordance with the contents of IAS 37, the provisions for long-term risks for which a maturity schedule can be established have been updated. These mainly concern provisions for reconditioning mining sites.

8 1.2.9 IAS 38 Intangible assets In application of IAS 38, the intangible assets and notably deferred charges not corresponding to strict capitalisation criteria defined in this standard have been reclassified as a deduction to equity Other restatements of the balance sheet and income statement The other restatements are as follows: - in application of IFRS 3, the negative goodwill on acquisition ( badwill ), previously classified as a deduction to goodwill on acquisition, has been included in equity for January 1, 2004; - in application of this same standard, IFRS 3, goodwill on acquisition is no longer amortised but subject to a systematic annual evaluation test to determine possible impairment (see 2.6 above). Amortisation practised previously using French standards has been reclassified as a deduction to the gross value. Transferable investment securities are recorded on the balance sheet at fair value, including unrealised gains. IFRS 2 (booking of stock options in personnel costs) does not apply to the stock options plans in force at the Group on January 1, 2004 since these were agreed prior to 7 November Balance sheet and income statement reclassifications Balance sheet reclassifications IFRS has required certain reclassifications of balance sheet assets or liabilities, as well as transfers between assets and liabilities. The main reclassifications or transfers relate to capital subsidies reclassified as a deduction from fixed assets and the presentation of bank debts as current or noncurrent. This clarification was, however, presented in the Notes to the balance sheet in the French standards Income statement reclassifications The main income statement reclassifications concern the discontinuation of a separate presentation of extraordinary items.

9 1.3 Balance sheet on January 1, 2004 Assets (in millions of euros) Notes 31/12/2003 IFRS 1/1/2004 French adjustments IFRS standards Goodwill on acquisition Intangible assets Property, plant and equipment Investments in associates Other financial assets Deferred taxes Total non-current assets Inventories Trade and other receivables Derivative financial instruments Cash and cash equivalents Current assets Total assets Liabilities (in millions of euros) Notes 31/12/2003 IFRS 1/1/2004 French adjustments IFRS standards Capital Share premium Reserves Goodwill on acquisition Minority interests Equity Provisions Deferred taxes Loans Non-current liabilities Short-term borrowings Trade and other payables (1) Derivative financial instruments Current liabilities Total liabilities

10 1.4 Balance sheet on December 31, 2004 Assets (in millions of euros) Notes 31/12/2004 IFRS 31/12/2004 French adjustments IFRS standards Goodwill on acquisition Intangible assets Property, plant and equipment Investments in associates Other financial assets Deferred taxes Total non-current assets Inventories Trade and other receivables Derivative financial instruments Cash and cash equivalents Current assets Total assets Liabilities (in millions of euros) Notes 31/12/2004 IFRS 31/12/2004 French adjustments IFRS standards Capital Share premium Reserves Goodwill on acquisition Net income (loss) for the period Minority interests Equity Provisions Deferred taxes Loans Non-current liabilities Short-term borrowings Trade and other payables (1) Derivative financial instruments Current liabilities Total liabilities

11 1.5 Income statement for 2004 (in millions of euros) Full-year IFRS Full-year 2004 adjustments 2004 French IFRS standards Revenue Other income Cost of sales Administrative and selling expenses Research and development expenses EBITDA Fixed asset amortisation, depreciation and provisions Charge to operating provisions Current operating income Other operating income and charges Operating income Net financial charges Other financial income and expenses Share in the income (loss) of associates 1-1 Income taxes Income (loss) before minority interests Income (loss) attributable to minority interests Net income (loss) for the period Net income (loss) per share (EUR) Diluted net income (loss) per share (EUR)

12 2 Sectoral information 2.1 By business sector (in millions of euros) Nickel Manganese Alloys Holdings and Total eliminations 1st half 2005 Non-group sales Intra-group sales 4-4 Revenues Operating cash flow Current operating income Fixed asset amortisation, depreciation and provisions Share in the income (loss) of associates 1 1 Industrial investments, tangible and intangible Capital employed Non-group sales Intra-group sales 6-6 Revenues Operating cash flow Current operating income Fixed asset amortisation, depreciation and provisions Share in the income (loss) associates 1 1 Industrial investments, tangible and intangible Capital employed st half 2004 Non-group sales Intra-group sales 3-3 Revenues Operating cash flow Current operating income Fixed asset amortisation, depreciation and provisions Share in the income (loss) of associates Industrial investments, tangible and intangible Capital employed By geographical area (in millions of euros) Europe North Asia Other Total America areas Revenue (area of sales) 1st half st half Industrial investments, tangible and intangible 1st half st half