Thales Sa · EURONEXT:HO
Thales Sa — FY2004 Earnings Presentation
16 slides from Thales Sa's earnings presentation, May 12, 2005
Slide 1: 2004 Results: Transition to IFRS
2004 Results Transition to IFRS Ross McInnes 12 May 2005
Slide 2: Transition to IFRS: Agenda
Transition to IFRS Agenda 1. Significant standards for Thales 2. 2004 Profit & Loss account 3. 2004 Balance sheet 4. Back-up The 2004 IFRS pro-forma results presented there-after 12 mai 2005 have been audited by the statutory auditors of the Company 2
Slide 3: Significant standards for Thales
1. Significant standards for Thales … in line with the specific nature of its business Long-term contracts & export sales ! IAS11 – Construction contracts IAS18 – Revenue ! IAS39 – Financial instruments (hedge accounting) High-tech activity, people-intensive & not capital-intensive ! IAS38 – Intangi
Slide 4: 2004 Profit & Loss account: main impacts
2. 2004 Profit & Loss account Main impacts on the 2004 income statement Change in accounting of penalties, no impact on the result “Assessment underway” ! €28m deducted from sales & cost of sales Accounting as an expense of share or share-options granted to employees “ ~ €(15)m p.a.” ! €(15)m in the
Slide 5: Impact on main P&L items
2. 2004 Profit & Loss account Impact on main P&L items € million FR.GAAP IAS / IFRS Diff. Revenues 10,288 10,276 - 12 Operating income 729 719 - 10 Income of operating activities 593 590 -3 Financial result, including financial component of pension charge (176) (113) + 63 Income bef. tax, affiliates
Slide 6: Main impacts on 2004 balance sheet
3. 2004 Balance sheet Main impacts on 2004 balance sheet IAS 11 Construction contracts - Penalties deducted from receivables vs presented as reserves - Advances received offset with receivables when revenue is recognised - stage of completion method- (vs contractual billing) Badwills recognised in e
Slide 7: Balance sheet at end 2004: assets
3. Balance sheet at end 2004 ASSETS € million FR.GAAP. IAS / IFRS Diff. Goodwill 1,956 1,913 - 43 Tangible & intangible assets 1,448 1,448 - Financial assets 360 494 + 134 Pensions and related costs 269 37 - 232 Deferred tax assets - 480 + 480 Non current assets 4,033 4,372 + 339 WCR items (asset si
Slide 8: 2004 Balance sheet: impact on equity
2. 2004 Balance sheet : impact on equity € million Published IAS/IFRS Diff. Net equity at 1 January 2004 2,058 1,393 - 665 * 2004 net income, Group share 198 339 + 141 2004 net income, minority interests 9 15 +6 Other equity changes -118 -117 1 Net equity at 31 December 2004 2,147 1,630 - 517 Total
Slide 9: Balance sheet at end 2004: liabilities & equity
3. Balance sheet at end 2004 LIABILITIES & EQUITY € million FR.GAAP IAS / IFRS Diff. Net equity 2,147 1,630 - 517 Pensions and related costs 457 1 092 + 635 Financial debt 2,170 - - 2 170 Financial debt – long term - 1,441 +1,441 Deffered tax liabilities - 20 + 20 Non current liabilities 2,627 2,553
Slide 10: Synthesis
Synthesis "Profit & Loss account " Small impact on operational incomes " Significant increase in net income " New presentation of intermediate results & aggregates " Balance sheet " Decrease in net equity (already taken into account by rating agencies) # Gearing ratio up from 29% to 35% " Reduction
Slide 11: Back-up
Back-up " Detailed 2004 P & L " Main standards impacting 2004 financial statements 12 mai 2005 11
Slide 12: 2004 Profit & Loss account
2004 Profit & Loss account € million FR GAAP IAS/IFRS Diff. Revenues 10,288 10,276 - 12 Cost of sales (7,920) (7,915) -5 R&D, admin & selling expenses (1,639) (1,641) -2 Operating income 729 719 - 10 Restructuring costs (110) (109) 1 Other operating expenses - (2) -2 Impairment of goodwill - (13) -
Slide 13: IAS11 – Contract accounting
IAS11 – Contract accounting $ Revenue recognition on construction contracts already according to the stage of completion method $ Penalties % French Gaap P & L: included in the cost of sales B/S: reserve % IAS11 P & L: deducted from revenues B/S: deducted from receivables $ Advances received on work
Slide 14: IAS38 - Accounting of R&D expenditure
IAS38 - Accounting of R&D expenditure Accounting principles for R&D expenditure: ‘an intangible asset arising from development shall be recognised if IAS38-defined criteria are met’ Thales already applies IAS 38 – Intangible assets & No impact for Thales 12 mai 2005 14
Slide 15: Share-based payment & employee benefits
Share-based payment & employee benefits IFRS2 – Share-based payment • P&L: Recognition of share options and shares granted to employees as an expense (P&L) IAS19 – Employee benefits IAS19 applied by Thales since 2002 ‘First-Time Adoption’ exemptions for Thales: • B/S: Recognition of all cumulative a
Slide 16: IAS36 - Goodwill
IAS36 - Goodwill (1) Amortisation & impairment test % Before Amortisation of goodwill (Fr. GAAP & IAS) + Impairment test % IAS36 Impairment test only More erratic impact on P/L (2) Goodwill on Investments in associates Reclassified as ‘Equity in associates’ (IAS 28-Investments in associates) (3) Bad