Notes (USD 1,000)
Notes (USD 1,000)
Transition to IFRS
As stated in the accounting policies on page 30, these are JL’s first consolidated financial statements prepared in accordance with IFRS. As a consequence the accounting policies of JL and the parent company have been changed in a number of areas.
In accordance with IFRS 1, the opening balance as at 1 January 2004, and the comparative figures for 2004 have been restated in accordance with the IFRS/IAS and IFRIC/SIC regulations in force at 31 December 2005. The opening balance as at 1 January 2004 is presented as if these standards had always been in force, with the exception of certain requirements and exemptions that are highlighted in the following.
IAS 1 - Presentation of financial statements - has affected the presentation of minority interest and other disclosures.
IAS 16 - Property, plant and equipment - has affected the way docking costs are handled. Previously docking costs were expensed over the income statement. IAS 16 requires that they are capitalised and depreciated over the period between dockings.
IAS 24 - Related party disclosures - has affected the identification of related parties and some other related party disclosures.
IAS 27 - Consolidated and separate financial statements, and IAS 28 - Investments in associates have had a significant effect upon the presentation of the accounts of the parent company J. Lauritzen A/S in respect of subsidiary and associated companies. Previously, subsidiary and associated companies were accounted for using the equity method. Now, these investments are carried at cost less accumulated impairment losses. All investments were tested for impairment at 1 January 2004 using a calculated utility value and write-downs of USD 259 million were recognised in the opening balance of 2004. The write-downs are primarily related to companies that have ceased operation or where significant losses have been incurred in the past.
IAS 31 - Interest in joint ventures - has affected the way jointly controlled operations are recognised. Previously JL recognised 100% of the total income and costs in a jointly controlled operation, and the distribution of the partners’ share of the jointly controlled operation was recognised as hire of chartered vessels. Changes to accounting policy now recognise earnings from vessels owned or leased by JL which are engaged in a jointly controlled operation on a net distribution basis.
The adoption of IAS 39 - Financial instruments: recognition and measurement - has resulted in a change in the accounting policy relating to the classification of financial assets at fair value through profit and loss. IAS 39 does not require the classification of financial assets as “fair value through profit and loss” of previously recognised financial assets.
The adoption of IFRS3 - Business combinations, IAS 36 - Impairment of Assets, and IAS 38 - Intangible assets, resulted in a change in accounting policy regarding goodwill. Until 31 December 2004 goodwill was amortized on a straight line basis over its estimated service life, although not exceeding ten years, and subjected to a regular impairment test.
In accordance with the provisions of IFRS 3 JL ceased amortisation of goodwill from 1 January 2004 and the accumulated amortization as at 31 December 2003 has been eliminated with a corresponding decrease in the cost of goodwill. From the year ended 31 December 2004 onwards, goodwill is tested annually for impairment as well as when there are indications of impairment.
IAS 7 - Cash flow statement. Has changed the definition of liquidity used in the cash flow and requires cash flow statements for both the group and the parent company.
Reclassifications - In addition to changes in accounting policies, certain reclassifications of items in the balance sheet have been made together with comparative figures.
Deferred tax assets are classified as non current assets. Previously these were classified as current assets. Deferred tax liabilities, previously shown as provisions are reclassified as non current liabilities.
Key figures - The key figures for previous periods have not been adjusted in line with the change in accounting policies required to adopt IFRS. The effect of any changes that would have been done if the key figures for 2001 - 2003 were converted to IFRS, are included in the adjustments made in the opening balance for 2004.