Government grants of a revenue nature, mainly for research and
development purposes, were credited to the Consolidated Statement
of Comprehensive Income in the same year as the related
expenditure.
In relation to the impairment of the Bitterfeld plant and
wafering facility in Erfurt, grants and subsidies have been
released in the same ratio. Furthermore, based on the assumption
that the agreed number of employees will not be employed by the end
of 2013, management expect that a significant portion of the
received grants and subsidies will require to be paid back, the
cost of so doing has been accrued. Only a part of the repayable
grants and subsidies have been released already in previous years.
This portion has to be derecognised and is presented in note 5.
All required conditions of these grants have been met and it is
the Group's intention they will continue to be met.
Provisions
Provisions are formed where a third party obligation exists,
which will lead to a probable future outflow of resources and where
this outflow can be reliably estimated. Provisions are measured at
the best estimate of the expenditure required to settle the
obligation, discounted to present value. The resulting charge upon
the discounting being unwound is recorded as a finance cost.
Accruals
Accruals are recognised when an obligation to meet an outflow of
economic benefit in the future arises at the balance sheet
date.
Accruals are initially recognised at fair value and subsequently
at amortised cost using the effective interest method.
Revenue recognition
Revenue is recognised when the significant risks and rewards of
ownership have been transferred to the customer. Ownership is
considered to have transferred once products have been received by
the customer unless shipping terms dictate any different. Revenues
exclude intra-group sales and value added taxes and represent net
invoice value less estimated rebates, returns and settlement
discounts. The net invoice value is measured by reference to the
fair value of consideration received or receivable by the Group for
goods supplied.
The Group has outsourced some elements of production to external
companies. In cases in which the Group retains power of disposal
over the product or product element, a sale is only recognised
under IFRS when the final product is sold. The final product is
deemed to have been sold when the risks and rewards of ownership
have been transferred to a third party.
Finance income and costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, interest
receivable on funds invested and dividend income and gains.
Interest income is recognised in the Consolidated statement of
Comprehensive Income as it accrues, using the effective interest
method.
Exceptional items
Exceptional items are those items that in the Directors' view
are required to be separately disclosed by virtue of their size or
incidence to enable a full understanding of the Group's financial
performance.
Due to the current volatility in the PV industry and any
(previously) unusual charges being in keeping with those of other
similar companies, the Directors' believe that separate disclosure
would not therefore be beneficial.
Defined benefit pension plan
A defined benefit plan is a pension plan that defines an amount
of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of
service and compensation.
The liability recognised in the Balance Sheet in respect of
defined benefit pension plans is the present value of the defined
benefit obligation at the balance sheet date less the fair value of
plan assets. The defined benefit obligation is calculated annually
by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined
by discounting the estimated future cash outflows using interest
rates of Government bonds at the balance sheet date with a ten year
maturity, adjusted for additional term to maturity of the related
pension liability.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are charged or credited
directly to the Consolidated Statement of Comprehensive Income in
the period in which they arise.
Past service costs are recognised immediately in profit or loss,
unless the changes to the pension plan are conditional to the
employees remaining in service for a specified period of time (the
vesting period). In this case, the past service costs are amortised
on a straight--line basis over the vesting period.
Defined contribution plan
For defined contribution plans, the Group pays contributions to
pension insurance plans on a contractual basis. The Group has no
further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expenses when
they are incurred.
Employee benefit trust
All assets and liabilities of the Employee Benefit Trust ("EBT")
have been consolidated in these financial statements as the Group
has de facto control over the trust's net assets as the parent of
its sponsoring company.
Deferred revenue and other long--term assets
As is common practice within the sector, the Group, where
appropriate, both seeks to receive deposits from customers in
advance of shipment and makes deposits in advance of supplies of
silicon tetrachloride and polysilicon feedstock.
These deposits are held on the Balance Sheet and matched against
revenue/cost as appropriate.
Deposits received from customers are not discounted, as the
effect is not considered to be material.
Share--based payments
The Group has applied the requirements of IFRS2 (Share--based
Payments). The Group issues equity--settled share--based payments
to certain employees. These are measured at their fair value at the
date of the grant using an appropriate option pricing model and are
expensed over the vesting year, based on the Group's estimate of
the number of shares that will eventually vest. Grants of shares
made during 2008 and 2007 are not subject to performance criteria
and were valued at the date of the grant at market value. During
2009 the Group granted share options to employees. During 2011
awards were granted under the Performance Share Plan to employees.
The share options granted are subject to performance criteria
required for the option to vest and are considered in the method of
measuring fair value.
Charges made to the Consolidated Statement of Comprehensive
Income in respect of share--based payments are credited to the
share--based payment reserve.
Shareholders' equity
Shareholders' equity is comprised of the following balances:
-- share capital is comprised of 416,725,335 ordinary shares of 2 pence each, see note 28;
-- share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of share issue;
-- investment in own shares is the Group's shares held by the
EBT that are held in Trust for the benefit of employees;
-- share--based payment reserve is the amount charged to the
Consolidated Statement of Comprehensive Income in respect of shares
already granted or options outstanding relative to the vesting date
or option exercise date;
-- reverse acquisition reserve is the difference between the
value of the assets acquired and the consideration paid by way of a
share for share exchange on 5 January 2007;
-- retained earnings is the cumulative profit retained by the Group; and
-- currency translation adjustment represents the differences
arising from the currency translation of the net assets in
subsidiaries.
2. Other income
2012 2011
EUR'000 EUR'000
------------------------------------------------------------ -------- --------
Recognition of accrued grants and subsidies for investments 9,026 2,862
Customer payment upon cancellation of contract 90,633 -
Customer deposit realised as income on cancellation
of contract 8,067 951
Research and development grants 548 666
Sale of non silicon product 24 457
Refunds 505 200
Insurance claims 326 94
Miscellaneous 350 375
------------------------------------------------------------ -------- --------
109,479 5,605
------------------------------------------------------------ -------- --------
3. Cost of material and services
The cost of materials is attributable to the consumption of
silicon, ingots, wafers, chemicals and other consumables as well as
the purchase of merchandise.
2012 2011
EUR'000 EUR'000
---------------------------------------------------------- -------- --------
Cost of raw materials, supplies and purchased merchandise 42,595 159,144
Change in finished goods and work in progress 1,101 1,770
Own work capitalised (967) (11,499)
--------
Inventory writedowns 41,507 22,866
--------
Onerous contract charge 41,963 20,869
---------------------------------------------------------- -------- --------
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