PDF (1265kB) - Philip Morris

ANNUAL REPORT 2005 | CONSOLIDATED FINANCIAL RESULTS
6. PROPERTY, PLANT AND EQUIPMENT
Property Vehicles Furniture Construction Total
& Buildings & machinery & fixtures in progress
equipment
& Advances paid
At January 1, 2004
Cost 1 955 3 944 109 121 6 129
Accumulated depreciation and impairment (927) (2 292) (94) – (3 313)
Net book amount 1 028 1 652 15 121 2 816
Year ended December 31, 2004
Opening net book amount 1 028 1 652 15 121 2 816
Additions cost 37 281 4 (57) 265
Disposal net book amount (5) (56) (1) – (62)
Impairment charge – (30) – – (30)
Depreciation charge (90) (308) (5) – (403)
Closing net book amount 970 1 539 13 64 2 586
At December 31, 2004
Cost 1 982 3 842 105 64 5 993
Accumulated depreciation and impairment (1 012) (2 303) (92) – (3 407)
Net book amount 970 1 539 13 64 2 586
Year ended December 31, 2005
Opening net book amount 970 1 539 13 64 2 586
Additions cost 30 604 1 (14) 621
Disposal net book amount – (22) (1) – (23)
Impairment charge (39) (135) – – (174)
Exchange differences – 2 – – 2
Depreciation charge (83) (282) (4) – (369)
Reclassification to PP&E classified as held for sale (10) (2) – – (12)
Closing net book amount 868 1 704 9 50 2 631
At December 31, 2005
Cost 1 849 4 046 87 50 6 032
Accumulated depreciation and impairment (981) (2 344) (78) – (3 403)
Exchange differences – 2 – – 2
Net book amount 868 1 704 9 50 2 631
PP&E classified as held for sale are as follows:
Cost 159 32 17 – 208
Accumulated depreciation and impairment (149) (30) (17) – (196)
Net book amount 10 2 – – 12
Lease rentals amounting to CZK 105 million (2004: CZK 102 million) relating to the lease of warehousing and office space and machinery equipment
are included in the income statement.
All investments in fixed assets were financed by the Group’s own resources.
7. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
The revision of all fixed assets was done to look for any indication that
an asset may be impaired. An impairment loss was calculated as the
difference between the net book value of the fixed assets and their
recoverable amount. The recoverable amount was the higher of an asset’s
fair value less cost to sell and value in use.
In April 2005, Philip Morris ČR a.s. announced the plan to cease
production at its Hodonín manufacturing facility by the end of
July 2005. The restructuring is aimed at increasing manufacturing
competitiveness in the light of changes in market conditions and
brand mix. The total amount of the impairment loss related to the
restructuring plan recognized in the year ended December 31, 2005
is CZK 174 million. As a result of this plan and subsequent steps in
its execution, the Group revised the net book value of related fixed
assets. The impact of the impairment loss on individual fixed assets
categories is disclosed in Note 6.
In December 2005, management of the Group approved the plan to sell
the Hodonín factory. The sale relates to the land, buildings and related
operating equipment. Terms and conditions of the sale were agreed
with an independent buyer in December 2005 with the signature of
the Agreement on January 20, 2006. In accordance with IFRS
the Group reclassified all assets subject to the sale as “assets held for sale”
on the face on balance sheet. These assets are valued at their estimated
selling price less cost to sell. Individual categories of those fixed asses and
their net book value amount are disclosed in Note 6.
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