ANNUAL REPORT ARCELOR 2003 - paperJam

INTRODUCTIONThe consolidated financial statements of the Arcelorgroup for the year ended December 31, 2003 areprepared in accordance with International FinancialReporting Standards (“IFRS”) applicable at that date.These standards were partially adopted by theInternational Accounting Standards Board (“IASB”)in December 2003 (thirteen modified standards werepublished with effect after the balance sheet date)and will continue as such, in the context of the deadlineof 2005 set by the European Union.Arcelor has adopted a proactive approach in order toanticipate, and, where required, adapt its accountingpolicies depending on developments.NOTE 1 – GENERALArcelor S.A. was incorporated under Luxembourg Lawon June 8, 2001 in the context of the project of thebusiness combination of Aceralia, Arbed and Usinor.This business combination was completed onFebruary 28, 2002.In accord with the requirements of International FinancialReporting Standards (formerly known as InternationalAccounting Standards), and specifically under IAS 22,the business combination between Aceralia, Arbed andUsinor (the acquiring entity) was accounted for using thepurchase method of accounting.The consolidated financial statements as at December 31,2003 present the financial position of the Company andits subsidiaries (hereafter “the Group”), as well as theinterests of the Group in its associated companies andits interests in jointly controlled entities.The Board of Directors authorised the publication of theDecember 31, 2003 financial statements on February 18,2004. These financial statements will not be final untilapproved at the annual general meeting of shareholders.The consolidated financial statements have beenprepared in accordance with IFRS. This implies that theGroup makes certain estimates and assumptions whichhave an impact on the assets and liabilities, the incomestatement for the period and the notes to the financialstatements. Changes in facts and circumstances maylead the Group to change these estimates.NOTE 2 – ACCOUNTING POLICIES1) Statement of complianceThe consolidated financial statements have beenprepared in accordance with International FinancialReporting Standards as adopted by the IASB and theinterpretations of those standards published by theInternational Financial Reporting InterpretationsCommittee (“IFRIC”).The Group applied IFRS for the first time for the yearended December 31, 2002. Adjustments resulting bothfrom the move from French GAAP, as applied by Usinor,to IFRS and the application of the new accountingpolicies of the Arcelor group, are shown in shareholders’equity in the opening balance sheet as at December 31,2000. This has been done in order to show theretroactive application of IFRS in accordance with theinterpretation of the Standing Interpretation Committee(“SIC”), specifically SIC 8.The consolidated financial statements have beenprepared in accordance with the requirements of sectionXVI of the Luxembourg Law of August 10, 1915 oncommercial companies, with the specific exception ofthe accounting and valuation of financial instrumentsfollowing the adoption, in 2001, of IAS 39. Moreover, thepresentation of the consolidated balance sheet andincome statement is different from that required byLuxembourg Law. In the opinion of the Directors, thepresentation chosen more appropriately reflects theGroup’s financial situation.Note 29 sets out a reconciliation between the net profitand shareholders’ equity of the Group for the yearended December 31, 2003 as detailed in these IFRSfinancial statements and the amounts which would havebeen published had Luxembourg legal and regulatoryrequirements been followed.2) Presentation of consolidated financialstatementsThe consolidated financial statements are prepared ineuro (“EUR”), rounded to the nearest million.The consolidated financial statements of the Groupare prepared on the basis of the historical costconvention with the exception of the following assetsand liabilities which are stated at their fair values:derivative financial instruments, investments held fortrading and investments available for sale. Hedgedassets and liabilities are stated at their fair value inrespect of the risks hedged.financial information > consolidated financial statementsANNUAL REPORT ARCELOR 2003 137