26. Effect in change of presentation currency

As set out in Note 2, the Group has elected to change its presentation currency to U.S. dollar from January 1, 2018. This change in presentation currency constitutes a change in accounting policy with retrospective application in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and is affected in these consolidated financial statements by applying the procedures outlined below, in accordance with the reqirements set out in IAS 21 “The Effects of Changes in Foreign Exchange Rates”.

the consolidated statements of financial position have been translated at the foreign exchange rate at the balance sheet dates;

the consolidated income statements, consolidated statements of comprehensive income and consolidated statements of cash flows were translated at average exchange rates for the respective periods;

historic equity transactions were translated at the foreign exchange rate on the date of the transactions and were subsequently carried at historical value;

foreign exchange differences arising on translation to presentation currency are recognised in other comprehensive income; and

all foreign exchange rates used were extracted from the Group’s underlying financial records.

The exchange rates used in translation were as follows:


	Year ended December 31,
	2017	2016	2015	2014
Closing rate	1.1993	1.0541	1.0887	1.2141
Average rate	1.1249	1.1061	1.1150	1.3348

ARD FINANCE S.A.

CONSOLIDATED INCOME STATEMENT


	Year ended December 31, 2017				Year ended December 31, 2016				Year ended December 31, 2015
	Before				Before				Before
	exceptional	Exceptional			exceptional	Exceptional			exceptional	Exceptional
	items	Items	Total		items	Items	Total		items	Items	Total
	€m	€m	€m		€m	€m	€m		€m	€m	€m

Revenue	7,644	—		7,644	6,345	—		6,345	5,199	—		5,199
Cost of sales	(6,321)	(85)		(6,406)	(5,221)	(15)		(5,236)	(4,285)	(37)		(4,322)
Gross profit/(loss)	1,323	(85)		1,238	1,124	(15)		1,109	914	(37)		877
Sales, general and administration expenses	(359)	(43)		(402)	(300)	(116)		(416)	(274)	(44)		(318)
Intangible amortization	(235)	—		(235)	(173)	—		(173)	(109)	—		(109)
Operating profit/(loss)	729	(128)		601	651	(131)		520	531	(81)		450
Finance expense	(479)	(123)		(602)	(528)	(165)		(693)	(514)	(13)		(527)
Finance income	—	—		—	—	78		78	—	—		—
Profit/(loss) before tax	250	(251)		(1)	123	(218)		(95)	17	(94)		(77)
Income tax (charge)/credit	(87)	122		35	(103)	43		(60)	(75)	32		(43)
Profit/(loss) for the year	163	(129)		34	20	(175)		(155)	(58)	(62)		(120)

Profit/(loss) attributable to:
Owners of the parent				31				(155)				(120)
Non-controlling interests				3				—				—
Profit/(loss) for the year				34				(155)				(120)

ARD FINANCE S.A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	Year ended December 31,
	2017	2016	2015
	€m	€m	€m
Profit/(loss) for the year	34	(155)	(120)
Other comprehensive income/(expense)
Items that may subsequently be reclassified to income statement
Foreign currency translation adjustments:
—Arising in the year	(1)	(55)	(139)
	(1)	(55)	(139)
Effective portion of changes in fair value of cash flow hedges:
—New fair value adjustments into reserve	(226)	50	44
—Movement out of reserve	230	(77)	(43)
—Movement in deferred tax	1	(4)	—
	5	(31)	1
Items that will not be reclassified to income statement
—Re-measurements of employee benefit obligations	43	(121)	72
—Deferred tax movement on employee benefit obligations	(6)	16	(27)
	37	(105)	45
Total other comprehensive income/(expense) for the year	41	(191)	(93)
Total comprehensive income/(expense) for the year	75	(346)	(213)
Attributable to:
Owners of the parent	66	(346)	(213)
Non-controlling interests	9	—	—
Total comprehensive income/(expense) for the year	75	(346)	(213)

ARD FINANCE S.A.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION


	At December 31,
	2017	2016	2015	2014
	€m	€m	€m	€m
Non-current assets
Intangible assets	3,422	3,904	1,810	1,762
Property, plant and equipment	2,808	2,911	2,307	2,223
Derivative financial instruments	6	124	—	40
Deferred tax assets	184	259	178	184
Other non-current assets	21	20	14	10
	6,441	7,218	4,309	4,219
Current assets
Inventories	1,128	1,125	825	770
Trade and other receivables	1,062	1,164	651	692
Derivative financial instruments	13	11	—	2
Cash and cash equivalents	686	776	554	433
	2,889	3,076	2,030	1,897
TOTAL ASSETS	9,330	10,294	6,339	6,116
Equity attributable to owners of the parent
Issued capital	—	—	—	—
Other reserves	(325)	(329)	(114)	24
Retained earnings	(2,204)	(2,661)	(2,260)	(2,170)
	(2,529)	(2,990)	(2,374)	(2,146)
Non-controlling interests	(92)	2	2	2
TOTAL EQUITY	(2,621)	(2,988)	(2,372)	(2,144)
Non-current liabilities
Borrowings	8,400	9,699	6,397	6,034
Employee benefit obligations	831	905	720	723
Derivative financial instruments	251	—	—	455
Deferred tax liabilities	486	694	451	—
Provisions	37	57	48	33
	10,005	11,355	7,616	7,245
Current liabilities
Borrowings	2	8	7	4
Interest payable	89	112	79	83
Derivative financial instruments	2	8	7	7
Trade and other payables	1,660	1,548	878	804
Income tax payable	135	182	76	67
Provisions	58	69	48	50
	1,946	1,927	1,095	1,015
TOTAL LIABILITIES	11,951	13,282	8,711	8,260
TOTAL EQUITY and LIABILITIES	9,330	10,294	6,339	6,116

ARD FINANCE

CONSOLIDATED STATEMENT OF CASH FLOWS


	Year ended December 31,
	2017	2016	2015
	€m	€m	€m
Cash flows from operating activities
Cash generated from operations	1,330	1,109	950
Interest paid — excluding cumulative PIK interest paid	(510)	(372)	(323)
Cumulative PIK interest paid	—	(184)	—
Income tax paid	(90)	(84)	(59)
Net cash from operating activities	730	469	568
Cash flows from investing activities
Purchase of business net of cash acquired	—	(2,685)	—
Purchase of property, plant and equipment	(422)	(310)	(304)
Purchase of software and other intangibles	(19)	(12)	(8)
Proceeds from disposal of property, plant and equipment	5	4	8
Net cash used in investing activities	(436)	(3,003)	(304)
Cash flows from financing activities
Proceeds from borrowings	3,497	5,479	—
Repayment of borrowings	(4,061)	(2,322)	(198)
Return of capital to parent company	—	—	(15)
Net proceeds from share issuance by subsidiary	306	—	—
Dividends paid to parent company	(3)	(270)	—
Dividends paid by subsidiary to non-controlling interest	(7)	—	—
Early redemption premium costs paid	(85)	(108)	(8)
Deferred debt issue costs paid	(39)	(72)	(2)
Proceeds from the termination of derivative financial instruments	42	—	81
Net cash (outflow)/inflow from financing activities	(350)	2,707	(142)
Net (decrease)/increase in cash and cash equivalents	(56)	173	122
Cash and cash equivalents at the beginning of the year	776	554	433
Exchange (losses)/gains on cash and cash equivalents	(34)	49	(1)
Cash and cash equivalents at the end of the year	686	776	554