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CFO's review

Financial review

IFRS 16 is a new reporting standard that has had a material impact on our reported results: for continuing operations, increasing EBITDA by €32.2m, EBIT by €5.6m and interest costs by €5.8m, as well as increased year-end assets and debt. The full impact is shown in note 9 to the financial statements. As we have applied the modified retrospective approach, prior year comparatives are not restated. The above table shows the reported performance on an IFRS 16 basis along with IAS 17 to provide a comparative with 2019.

As well as IFRS 16, the performance in the year has been impacted by the disposals. Reym is recorded as part of continuing operations with seven months in FY20 compared to the full year in 2019. The Canadian business, however, met the definition of a discontinued operation. Group revenue on a continuing operations basis increased marginally to €1,775m. Underlying EBIT from continuing operations decreased by €3.5m or 4% to €82.0m on an IAS 17 basis.

IFRS 16 also has a significant impact on underlying EBITDA given the depreciation on right-of-use assets, which amounted to €27m in the year. The table overleaf sets out the EBITDA by Division on both an IFRS 16 and IAS 17 basis for the current year./p>

As both disposed businesses were reported as assets held for sale at March 2019, the current year results have been favourably impacted by the suspension of depreciation at Reym and Canada for the periods up to sale. The table overleaf bridges the year on year performance excluding IFRS 16. This shows that for the ongoing businesses, underlying EBIT fell by €8.2m or 10%, in line with our expectations, primarily due to reduced output at ATM, the profitable legacy Derby contract last year and the reinstatement of bonus and LTIP provisions as forecast.

Read the full review on page 38/44 of the Annual Report.

Toby Woolrych
Chief Financial Officer