3.1.19
Ryanair year ended 31March 2010 (Ireland)
Accounting Policy Note
Leases
Leases under which the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. Assets held under finance leases are capitalised in the balance sheet, at an amount equal to the lower of their fair value and the present value of the minimum lease payments, and are depreciated over their estimated useful lives. The present values of the future lease payments are recorded as obligations under finance leases and the interest element of a lease obligation is charged to the income statement over the period of the lease in proportion to the balances outstanding.
Other leases are operating leases and the associated leased assets are not recognised on the Company’s balance sheet. Expenditure arising under operating leases is charged to the income statement as incurred. The Company also enters into sale-and-leaseback transactions whereby it sells the rights to acquire an aircraft to an external party and subsequently leases the aircraft back, by way of an operating lease. Any profit or loss on the disposal where the price achieved is not considered to be at fair value is spread over the period during which the asset is expected to be used. The profit or loss amount deferred is included within “other creditors” and divided into components of greater or less than one year.
The net book value of assets held under finance leases at march31, 2010, 2009 and
2008 was €422.8 million, €435.5 million and €316.0 million respectively.
3.1.19
CRH plc year ended 31 December 2009 (Ireland)
Accounting Policy Note
Leases
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have transferred to the Group, and hire purchase contracts, are capitalised in the Consolidated Balance Sheet and are depreciated over their useful lives with any impairment being recognised in accumulated depreciation. The asset is recorded at an amount equal to the lower of its fair value and the present value of the minimum lease payments at the inception of the finance lease. The capital elements of future obligations under leases and hire purchase contracts are included in liabilities in the Consolidated
Balance Sheet and analysed between current and non-current amounts. The interest elements of the rental obligations are charged to the Consolidated Income Statement over the periods of the relevant agreements and represent a constant proportion of the balance of capital repayments outstanding in line with the implicit interest rate methodology.
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Operating lease rentals are charged to the Consolidated Income
Statement on a straight-line basis over the lease term.

31. Commitments under Operating and Finance Leases
Operating leases
Future minimum rentals payable under non-cancellable operating leases at 31st December are as follows:
Within one year
After one year but not more than five years
More than five years
2009
€m
230
506
358
1,094
2008
€m
240
548
396
1,184
Finance leases
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
2009
Minimum payments
€m
Present value of payments
€m
2008
Minimum payments
€m
Present value of payments
€m
Within one year
After one year but not more than five years
More than five years
Total minimum lease payments
Less: amounts allocated to future finance costs
Present value of minimum lease payments
5
8
4
17
(4)
13
4
6
3
13
8
10
5
23
(4)
19
6
8
5
19

3.2.18
Imperial Tobacco year ended 30 September 2010 (England)
Provisions
A provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources will be required to settle that obligation, and a reliable estimate of the amount can be made.
A provision for restructuring is recognised when the Group has approved a detailed formal restructuring plan, and the restructuring has either commenced or has been publicly announced, and it is more likely than not that the plan will be implemented, and the amount required to settle any obligations arising can be reliably estimated. Future operating losses are not provided for.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Legal Proceedings and Disputes
In accordance with IFRS, the Group recognises liabilities where there is a present obligation from a past event, a transfer of economic benefits is probable and the amount of costs of the transfer can be reliably estimated. In such instances a provision is calculated and recorded in the financial statements. In instances where these criteria are not met, a contingent liability may be disclosed in the notes to the financial statements.
A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation arising from past events that is not recognised in the financial statements because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or because the amount of the obligation cannot be measured with sufficient reliability.
Realisation of any contingent liabilities not currently recognised or disclosed in the financial statements could have a material effect on the Group’s financial condition.
As required under purchase accounting, claims and contingencies acquired by the Group through the purchase of other businesses are recorded initially at fair value. Future changes to these estimates of fair value are required to be reflected in the income statement and could have a material effect on the Group’s results and financial condition.
Application of these accounting principles to legal proceedings and disputes, including cases in which claimants are seeking damages for alleged smoking and health-related effects, is inherently difficult, given the complex nature of the facts and law involved. Deciding whether or not to provide for loss in connection with such claims requires the Group’s management to make determinations about various factual and legal matters beyond its control.
The Group reviews outstanding legal cases following developments in the legal proceedings at each balance sheet date, in order to assess the need for provisions in its financial statements. Among the factors considered in making decisions on provisions are the nature of the litigation, claim or assessment; the legal processes and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought; the progress of the case (including progress after the date of the financial statements but before those statements are issued); the opinions or views of legal counsel and other advisers; experience of similar cases and any decision of the Group’s management as to how it will respond to the litigation, claim or assessment.
To the extent that the Group’s determinations at any time do not reflect subsequent developments or the eventual outcome of any claim, its future financial statements may be materially affected, with an adverse impact upon the Group’s operating profit, financial position and liquidity.
The Group is currently involved in a number of legal cases in which claimants are seeking damages for alleged smoking and health-related effects. In the opinion of the Group’s lawyers, the Group has meritorious defences to these actions, all of which are being vigorously contested. Although it is not possible to predict the outcome of the pending litigation, the Directors believe that the pending actions will not have a material adverse effect upon the revenue, profit or financial condition of the Group. Consequently, in respect of any such cases, the Group has not provided for any amounts in the consolidated financial statements.
In 2003 the Office of Fair Trading (OFT) commenced an investigation under the Competition Act 1998 into the operation of the UK tobacco supply industry in the period from 2000 to 2003. In a decision dated 15 April 2010, the OFT concluded that certain of the Group’s promotional arrangements with tobacco retailers had the object of restricting competition and imposed a fine of L112.3 million on the Group. At the same time it confirmed that two other allegations included in its 2008 statement of objections had been dropped.
The Group takes compliance with competition law very seriously and continues to reject any suggestion that it acted in breach of the Competition Act or in any way contrary to the interests of consumers. On 15 June 2010 the Group submitted an appeal to the Competition Appeal Tribunal against the OFT’s findings of infringement and the level of the fine.
Five tobacco retailers have also submitted appeals against the OFT’s decision. The Competition Appeal
Tribunal may uphold, quash or vary the OFT’s decision or the fine that has been imposed. As part of its appeal the Group has asked for the fine to be quashed in its entirety. Consequently, the Group has not provided for any amount in the consolidated financial statements.

3.2.18
Royal Dutch Shell year ended 31 December 2009 (England)
Note to the financial statements
Provisions
Provisions are recognised at the balance sheet date at Shell’s best estimate, using risk-adjusted future cash flows, of the present value of the expenditure required to settle the present obligation. Non-current amounts are discounted using the risk-free rate. Specific details for decommissioning and restoration costs and environmental remediation are described below. The carrying amounts of provisions are regularly reviewed and adjusted for new facts or changes in law or technology.
Provisions for decommissioning and restoration costs, which are primarily in respect of hydrocarbon production facilities, are measured based on current requirements, technology and price levels and the present value is calculated using amounts discounted over the useful economic life of the assets. The liability is recognised
(together with a corresponding amount as part of the related property, plant and equipment) once an obligation crystallises in the period when a reasonable estimate can be made. The effects of changes resulting from revisions to the timing or the amount of the original estimate of the provision are reflected on a prospective basis, by adjustment to the carrying amount of the related property, plant and equipment.
Provisions for environmental remediation resulting from on-going or past operations or events are recognised in the period in which an obligation arises and the amount can be reasonably estimated. Provisions are measured based on current legal requirements and existing technology. Recognition of any joint and several liability is based upon Shell’s best estimate of the final pro rata share of the liability. Provisions are determined independently of expected insurance recoveries. Recoveries are recognised and reported as separate events and brought into account when virtually certain of realisation.
Provisions
Provisions are recognised for the future decommissioning and restoration of hydrocarbon production facilities and pipelines at the end of their economic lives. The estimated cost is recognised in income over the life of the proved developed reserves on a unit-of-production basis. Changes in the estimates of costs to be incurred, proved developed reserves or in the rate of production will therefore impact income, over the remaining economic life of oil and gas assets.
Other provisions are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can be reasonably estimated. The timing of recognition requires the application of judgement to existing facts and circumstances, which can be subject to change.
Estimates of the amounts of provisions recognised are based on current legal and constructive requirements, technology and price levels. Because actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and can take place many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes.
In relation to decommissioning and restoration costs, the estimated interest rate used in discounting the riskadjusted cash flows is reviewed at least annually. The interest rate used to determine the balance sheet obligation at December 31, 2009, was 6% (2008: 6%).
Information on provisions is given in Note 19.
As further described in Note 28, Shell is subject to claims and actions. The facts and circumstances relating to particular cases are evaluated in determining whether it is more likely than not that there will be a future outflow of funds and, once established, whether a provision relating to a specific litigation is sufficient. Accordingly, significant management judgement relating to contingent liabilities is required since the outcome of litigation is difficult to predict. Notwithstanding the possibility of outcomes outside expected ranges, in recent years Shell’s experience has been that estimates used in determining the appropriate levels of provisions have been materially adequate in anticipating actual outcomes. Actual payments related to litigation during the three years ended
December 31, 2009, have not been material to Shell’s financial condition or results of operations.
A change in estimate of a recognised provision would be recognised in income in the period in which the change occurs (with the exception of decommissioning and restoration costs as described above).

19 OTHER PROVISIONS
Decommissioning and restoration
Environmental
Redundancy
Litigation
Other
Total
[Note 19 continued]
Movements in provisions are as follows:
2009
653
365
1,492
201
1,096
3,807
Current
2008
514
321
203
249
1,164
2,451
2009
11,633
891
157
499
868
14,048
Non-current
2008
9,982
842
107
709
930
12,570
2009
12,286
1,256
1,649
700
1,964
17,855
$ MILLION
Total
2008
10,496
1,163
310
958
2,094
15,021
$ MILLION
At January 1, 2009
Additional provisions
Amounts charged against provisions
Accretion expense
Reclassifications and other movements
Currency translation differences
At December 31, 2009
At January 1, 2008
Additional provisions
Amounts charged against provisions
Accretion expense
Reclassifications and other movements
Currency translation differences
At December 31, 2008
Decommissioning and restoration
10,496
265
(424)
638
488
823
12,286
11,226
198
(147)
609
456
(1,846)
10,496
Environmental
1,163
192
(189)
26
13
51
1,256
1,212
245
(240)
35
(5)
(84)
1,163
Redundancy
310
1,535
(171)
–
(27)
2
1,649
561
85
(305)
–
(12)
(19)
310
Litigation
958
196
(489)
18
700
9
8
1,116
149
(293)
6
13
(33)
958
Other
2,094
680
(776)
55
(155)
66
1,964
2,335
271
(397)
30
16
(161)
2,094
The timing and amounts settled in respect of these provisions are uncertain and dependent on various factors that are not always within management’s control.
Of the decommissioning and restoration provision at December 31, 2009, an estimated $3 billion is expected to be utilised within one to five years, $4 billion within six to ten years, and the remainder in later periods.
Reviews of estimated decommissioning and restoration costs are carried out annually, which in 2009 resulted in an increase of $477 million
(2008: $1,520 million) in both the provision, reported within “Reclassifications and other movements”, and the corresponding property, plant and equipment assets reported within “Sales, retirements and other movements” in Note 9. Offsetting this increase in 2008 was a reduction resulting from disposals of assets, primarily in the UK and USA, of $1,032 million.
Provisions for environmental remediation costs relate to a number of events in different locations, none of which is individually significant.
Total
15,021
2,868
(2,049)
728
327
960
17,855
16,450
948
(1,382)
680
468
(2,143)
15,021
The additional provisions for redundancy in 2009 of $1,535 million mainly relate to around 5,000 staff who are leaving Shell as a result of a restructuring programme.
Provisions for litigation costs at December 31, 2009 relate to a number of cases, none of which is individually significant. Further information is given in Note 28. In 2009, Shell concluded the settlement of claims arising from the 2004 recategorisation of certain hydrocarbon reserves.
Included in other provisions at December 31, 2009, are $750 million (2008: $656 million) relating to employee end-of-service benefits.

3.3.16
Rio Tinto plc year ended 31 December 2009 (UK)
Note to the Financial Statements
(m) Taxation
Current tax is the tax expected to be payable on the taxable income for the year calculated using rates that have been enacted or substantively enacted by the statement of financial position date. It includes adjustments for tax expected to be payable or recoverable in respect of previous periods.
(xii) Deferred tax potentially recoverable on Group tax losses
The Group has carried forward losses; mainly in the UK, French and Canadian tax groups; that have the potential to reduce tax charges in future years. Deferred tax assets have been recognised on these tax losses to the extent their recovery is probable, having regard to the projected future taxable profits of the relevant tax groups.
The ‘possible tax assets’ on these losses totalled US$1,882 million at 31 December
2009 (2008: US$1,000 million).
Of these, US$1,286 million have been recognised as deferred tax assets (2008:
US$899 million), leaving US$596 million (2008: US$101 million) unrecognised, as recovery is not considered probable. This amount excludes unrecognised capital losses which can only be recovered against future capital gains.
Within the UK tax group, US$303 million in tax losses have been recognised as deferred tax assets (2008: US$246 million), with no amounts unrecognised. Within the French tax group, US$419 million in tax losses have been recognised as deferred tax assets (2008: US$309 million) with US$503 million unrecognised.
Within the Canadian tax

8 Tax on profit
UK taxation
Corporation tax at 28%
– Current
– Deferred
Australian taxation
Corporation tax at 30%
– Current
– Deferred
Other countries taxation
– Current
– Deferred
Total taxation charge
– Current
– Deferred
Prima facie tax reconciliation
Profit before taxation
Deduct: share of profit after tax of equity accounted units
Parent companies’ and subsidiaries’ profit before tax
Prima facie tax payable at UK rate of 28%
Higher rate of taxation on Australian earnings at 30%
Impact of items excluded in arriving at Underlying earnings
(a)
Adjustments to deferred tax liabilities following changes in tax rates
Other tax rates applicable outside the UK and Australia
Resource depletion and other depreciation allowances
Research, development and other investment allowances
Utilisation of previously unrecognised deferred tax assets
Unrecognised current year operating losses
Foreign exchange differences
Withholding taxes
Non-taxable gains on asset disposals
(b)
Other items
Total taxation charge
(c)
Note
18
2008
US$m
3,005
(812)
2,193
1,711
(46)
(46)
–
(116)
1,595
4,716
(974)
3,742
2008
US$m
9,178
(1,039)
8,139
2,279
226
919
(25)
206
(129)
(72)
(160)
163
197
95
–
43
3,742
2009
US$m
1,829
391
2,220
763
1
–
1
(908)
(145)
2,593
(517)
2,076
2009
US$m
7,860
(786)
7,074
1,981
136
347
(22)
113
(132)
(55)
(36)
105
(167)
73
(208)
(59)
2,076
(d) The tax credit/(charge) relating to components of other comprehensive income is as follows:
Tax on exchange adjustments
Cash flow hedge fair value losses/(gains):
– Cash flow hedge fair value losses/(gains)
– Cash flow hedge losses transferred to the income statement
Gains/(losses) on available for sale securities
Gains on revaluation of available for sale securities transferred to the income statement
Actuarial losses on post retirement benefit plans
Deferred tax on share options
Share of tax on other comprehensive income/(expense) of equity accounted units
Tax relating to components of other comprehensive income/(expense) for the year
(a)
Attributable to shareholders of
Rio Tinto
US$m
–
62
(10)
(1)
1
233
50
335
(38)
297
2009
Outside interests
US$m
–
35
(10)
–
–
(1)
–
24
–
24
Total
US$m
–
97
(20)
(1)
1
232
50
359
(38)
321
(a) This includes US$319 million (2008: US$205 million) of deferred tax and US$2 million (2008: US$39 million) of current tax. See note 18.
2008
Attributable to shareholders of
Rio Tinto
US$m
Outside interests
US$m
99 –
(11) (8)
(77) (35)
10
Total
US$m
99
(19)
(112)
10
– – –
457
299
280
–
7
(36)
(36)
464
263
244

18 Deferred taxation
At 1 January
Adjustment on currency translation
Credited to the income statement
Credited to Statement of comprehensive income
(a)
Subsidiaries no longer consolidated
Subsidiaries now equity accounted
Transfer from asset held for sale
Other movements
(b)
At 31 December
Comprising:
– deferred tax liabilities (c)
– deferred tax assets
(c)
2009
US$m
2,687
297
(517)
(319)
(82)
(14)
(190)
211
2,073
4,304
(2,231)
Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on the face of the balance sheet as permitted by IAS 12. The closing deferred tax liabilities and assets, prior to this offsetting of balances, are shown below.
UK tax
US$m
Australian tax
US$m
Other countries’ tax
US$m
Total
2009
US$m
Deferred tax liabilities arising from:
Accelerated capital allowances
Post retirement benefits
Unremitted earnings
Unrealised exchange losses
Other temporary differences
(Credited)/charged to the income statement
(Decelerated)/accelerated capital allowances
94
–
–
1,750
–
–
Unrealised exchange losses
Other differences
– 47 37
1 347 246
84
594
Deferred tax assets arising from:
Capital allowances
Provisions (71)
Post retirement benefits (167)
Tax losses
95 2,144 5,037 7,276
–
(303)
(48)
(737)
(30)
(132)
(15)
(1,359)
(851)
(63)
(1,556)
(1,286)
–
(11)
(552)
(11)
Provisions (32)
(149)
(95)
(1,191)
177
(231)
4,138
–
616
–
(135)
(554)
5,982
–
616
(149)
(241)
(388)
Post retirement benefits
Tax losses
Tax on unremitted earnings
Unrealised exchange losses
Other temporary differences
11
15
–
–
17
8
(119)
4
577
(25)
(13)
(344)
(22)
41
(51)
6
(448)
(18)
618
(59)
(1,129)
(899)
(1,076)
(30)
(132)
100
20
22
(1,039)
(148)
Total
2008
US$m
6,468
29
340
493
161
7,491
(202)
2008
US$m
4,327
(287)
(974)
(205)
–
–
–
(174)
2,687
4,054
(1,367)
(a) The amounts credited directly to the Statement of comprehensive income relate to tax relief on share options, provisions for tax on exchange differences on intragroup loans qualifying for reporting as part of the net investment in subsidiaries, on cash flow hedges and on actuarial gains and losses on pension schemes and post retirement healthcare plans.
(b) ‘Other movements’ include deferred tax relating to tax payable recognised by subsidiary holding companies on the profits of the equity accounted units to which it relates, as well as the movements in the estimated tax accrual relating to the divestment of the Alcan Packaging businesses.
(c) The deferred tax liability of US$4,304 million (2008: US$4,054 million) includes US$4,091 million (2008: US$3,866 million) due in more than one year. The deferred tax asset of US$2,231 million (2008:
US$1,367 million) includes US$2,109 million (2008: US$594 million) receivable in more than one year.
(d) US$1,426 million (2008: US$1,311 million) of potential deferred tax assets have not been recognised as assets in these accounts. There is a time limit for the recovery of US$20 million of these potential assets (2008: US$32 million). US$620 million (2008: US$1,067 million) of the potential assets relates to realised or unrealised capital losses, recovery of which depends on the existence of capital gains in future years. US$503 million (2008: US$543 million) of the potential assets relates to trading losses in France, which were acquired as part of the Alcan acquisition.
(e) Deferred tax is not recognised on the unremitted earnings of subsidiaries and jointly controlled entities where the Group is able to control the timing of the remittance and it is probable that there will be no remittance in the foreseeable future. If these earnings were remitted, tax of US$888million (2008: US$1,130 million) would be payable
.
The reduction from prior year is due to the introduction of an exemption from taxation for foreign dividends in the UK in 2009.
(f) There is a limited time period for the recovery of US$401 million (2008: US$187 million) of tax losses which have been recognised as deferred tax assets in the financial statements.

3.4.12
Ryanair year ended 31 March 2010 (Ireland)
Accounting Policy Note
Foreign currency translation
Items included in the financial statements of each of the group entities are measured using the currency of the primary economic environment in which the entity operates (the
“functional currency”). The consolidated financial statements are presented in euro, which is the functional currency of the majority of the group entities.
Transactions arising in foreign currencies are translated into the respective functional currencies at the rates of exchange in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated to euro at foreign exchange rates in effect at the dates the transactions were effected. Foreign currency differences arising on retranslation are recognised in profit and loss, except for differences arising on qualifying cash-flow hedges, which are recognised in other comprehensive income.

(d) Foreign currency risk
The Company has exposure to various foreign currencies (principally U.K. pounds sterling and U.S. dollars) due to the international nature of its operations. The Company manages this risk by matching U.K. pound sterling revenues against U.K. pound sterling costs. Any remaining unmatched U.K. pound sterling revenues are used to fund U.S. dollar currency exposures that arise in relation to fuel, maintenance, aviation insurance and capital expenditure costs or are sold for euro. The Company also sells euro forward to cover certain U.S. dollar costs. Further details of the hedging activity carried out by the Company are disclosed in
Note 5 to the consolidated financial statements.
The following table shows the net amount of monetary assets of the Company that are not denominated in euro at March 31, 2010, 2009 and 2008. Such amounts have been translated using the following year-end foreign currency rates in 2010:
¼
/£: 0.8898;
¼
/$: 1.3479 (2009:
¼
/£: 0.9308;
¼
/$: 1.3308, 2008:
¼
/£: 0.7958;
¼
/$
1.5812).
Monetary assets
U.K. pounds sterling cash and liquid resources.........
USD cash and liquid resources.........
GBP
March 31, 2010 March 31, 2009 March 31, 2008 euro euro euro
U.S.$ equiv. GBP U.S.$ equiv. GBP U.S.$ equiv.
$M
¼
M £M $M
¼
M
-
35.6
12.4
12.4
9.2
49.2
-
24.4
13.9
13.9
10.4
36.7
-
48.5
7.1
7.1
4.5
65.4
All of the Company’s financial liabilities are denominated in euro.
The following table gives details of the notional amounts of the Company’s currency forward contracts as at March 31, 2010, 2009 and 2008:
Currency forward contracts
U.S. dollar currency forward contracts
- for aircraft sales ........................
- for aircraft purchases ................
March 31, 2010 March 31, 2009 March 31, 2008
U.S.$
$M euro equiv. U.S.$ euro equiv. U.S.$ euro equiv.
¼
M $M
¼
M $M
¼
M
1,437.4 770.4 1,780.1 1,268.8 1,434.4 1,011.7
- - (101.5) (75.8) (105.0) (70.9)
1,123.8 1,021.8 1,464.0 985.0 1,771.5 1,208.1
2,561.2 1,792.2 3,142.6 2,178.0 3,100.9 2,148.9
Currency forward contracts
U.K pounds sterling currency forward contracts ........................
March 31, 2010
Stg £
£M
March 31, 2009 March 31, 2008 euro euro euro equiv. Stg £ equiv. Stg £ equiv.
¼
M £M
¼
M £M
¼
M
122.3
122.3
140.3
140.3
-
-
-
-
-
-
-
-

3.4.12
Imperial Tobacco year ended 30 September 2010 (England)
Accounting Policy Note
Foreign Currency
Items included in the financial statements of each Group company are measured using the currency of the primary economic environment in which the company operates (the functional currency).
The income and cash flow statements of Group companies using non-sterling functional currencies are translated to sterling (the Group ’s presentational currency) at average rates of exchange in each period, which are an appropriate approximation of the rates ruling at the dates of transactions in the income and cash flow statements. Assets and liabilities of these companies are translated at rates of exchange ruling at the balance sheet date. The differences between retained profits and losses translated at average and closing rates are taken to reserves, as are differences arising on the retranslation of the net assets at the beginning of the year.
Any translation differences that have arisen since 1 October 2004 are presented as a separate component of equity. As permitted by IFRS 1, any differences prior to this date are not included in this separate component of equity.
Transactions in currencies other than a company ’s functional currency are initially recorded at the exchange rate ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at exchange rates ruling at the balance sheet date of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when treated as qualifying net investment hedges.
The Group designates as net investment hedges certain external borrowings and derivatives up to the value of the net assets of Group companies that use nonsterling functional currencies after deducting permanent intragroup loans.
Gains or losses on these hedges are transferred to other comprehensive income and offset any gains or losses on translation of the net assets.

3.4.12
CRH plc year ended 31 December 2009 (Ireland)
Accounting policy Note
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The Consolidated Financial Statements are presented in euro, which is the presentation currency of the Group and the functional currency of the Parent Company.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All currency translation differences are taken to the Consolidated Income Statement with the exception of all monetary items that provide an effective hedge for a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are recognised in the income statement.
Results and cash flows of subsidiaries, joint ventures and associates with noneuro functional currencies have been translated into euro at average exchange rates for the year, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on translation of the results of non-euro subsidiaries, joint ventures and associates at average rates, and on restatement of the opening net assets at closing rates, are dealt with in a separate translation reserve within equity, net of differences on related currency borrowings. All other translation differences are taken to the Consolidated Income
Statement.
On disposal of a foreign operation, accumulated currency translation differences are recognised in the Consolidated Income Statement as part of the overall gain or loss on disposal. Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign operation, are expressed in the functional currency of the foreign operation, are recorded in euro at the exchange rate at the date of the transaction and are subsequently retranslated at the applicable closing rates.
The principal exchange rates used for the translation of results, cash flows and balance sheets into euro were as follows: euro 1 =
Average
2009 2008
Year-end
2009 2008
US Dollar
Pound Sterling
Polish Zloty
Ukrainian Hryvnya
Swiss Franc
Canadian Dollar
Argentine Peso
Israeli Shekel
Turkish Lira
Indian Rupee
1.3948
0.8909
4.3276
11.2404
1.5100
1.5850
5.2111
5.4756
2.1631
67.4271
1.4708
0.7963
3.5121
7.7046
1.5874
1.5594
4.6443
5.2556
1.9064
63.7652
1.4406
1.3917
0.8881
4.1045
11.4738
10.8410
1.4836
1.4850
1.5128
5.4885
0.9525
4.1535
1.6998
4.7924
5.5134
5.3163
2.1547
2.1488
66.9539
67.5553

Foreign currency risk
Due to the nature of building materials, which in general exhibit a low value-to-weight ratio, CRH’s activities are conducted primarily in the local currency of the country of operation resulting in low levels of foreign currency transaction risk; variances arising in this regard are reflected in operating costs or cost of sales in the Consolidated
Income Statement in the period in which they arise and are shown in note 4.
Given the Group’s presence in 35 countries worldwide, the principal foreign exchange risk arises from fluctuations in the euro value of the Group’s net investment in a wide basket of currencies other than the euro; such changes are reported separately within the Consolidated Statement of Comprehensive Income. A currency profile of the Group’s net debt and net worth is presented in note 25. The Group’s established policy is to spread its net worth across the currencies of its various operations with the objective of limiting its exposure to individual currencies and thus promoting consistency with the geographical balance of its operations. In order to achieve this objective, the Group manages its borrowings, where practicable and cost effective, partially to hedge its foreign currency assets. Hedging is done using currency borrowings in the same currency as the assets being hedged or through the use of other hedging methods such as currency swaps.
The following table demonstrates the sensitivity of profit before tax and equity to selected movements in the relevant €/US$ exchange rate (with all other variables held constant); the US Dollar has been selected as the appropriate currency for this analysis given the materiality of the Group’s activities in the United States:
Percentage change in relevant €/US$ exchange rate +/- 5% +/-2.5%
Impact on profit before tax
Impact on equity *
2009 -/+ €14m -/+ €7m
2008 -/+ €29m -/+ €15m
2009 -/+ €170m -/+ €87m
2008 -/+ €160m -/+ €82m
* Includes the impact on financial instruments which is as follows: 2009 +/- €105m +/- €54m
2008 +/- €139m +/- €71m
Financial instruments include deposits, money market funds, bank loans, medium term notes and other fixed term debt, interest rate swaps, commodity swaps and foreign exchange contracts. It excludes trade receivables and trade payables.

3.5.8
Smurfit Kappa Plc year ended 31 December 2009 (Ireland)
Accounting Policy Note
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3.5.8
British American Tobacco year ended 31 December 2009 (England)
Foreign currencies
The functional currency of the Parent Company is sterling and this is also the presentation currency of the Group. The income and cash flow statements of Group undertakings expressed in currencies other than sterling are translated to sterling at average rates of exchange in each year provided that the average rate approximates the exchange rate at the date of the underlying transactions. Assets and liabilities of these undertakings are translated at rates of exchange at the end of each year. For hyperinflationary countries, the financial statements in local currency are adjusted to reflect the impact of local inflation prior to translation into sterling.
The differences between retained profits of overseas subsidiary and associated undertakings translated at average and closing rates of exchange are taken to reserves, as are differences arising on the retranslation to sterling (using closing rates of exchange) of overseas net assets at the beginning of the year. Any differences that have arisen since 1 January 2004 are presented as a separate component of equity.
As permitted under IFRS 1, any differences prior to that date are not included in this separate component of equity. On the disposal of an overseas undertaking, the cumulative amount of the related exchange differences deferred in the separate component of equity are recognised in the income statement when the gain or loss on disposal is recognised.
Foreign currency transactions are initially recognised in the functional currency of each entity in the Group using the exchange rate ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of foreign currency assets and liabilities at year end rates of exchange are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges, on inter-company net investment loans and qualifying net investment hedges. Foreign exchange gains or losses recognised in the income statement are included in profit from operations or net finance costs depending on the underlying transactions that gave rise to these exchange differences.