benchmark study of the application of IFRS in the Life ...
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Benchmark study
benchmark study of the of the application in
application of IFRS in the Europe of IFRS in the
Life Sciences Sector.*Life Sciences Sector* At PricewaterhouseCoopers Nederland, over 4,500 professionals work together
covering various disciplines: Assurance, Tax and Human Resource Services,
and Advisory. On the basis of our corporate philosophy, Connected Thinking,
we provide sector-specific services and seek novel solutions. Not only for large
national and international companies, but also for medium-sized and smaller
businesses as well as for government entities and non-profit organisations.
As an independent part of a worldwide network comprising 140,000 colleagues in
149 countries, we can rely on extensive knowledge and experience which we share
with each other, with our clients and with their stakeholders. We seek unexpected
angles, make surprising connections, feel involved and work together from our
strengths.
www.pwc.nl Assurance • Tax • Advisory Contents
Introduction 4
Executive summary 6
Benchmark of key IFRS topics for the Life Sciences sector 9
First-time adoption of IFRS 9
Share-based payment 14
Research and development expenditure 19
Business combinations including goodwill and other intangible assets 24
Revenue recognition 27
Deferred tax 34
Other adjustments and accounting areas 38
Making it more than just about the numbers – embedding IFRS 39
Appendix A: Overview of companies included in the benchmark 40
Your contacts 41
Legal ...
Voir
benchmark study of the of the application in
application of IFRS in the Europe of IFRS in the
Life Sciences Sector.*Life Sciences Sector* At PricewaterhouseCoopers Nederland, over 4,500 professionals work together
covering various disciplines: Assurance, Tax and Human Resource Services,
and Advisory. On the basis of our corporate philosophy, Connected Thinking,
we provide sector-specific services and seek novel solutions. Not only for large
national and international companies, but also for medium-sized and smaller
businesses as well as for government entities and non-profit organisations.
As an independent part of a worldwide network comprising 140,000 colleagues in
149 countries, we can rely on extensive knowledge and experience which we share
with each other, with our clients and with their stakeholders. We seek unexpected
angles, make surprising connections, feel involved and work together from our
strengths.
www.pwc.nl Assurance • Tax • Advisory Contents
Introduction 4
Executive summary 6
Benchmark of key IFRS topics for the Life Sciences sector 9
First-time adoption of IFRS 9
Share-based payment 14
Research and development expenditure 19
Business combinations including goodwill and other intangible assets 24
Revenue recognition 27
Deferred tax 34
Other adjustments and accounting areas 38
Making it more than just about the numbers – embedding IFRS 39
Appendix A: Overview of companies included in the benchmark 40
Your contacts 41
Legal ...
Benchmarkstudy oftheapplicationin EuropeofIFRSinthe LifeSciencesSector*
AtPricewaterhouseCoopersNederland,over4,500professionalsworktogether coveringvariousdisciplines:Assurance,TaxandHumanResourceServices, andAdvisory.Onthebasisofourcorporatephilosophy,ConnectedThinking, weprovidesector-specificservicesandseeknovelsolutions.Notonlyforlarge nationalandinternationalcompanies,butalsoformedium-sizedandsmaller businessesaswellasforgovernmententitiesandnon-profitorganisations.
Asanindependentpartofaworldwidenetworkcomprising140,000colleaguesin 149countries,wecanrelyonextensiveknowledgeandexperiencewhichweshare witheachother,withourclientsandwiththeirstakeholders.Weseekunexpected angles,makesurprisingconnections,feelinvolvedandworktogetherfr omour strengths.
www.pwc.nl
Assurance•Tax•Advisory
Contents
Introduction
Executivesummary
BenchmarkofkeyIFRStopicsfortheLifeSciencessector First-timeadoptionofIFRS Share-basedpayment Researchanddevelopmentexpenditure Businesscombinationsincludinggoodwillandotherintangibleassets Revenuerecognition Deferredtax
Otheradjustmentsandaccountingareas
Makingitmorethanjustaboutthenumbers–embeddingIFRS
AppendixA:Overviewofcompaniesincludedinthebenchmark 4
Yourcontacts
LegalDisclaimer
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Introduction
Asfrom1January2005mostlistedcompaniesinEuropehaveadoptedInternational FinancialReportingStandards(“IFRS”).However,thetransitiontoandreporting underIFRScontinuestobeachallengefortheLifeSciencessectortoaddr ess.This isspecificallytruebecauseatthismoment,early2007,thewindowforInitialPublic OfferingsofLifeSciencescompaniesseemstohaveopenedupagainandasaresult severalcompaniesarecurrentlypreparingthemselvesforsuchanIPO,includingthe necessarytransitiontoIFRS.
ThetransitiontoIFRSismorethanjustanaccountingissue.IFRScoverseverything frommergersandacquisitionstoleasing,revenuerecognition,andaccountingfor employeebenefits.Itrequiressubstantialchanges,includingnewaccountingpolicies, andmoredisclosurethanbefore.TransitiontoIFRSwillinmostcasesimpactthereported profitabilityofthebusinessesthemselves,butwillalsoinfluencecontractnegotiationsand otheroperationalmatters.
LifeSciencescompaniesarenoexception.IFRSsubstantiallyinfluencesthissector,not onlyintermsofpracticaltransitionalissues,butalsoinrespecttoreportableearnings,net assetvalue,thelevelofgearing,andreturnoncapitalemployed.
InthisIFRSbenchmarkstudywehaveanalysedthefinancialstatementsof20European LifeSciencescompaniesthathavepreparedtheirfinancialstatementsfor2005in accordancewithIFRS(anoverviewofthecompaniesisincludedinappendixA).Ofthe20 companiesanalysed,13companieswerefirst-timeadoptersofIFRSasfrom1January 2005;2companiesarebasedintheUKandtheother18ontheEuropeanmainland (Switzerland,Sweden,TheNetherlands,Belgium,GermanyandFrance).Whenwer “companies”inthisstudy,wemeantheirfinancialstatements.
WehavesummarisedtheimpactofthetransitiontoIFRSandconsideredthetakeup bycompaniesoftheexemptionsthatwereavailabletothemunderIFRS1“Firsttime adoptionofInternationalAccountingStandards”.NextweassessedtheimpactIFRS hasonthefinancialreportingofLifeSciencescompaniesbyperformingabenchmark ofcertainkeyaccountingtopicsforcompaniesinthesector.Whereapplicable,we havealsoincludedobservationsfromasurveyinwhichPricewaterhouseCoopersin theUKanalysedthefirstIFRSfinancialstatementsof25companiesinthetechMARK mediscienceindex.ThefindingsfromtheUKanalysiswerepublishedinJanuary2007in thepublication“IFRSanditsimpactonFinancialReportingfortheLifeSciencesSector”.
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