Illustrative Condensed Interim Financial Statemenst

Illustrative condensed interim financial statements
International Financial Reporting Standards March 2006
About this publication

These illustrative condensed interim financial statements have been produced by the KPMG International Financial Reporting Group (part of KPMG IFRG Limited), and the views expressed herein are those of the KPMG International Financial Reporting Group.
Content
The purpose of this publication is to assist you in preparing condensed interim financial statements in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting. It illustrates one possible format for condensed interim financial statements, based on a fictitious multinational corporation involved in general business; the corporation is not a first-time adopter of IFRSs (see Technical guide). This publication focuses on compliance with IAS 34, but does not repeat all of that standards requirements. In addition, IFRSs other than IAS 34 are not discussed in this publication except in the context of disclosure in condensed interim financial statements. While this publication is up to date at the time of printing, IFRSs and their interpretation change over time. Accordingly, these illustrative condensed interim financial statements should not be used as a substitute for referring to the standards and interpretations themselves. When preparing interim financial statements in accordance with IAS 34, an entity should have regard to its local legal and regulatory requirements, which are not considered in this publication, but which may require additional disclosures to be made in interim financial statements. For example, IFRSs do not require the presentation of separate financial statements for the parent entity, and these illustrative condensed interim financial statements include only consolidated financial statements. However, in some jurisdictions parent entity financial information also may be required. IAS 34 deals only with the financial statement component of an interim financial report, and this publication illustrates only that component. However, typically an interim report will include at least some additional commentary by management, either in accordance with local laws and regulations or at the election of the entity.
References
The illustrative condensed interim financial statements are contained on the odd-numbered pages of this publication. The even-numbered pages contain explanatory comments and notes. As noted above, these explanatory comments are not intended to be an exhaustive commentary. To the left of each item disclosed, a reference to the relevant paragraph in IAS 34 or related standard is provided; generally the references relate only to disclosure requirements.
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2006 KPMG IFRG Limited, a U.K. company, limited by guarantee. All rights reserved.
Technical guide
IFRSs do not require entities to publish interim financial reports; generally local laws and regulations determine such requirements. IAS 34 applies to entities that are either required to or elect to publish an interim financial report in accordance with IFRSs, and encourages such entities that are publicly traded to make their interim report available within 60 days of the reporting date.
The principles of preparing interim financial statements

IAS 34 defines the minimum content of interim financial statements, including disclosures, and identifies the recognition and measurement principles that should be applied in preparing interim financial statements. For the most part, the recognition and measurement principles are consistent with IFRSs used in the preparation of annual financial statements, though differences do exist, e.g., in the measurement of income tax expense. In addition, a greater use of estimation may be required than in the preparation of annual financial statements. IAS 34 permits the disclosure requirements for annual financial statements to be condensed on the assumption that users of the interim financial report have access to the most recent annual financial statements. Accordingly, a key requirement of IAS 34 is to disclose information material to an understanding of the current interim period. This is an area where significant judgement is required by management; some items, such as related party transactions, may be considered significant because of their nature rather than their size.
Form and content of interim financial statements

IAS 34 permits the presentation of either condensed or a complete set of interim financial statements. If an entity chooses to publish a complete set of financial statements, then their form and content must conform to the requirements of IAS 1 Presentation of Financial Statements in addition to the measurement and any supplementary disclosure requirements of IAS 34. If an entity publishes a set of condensed interim financial statements, then these financial statements must contain at least each of the headings and subtotals that were included in its most recent annual financial statements, together with the selected note disclosures required by IAS 34. Additional line items or notes are required if their omission would make the condensed interim financial statements misleading. These illustrative condensed interim financial statements assume that the entity prepares a half-year interim report, but does not produce quarterly interim reports. If the entity illustrated in these condensed interim financial statements had also published interim financial statements as at and for the quarter ended 31 March 2006, then an additional income statement for the period from 1 April to 30 June 2006 (and comparatives for the period from 1 April to 30 June 2005) would have been presented in these illustrative condensed interim financial statements.
Measurement and recognition

IAS 34 sets out general recognition and measurement principles and provides examples of applying these principles. In preparing interim financial statements an entity applies the same accounting policies as in its most recent annual financial statements, with the exception of changes to accounting policies made after the most recent annual financial statements. Of course, if applicable IFRSs are amended between the preparation of interim financial statements and the following annual financial statements, changes to previous policies may be necessary. An interim period is not a stand-alone reporting period but rather is part of a larger financial year. The principles for recognising assets, liabilities, income and expenses in interim periods generally are the same as in the preparation of annual financial statements. As the preparation of interim financial statements often will require an entity to make greater use of estimates than for annual financial statements, IAS 34 includes examples to illustrate the use of estimates. An entity should have regard to both the measurement and recognition requirements of IAS 34, as well as the standards illustrative examples, when preparing its interim financial statements.
Disclosure in condensed interim financial statements

As a minimum, information that is material and is not disclosed elsewhere in the interim financial report should be disclosed in the condensed interim financial statements. Normally the disclosures should be reported on a financial year-to-date basis. With the exception of certain disclosures required by IFRS 3 Business Combinations, the disclosure requirements of other IFRSs are not required in condensed interim financial statements. However, the annual disclosure requirements provide helpful guidance in considering appropriate disclosures in respect of events and transactions that are material to an understanding of the current interim period, and IAS 34 acknowledges the role of individual standards and interpretations in determining the extent of disclosure. In these illustrative condensed interim financial statements a number of additional disclosures are provided on the basis that the information might be material to an understanding of the current interim period.
First-time adopters of IFRSs

These illustrative condensed interim financial statements assume that the entity is not a first-time adopter of IFRSs, and therefore that the interim financial statements are an update from the most recent previous annual IFRS financial statements. Since a first-time adopter of IFRSs does not have any previous annual IFRS financial statements, any interim financial statements cannot be seen as simply an update. In our view, an entity may publish condensed interim financial statements in accordance with IAS 34 even if it has not published IFRS annual financial statements for the prior period; however, the minimum disclosures prescribed by IAS 34 would be insufficient to provide an understanding of the interim period and therefore further disclosure is required. In our view, a first-time adopter of IFRSs should include a complete set of significant accounting policies in its condensed interim financial statements. Significant judgement then is required in determining other areas that may require additional disclosure; these may include, but are not limited to:

significant judgements made in applying accounting policies and key sources of estimation uncertainty segment reporting non-current assets held for sale and discontinued operations income tax expense earnings per share employee benefits financial instruments.
Our illustrative interim financial statements published in April 2005 illustrate a set of condensed interim financial statements for a first-time adopter of IFRSs. While IFRSs have changed from a year ago, the publication may be useful in assessing the extent of additional disclosures for a first-time adopter of IFRSs.
Insights into IFRS

Our publication Insights into IFRS provides interpretations of the KPMG International Financial Reporting Group in applying IFRSs. That publication includes a chapter on interim financial reporting. The views expressed in that publication are not repeated in their entirety in this publication; rather, the two publications should be used together.
Note Reference Explanatory note 1.

IAS 34.19, 20
The statements must include comparative information; otherwise interim financial statements cannot claim to be in compliance with IFRSs, and IAS 34 in particular for condensed interim financial statements. This is particularly important for entities that did not produce interim financial statements in the year of IFRS adoption, but do produce such statements in the following year.
Contents
Reference
IAS 34.8
Page Condensed consolidated interim financial statements Condensed consolidated interim income statement1 Condensed consolidated interim statement of recognised income and expense1 Condensed consolidated interim balance sheet1 Condensed consolidated interim statement of cash flows1 Notes to the condensed consolidated interim financial statements Independent report on review of condensed consolidated interim financial information
3 5 7 9 13 35
IFRS Illustrative Condensed Interim Financial Statements March 2006
Note Reference Explanatory note 1. When interim financial statements are unaudited, generally they are labelled as such in practice. This is a requirement in some jurisdictions.
IAS 34.10
2.
Condensed interim financial statements must include the headings and subtotals that were included in the most recent annual financial statements. Additional line items are included if their omission would make the financial statements misleading. IAS 34 is unclear as to what constitutes headings and subtotals . In these illustrative condensed interim financial statements we have included all line items that were included in the most recent annual financial statements.
3.
IAS 34.33, 37 , 38
Revenues are recognised in interim financial statements when earned. Revenues that are received seasonally, cyclically or occasionally within a financial year are not anticipated or deferred at the interim reporting date unless this treatment would be appropriate at an annual reporting date. This issue is discussed in our publication Insights into IFRS. Expenses are recognised in interim financial statements when an obligation has been incurred. Costs incurred unevenly within a financial year are not anticipated or deferred at the interim reporting date unless this treatment would be appropriate at an annual reporting date. This issue is discussed in our publication Insights into IFRS. The general principle established in IAS 34 is that the interim income tax expense is based on the weighted average annual income tax rate expected for the full year, applied to the pre-tax interim income. However, a number of issues remain unclear in IAS 34, including the treatment of permanent differences and the use of a consolidated effective tax rate. These issues are discussed in our publication Insights into IFRS. The presentation of discontinued operations in these illustrative condensed interim financial statements differs from the presentation in our most recent illustrative annual financial statements. This change has been made to illustrate a different approach that is equally acceptable, and is not intended as a deviation from the general principle that the presentation in interim financial statements should match that in the most recent annual financial statements (see footnote 2 above). Although not required explicitly by IAS 34, earnings per share for continuing operations may be material to an understanding of the current interim period, in which case it would be disclosed.
4.
IAS 34.30(b), 33, 39
5.
IAS 34.30(c), B12-22
6.
7.
IFRS Illustrative Condensed Interim Financial Statements March 2006 1 These condensed consolidated interim financial statements are unaudited
Reference
IAS 34.8(b), 20(b)
Condensed consolidated interim income statement

For the six months ended 30 June
In thousands of euro
Note
2006
2005 Restated*
Continuing operations 3 Revenue Cost of sales Gross profit Other income Distribution expenses Administrative expenses Other expenses 4 Results from operating activities Finance income Finance expenses Net finance costs Share of profit of equity accounted investees Profit before income tax Income tax expense
5
12, 14, 15
45,980 (27 ,460) 18,520 620 (8,108) (7 ,803) (1,686) 1,543 456 (880) (424) 233 1,352
47 ,593 (27 ,920) 19,673 190 (8,208) (8,129) (578) 2,948 345 (1,004) (659) 278 2,567 (744) 1,823
11, 14
11
13
(304) 1,048
Profit from continuing operations Discontinued operation Profit from discontinued operation (net of tax) Profit for the period Attributable to: Shareholders of the Company Minority interest Profit for the period Earnings per share Basic earnings per share (euro) Diluted earnings per share (euro) Continuing operations Basic earnings per share (euro) Diluted earnings per share (euro)
7 6
489 1,537
288 2,111
1,444 93 1,537
2,023 88 2,111
IAS 34.11 IAS 34.11
0.33 0.33
0.53 0.52
0.17 0.17
0.43 0.43
* See change in accounting policy note 3; and discontinued operation note 8.

IAS 34.13
Interim financial statements should include either an interim statement of recognised income and expense or an interim statement of changes in equity, consistent with the choice of statement presented in the most recent annual financial statements. See footnote 4 on page 12 for a discussion on the choice of statement presented when an entity changes its accounting policy to recognise actuarial gains and losses immediately in equity. See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented.
IFRS Illustrative Condensed Interim Financial Statements March 2006 These condensed consolidated interim financial statements are unaudited
Reference
Condensed consolidated interim statement of recognised income and expense1

In thousands of euro Note
2006 2005 Restated*
IAS 34.8(c)(ii), 20(c)
Foreign exchange translation differences Net gain (loss) on hedge of net investment in foreign subsidiary Effective portion of changes in fair value of cash flow hedges Change in fair value of securities available for sale Defined benefit plan actuarial gains and losses Income and expense recognised directly in equity Profit for the period Total recognised income and expense for the period Attributable to: Shareholders of the Company Minority interest Total recognised income and expense for the period Impact of change in accounting policy on retained earnings at beginning of period * See change in accounting policy note 3.
511 5 (93) 235 658 1,537 2,195
133 (8) (10) 115 2,111 2,226
2,072 123 2,195
2,126 100 2,226
(38)
Note Reference Explanatory note 1. 2.

IAS 34.41, C7
See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented. The carrying amount of assets that are measured based on fair value should be determined at the interim reporting date, including property, plant and equipment accounted for in accordance with the revaluation model. The fair value assessment at the interim reporting date may involve a higher degree of estimation than is used for the annual financial statements. When there are significant changes to market conditions during the interim period, we would expect the valuation to be updated at the interim reporting date; otherwise, in our view extrapolations based upon the previous annual reporting date may be appropriate for interim financial statements. These issues are discussed in our publication Insights into IFRS. Reviews for indicators of impairment and any resulting impairment tests are performed at the interim reporting date in the same manner as at an annual reporting date.
IAS 34.B35, B36
3.
Inventory write-downs and interim period manufacturing variances at the interim reporting date B23, B25-28 are recognised using the same procedures as at an annual reporting date. Therefore they are recognised even if they are expected to be restored or absorbed by the end of the financial year. Discretionary purchase rebates and discounts are not anticipated. Contractual rebates are recognised based upon the best estimate of the amount that will be received. These issues are discussed in our publication Insights into IFRS.
IAS 34.30(a), IAS 34.B9, C4
4.
For defined benefit plans the interim balance sheet position generally is determined by adjusting the opening balance sheet for the current service cost, interest cost, expected return on assets, amortisation of actuarial gains and losses (if any), and contributions to the plan. Generally it does not involve obtaining an updated actuarial valuation. When there are significant changes to the plan or market conditions during the interim period, we would expect the actuarial valuation to be updated at the interim reporting date. In our view, when it is necessary to update the actuarial valuation at the interim reporting date and internal expertise is not available to do so, an actuary should perform the updated valuation. These issues are discussed in our publication Insights into IFRS.
Reference
IAS 34.8(a), 20(a)
Condensed consolidated interim balance sheet 1

As at 30 June 2006
30 June 31 Dec 2005 Restated*
Note
2006
Assets 2 Property, plant and equipment Intangible assets 2 Biological assets 2 Investment property Investments in equity accounted investees 2 Other investments Deferred tax assets Total non-current assets Inventories 2 Biological assets 2 Other investments Income tax receivable Trade and other receivables Cash and cash equivalents 2 Assets classified as held for sale Total current assets Total assets Equity Issued capital Share premium Reserves Retained earnings Total equity attributable to shareholders of the Company Minority interest Total equity Liabilities Loans and borrowings 4 Employee benefits Deferred government grants Provisions Deferred tax liabilities Total non-current liabilities Bank overdraft Loans and borrowings Income tax payable Trade and other payables Provisions Liabilities classified as held for sale Total current liabilities Total liabilities Total equity and liabilities * See change in accounting policy note 3.
3
14 15
13
20,555 5,986 7 ,629 5,085 1,791 3,767 1,568 46,381 14,005 156 267 634 17 ,854 2,356 12,891 48,163 94,544
31,049 4,661 8,716 1,050 1,558 3,499 1,230 51,763 14,119 140 568 228 19,689 1,850 36,594 88,357
12
15,015 4,722 1,006 15,155 35,898 943
14,550 3,500 356 14,121 32,527 820 33,347
16
36,841
17
19,218 2,306 1,462 1,000 2,587 26,573 120 6,559 1,893 18,658 250 3,650 31,130 57 ,703 94,544
17 ,116 2,110 1,500 400 1,421 22,547 282 6,476 24,505 1,200 32,463 55,010 88,357
17
19 9
Note Reference Explanatory note 1. See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented. The presentation of the cash flow statement following the indirect method for operating activities in these illustrative condensed interim financial statements differs from the presentation in our most recent illustrative annual financial statements, where the direct method was used for operating activities. This change has been made to illustrate a different approach that is equally acceptable, and is not intended as a deviation from the general principle that the presentation in interim financial statements should match that in the most recent annual financial statements (see footnote 2 on page 2).
Reference
IAS 34.8(d), 20(d)
Condensed consolidated interim statement of cash flows1

2006 2005 Restated*
Cash flows from operating activities continuing operations Profit for the period Adjustments for: Depreciation Amortisation (Reversal of) impairment losses on property, plant and equipment Impairment losses on goodwill Impairment losses on assets classified as held for sale Write-down of inventory Change in value of biological assets Change in value of investment property Net finance costs Share of profit of equity accounted investees Gain on sale of property, plant and equipment Share-based payments Income tax expense Change in inventories Change in trade and other receivables Change in trade and other payables Change in provisions and employee benefits Change in deferred government grant Interest paid Income taxes paid Net cash (used in) from operating activities continuing operations
1,537 6,596 290 (393) 116 25 258 144 55 424 (233) (108) 1,147 304 10,162 (4,069) (5,745) 1,212 (154) (38) 1,368 (800) (1,030) (462)
2,111 5,850 355 512 131 (65) (100) 659 (278) (25) 955 744 10,849 2,695 (435) (703) 132 12,538 (720) (950) 10,868
14 15 9 12
14
Cash flows from investing activities continuing operations Interest received Dividends received Proceeds from sale of property, plant and equipment 14 Proceeds from sale of investments Acquisition of subsidiary, net of cash acquired 10 14 Acquisition of property, plant and equipment Acquisition of investment property Acquisition of other investments Development expenditure Net cash used in investing activities continuing operations
680 62 4,217 3,900 (2,125) (10,226) (4,090) (3,077) (1,581) (12,240)
85 100 406 849 (2,315) (350) (1,225)
* See change in accounting policy note 3; and discontinued operation note 8.
10
This page has been left blank intentionally.
11
Condensed consolidated interim statement of cash flows (continued)

2006 2005 Restated*
Cash flows from financing activities continuing operations Proceeds from the issue of share capital Proceeds from the issue of convertible notes Proceeds from the issue of redeemable preference shares Proceeds from the sale of own shares Payment of transaction costs Repurchase of own shares Repayment of borrowings Payment of finance lease liabilities Dividends paid Net cash from (used in) financing activities continuing operations Discontinued operation Net cash from operating activities Net cash from investing activities Net cash from financing activities Net cash from discontinued operation Net increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 30 June
16 17 17 16 17 17 17 16
1,570 5,000 2,000 30 (302) (4,811) (130) (1,243) 2,114
(280) (1,492) (123) (520) (2,415)
356 10,890 11,246 658 1,568 10 2,236
948 852 1,800 9,028 966 7 10,001
Cash and cash equivalents for the purpose of the cash flow statement includes bank overdrafts. * See discontinued operation note 8.
12

IAS 34.14
The interim financial statements are prepared on a consolidated basis if the most recent annual financial statements were prepared on a consolidated basis. If the most recent annual report included separate financial statements of the parent, an entity is neither required to include nor prohibited from including separate financial statements of the parent in its interim financial report. In order to state compliance with IAS 34, condensed interim financial statements must comply with all of the requirements of the standard. Interim financial statements should reflect the same accounting policies as in the most recent annual financial statements, except for changes in accounting policy that will be reflected in the next annual financial statements. Therefore new standards and interpretations are applied in the first interim period within the annual period to which they apply. These illustrative condensed interim financial statements illustrate one possible change in accounting policy. The following standards and interpretations, which are mandatory for annual periods beginning on or after a specified date in late 2005 or 2006 (see below in brackets), also may be relevant for interim reporting dates in 2006:

2.
IAS 34.3, 19
3.
IAS 34.16(a), 28
IFRS 6 Exploration for and Evaluation of Mineral Resources (1 January 2006) Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operation (1 January 2006) Amendments to IAS 39 Financial Instruments: Recognition and Measurement Cash Flow Hedge Accounting of Forecast Intragroup Transactions (1 January 2006) Amendments to IAS 39 Financial Instruments: Recognition and Measurement The Fair Value Option (1 January 2006) Amendments to IAS 39 and IFRS 4 Financial Guarantee Contracts (1 January 2006) IFRIC 4 Determining whether an Arrangement contains a Lease (1 January 2006) IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (1 January 2006) IFRIC 6 Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment (1 December 2005) IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (1 March 2006) IFRIC 8 Scope of IFRS 2 Share-based Payment (1 May 2006) IFRIC 9 Reassessment of Embedded Derivatives (1 June 2006).
IAS 34.17(g)
These condensed interim financial statements do not illustrate the correction of an error, which is an example of the kinds of disclosures required by IAS 34. If an entity chooses to recognise all actuarial gains and losses immediately in equity, then the entity must present a statement of recognised income and expense as a primary statement; it cannot present recognised income and expense as an element of a statement of changes in equity. IAS 34 requires disclosure of the nature and effect of any change in accounting policy. In these condensed interim financial statements we have illustrated all of the disclosures that would be required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors in a complete set of IFRS financial statements.
4.
IAS 19.93B
5.
IAS 34.16(a)
13
Reference
1.
Notes to the condensed consolidated interim financial statements

Reporting entity1 [Name] (the Company) is a company domiciled in [country]. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2006 comprise the Company and its subsidiaries (together referred to as the Group) and the Groups interests in associates and jointly controlled entities. The consolidated financial statements of the Group as at and for the year ended 31 December 2005 are available upon request from the Companys registered office at [address] or at [Web site address]. 2. Statement of compliance2 These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2005. These condensed consolidated interim financial statements were approved by the Board of Directors on [date]. 3. Significant accounting policies3 Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2005. The Group adopted an amendment to IAS 19 Employee Benefits Actuarial Gains and Losses, Group Plans and Disclosures as at 1 January 2006. The Group now recognises all actuarial gains and losses arising from defined benefit plans immediately in equity. Previously the Group applied the corridor method to recognise actuarial gains and losses over the expected average remaining working lives of employees in the plan, and recognised such gains and losses in profit or loss.4
IAS 34.19
IAS 34.16(a)
IAS 34.43(a)
The change in accounting policy was recognised retrospectively in accordance with the transitional provisions of the amendment, and comparatives have been restated. The change in accounting policy had the following impact on these condensed consolidated interim financial statements:5
2006 2005
Income statement for the six months ended 30 June Decrease in cost of sales Decrease in distribution expenses Increase in income tax expense Increase in results from operating activities (continuing operations) Recognised income and expense for the six months ended 30 June Decrease in net income recognised directly in equity Increase in profit for the period Decrease in total recognised income and expense for the period Balance sheet at 30 June 2006 (31 December 2005) Cumulative increase in liability for employee benefits Cumulative increase in deferred tax asset Cumulative decrease in retained earnings The change in accounting policy had no material impact on earnings per share.
5 3 (2) 6
(10) 6 (4)
(51) 13 (38)
(51) 13 (38)
14
Note Reference Explanatory note 1. See footnote 4 on page 6 for a discussion on obtaining an actuarial valuation at an interim reporting date.
IAS 34.35, 36
2.
Revisions to accounting estimates are recognised in the interim period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Prior interim periods are not restated. If an estimate of an amount reported in an interim period is changed significantly during the final interim period, but a separate financial report is not published for that interim period, then the nature and amount of that change in estimate is disclosed in a note to the annual financial statements. The International Financial Reporting Interpretations Committees (IFRIC) Exposure Draft D18 Interim Financial Reporting and Impairment proposes that an entity should not reverse an impairment loss recognised in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost (not amortised cost). The IFRIC has invited comments on this draft interpretation by 31 March 2006, and a final interpretation is expected later in 2006.
IAS 34.26
3.
IAS 34.16(d)
An entity should disclose the nature and amount of material changes in estimates of amounts reported in prior interim periods or in prior financial years. Although not required explicitly by IAS 34, any changes in an entitys financial risk management objectives and policies may be material to an understanding of the current interim period, in which case such changes would be disclosed.
4.
15
Reference
3.

Significant accounting policies (continued) The change in accounting policy did not result in the recognition of any actuarial gains and losses during the six months ended 30 June 2006 because the Group did not update its actuarial valuation during this period; there were no changes to the plan, and no significant changes in market conditions, during this period.1 Estimates2 The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Groups accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2005.3
4.
IAS 34.41
IAS 34.16(d)
During the six months ended 30 June 2006 management reassessed its estimates in respect of:
previously unrecognised deferred tax assets related to the carryforward of unused tax losses (see note 13) the recoverable amount of certain property, plant and equipment (see note 14) the recoverable amount of goodwill (see note 15).
5.
Financial risk management4 During the six months ended 30 June 2006 the Group changed its policy in respect of the hedging of foreign currency denominated items. The Group now hedges at least 90 percent (2005: 80 percent) of all trade receivables and trade payables denominated in a foreign currency, and at any point in time the Group hedges 90 percent (2005: 80 percent) of its estimated foreign currency exposure in respect of forecasted sales and purchases over the following six months. Other aspects of the Groups financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2005.
16

IAS 34.16(g)
If IAS 14 Segment Reporting requires an entity to disclose segment information in its annual financial statements, an entity should disclose segment revenue and segment results in its interim financial statements for either business or geographical segments, whichever is the entitys primary basis of segment reporting. The disclosure in these illustrative condensed interim financial statements goes beyond the strict requirements of IAS 34 by reconciling the segment result to the condensed interim income statement.
2.
IAS 34.21
An entity whose business is highly seasonal is encouraged to provide, as additional disclosure, financial information for the 12 months ending on the interim reporting date and comparative information for the comparable 12-month period. These condensed interim financial statements illustrate such information consistent with the level of disclosure provided for segment reporting.
Reference
IAS 34.16(g)

6. Segment reporting1 For the six months ended 30 June
Packaging (Discontinued)
2005 Restated 2006 2005
Paper
2006 2005 Restated
Forestry
2006
Other operations
2006 2005 Restated
Eliminations
2006 2005
Consolidated
2006 2005 Restated
IAS 34.16(g) IAS 34.16(g)
Segment revenue
42,918
45,863
4,524
4,381
8,893 338
13,836 436
1,218 89
834 167
(3,530) (493)
(4,903) (404)
54,023 2,670 (789) 1,881 (338) 1,543
60,011 3,690 (306) 3,384 (436) 2,948
Segment result 1,923 2,487 813 1,004 Unallocated expenses Results from operating activities Less results from operating activities (discontinued operation) Results from operating activities (continuing operations) The Group comprises the following main business segments:

IAS 14.81
Paper the manufacture and sale of paper used in the printing industry, as well as research and development activities in this area. Forestry the cultivation of pine trees and the sale of wood, as well as related services. Packaging the design and manufacture of packaging materials; this segment was sold in May 2006 (see note 8).
7.
IAS 34.16(b)
Seasonality of operations The Groups Forestry segment is subject to seasonal fluctuations as a result of weather conditions. In particular, the cultivation of pine trees and the provision of related services in key geographical areas are impacted negatively by winter weather conditions, which occur primarily from January to March. The Group attempts to minimise the seasonal impact through the management of inventories to meet demand during this period; however, the first half-year typically results in lower revenues and results for this segment. For the 12 months ended 30 June 2006 the Forestry segment had segment revenue of 11,601 thousand (12 months ended 30 June 2005: 10,588 thousand) and a segment result of 2,311 thousand (12 months ended 30 June 2005: 2,169 thousand).2
IAS 34.21
17
18

IAS 34.16(i)
An entity should disclose the effects of changes in the composition of an entity during the interim period, including business combinations, acquisitions and disposals of subsidiaries and long-term investments, restructurings and discontinued operations. In respect of business combinations effected during the period, or after the reporting date but before the interim financial statements are authorised for issue, an entity is required to disclose in its interim financial statements the information required by paragraphs 66-73 of IFRS 3 Business Combinations. IAS 34 requires disclosure of changes in the composition of the entity as a result of discontinued operations. In these condensed interim financial statements we have illustrated all of the disclosures that would be required by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in a complete set of IFRS financial statements. Although not required explicitly by IAS 34, details of non-current assets held for sale may be material to an understanding of the current interim period, in which case such details would be disclosed.
2.
IAS 34.16(i)
3.
4. 5.
IAS 34.17(b) IAS 34.16(i)
Impairment losses are an example of the kinds of disclosures required by IAS 34. Where relevant, the disclosures required by IFRS 3.69, 72 and 73 in respect of provisional accounting for a business combination and adjustments relating to business combinations effected in the current or in previous periods should be given.
19
Reference
8.
IAS 34.16(i)

Discontinued operation1, 2 In May 2006 the Group sold its entire Packaging segment (see note 6); the segment was not a discontinued operation or classified as held for sale as at 31 December 2005 and the comparative income statement and statement of cash flows have been restated to show the discontinued operation separately from continuing operations. The effect of the disposal was a decrease in the net assets of the Group of 10,154 thousand, excluding cash consideration received of 11,000 thousand. The net cash inflow on disposal after deducting cash disposed of was 10,890 thousand. Profits attributable to the discontinued operation for the six months ended 30 June were as follows:
2006 2005
Results of discontinued operation Revenue Expenses Results from operating activities Income tax expense Profit after tax but before gain on sale of discontinued operation Gain on sale of discontinued operation Tax on gain on sale of discontinued operation Profit for the period 9.
8,043 (7 ,705) 338 (365) (27) 846 (330) 489
12,418 (11,982) 436 (148) 288 288
Assets held for sale3 Part of a manufacturing facility within the Paper segment is presented as a disposal group held for sale following the commitment of the Groups management, on 15 June 2006, to a plan to sell facilities due to a regional economic downturn. Efforts to sell the disposal group have commenced, and a sale is expected by January 2007 . As at 30 June 2006 the disposal group comprised assets of 12,891 thousand less liabilities of 3,650 thousand:
Property, plant and equipment Inventory Trade and other receivables Trade and other payables
8,756 2,750 1,385 (3,650) 9,241
IAS 34.17(b)
An impairment loss of 25 thousand on the remeasurement of the disposal group to the lower of its carrying amount and its fair value less costs to sell has been recognised in other expenses .4 10. Acquisition of subsidiary1, 5 On 31 March 2006 the Group acquired all of the shares in Papyrus Pty Limited for 2,500 thousand in cash. The company manufactures and distributes recycled paper. In the three months to 30 June 2006 the subsidiary contributed profit of 120 thousand. If the acquisition had occurred on 1 January 2006, management estimates that consolidated revenue would have been 56,916 thousand and consolidated profit for the period would have been 1,657 thousand for the six months ended 30 June 2006.
IAS 34.16(i) IFRS 3.66(a), 67(a)-(d), 67(i), 70
20

IAS 34.16(c)
An entity should disclose the nature and amount of items affecting assets, liabilities, equity, net income or cash flows that are unusual because of their nature, size or incidence. Inventory write-downs and their reversal are examples of the kinds of disclosures required by IAS 34.
2.
IAS 34.17(a)
21
Reference

10. Acquisition of subsidiary (continued) The acquisition had the following effect on the Groups assets and liabilities:
PreRecognised values on Fair value acquisition carrying amounts
IFRS 3.67(f)
acquisition adjustments
IFRS 3.67(d)
Property, plant and equipment Intangible assets Inventories Trade and other receivables Cash and cash equivalents Loans and borrowings Deferred tax liabilities Trade and other payables Net identifiable assets and liabilities Goodwill on acquisition Consideration paid, satisfied in cash* Cash acquired Net cash outflow * Includes legal fees of 25 thousand.
1,955 250 375 404 375 (500) (79) (430) 2,350 150 2,500 (375) 2,125
90 125 10 30 (77) 178
1,865 125 365 404 375 (530) (2) (430) 2,172
IFRS 3.67(d) IFRS 3.67(h)
The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired businesss workforce and the synergies expected to be achieved from integrating the company into the Groups existing paper business. 11. Earthquake related expenses1 During the six months ended 30 June 2006 expenses of 856 thousand were incurred due to an earthquake near production facilities in [country] and are included in other expenses . The expenses relate to the survey of production facilities and the removal of damaged items. Related insurance recoveries of 250 thousand are included in other income . 12. Write-down of inventory2 During the six months ended 30 June 2006 the Group recognised a write-down of finished goods inventory of 258 thousand related to paper purchased for a specific customer who subsequently declared bankruptcy, which is included in cost of sales . There were no inventory write-downs recognised during the six months ended 30 June 2005.
IAS 34.16(c)
IAS 34.17(a)
22
Note Reference Explanatory note 1. Although not required explicitly by IAS 34, any changes in an entitys effective tax rate may be material to an understanding of the current interim period, in which case information in respect of such changes would be disclosed.
IAS 34.17(b), (d), (e)
2.
Impairment losses, acquisitions and disposals of property, plant and equipment, and commitments for the purchase of property, plant and equipment are examples of the kinds of disclosures required by IAS 34.
23
Reference

13. Income tax expense1 The Groups consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2006 was 23 percent (for the year ended 31 December 2005: 33 percent; for the six months ended 30 June 2005: 29 percent). This change in effective tax rate was caused mainly by two factors:
A decrease in the income tax rate in [country] was enacted in April 2006, effective from 1 January 2007 . Previously unrecognised tax losses were recognised in the current period as management now considers it probable that future taxable profits will be available against which they can be utilised. Management revised its estimates following the pilot of a new type of paper in [country], which is proving popular with customers and is increasing the subsidiarys results from operating activities.
IAS 34.17(d)
14. Property, plant and equipment2 Acquisitions and disposals During the six months ended 30 June 2006 the Group acquired assets with a cost of 12,156 thousand (six months ended 30 June 2005: 2,315 thousand), including assets acquired through business combinations (see note 10) of 1,930 thousand (six months ended 30 June 2005: nil). Assets with a carrying amount of 3,877 thousand were disposed of as part of the discontinued operation (see note 8). Other assets with a carrying amount of 4,109 thousand were disposed of during the six months ended 30 June 2006 (six months ended 30 June 2005: 381 thousand), resulting in a gain on disposal of 108 thousand (six months ended 30 June 2005: gain of 25 thousand), which is included in other income .
IAS 34.17(b)
Reversal of impairment loss In 2005 export restrictions were enacted for a particular product of the Paper segment that caused the Group to assess the recoverable amount of a number of specialised machines dedicated to that product. Based on this assessment, the carrying amount of those machines was written down by 512 thousand. During the six months ended 30 June 2006, following modifications to those restrictions, the Group reassessed its estimates and 393 thousand of the impairment loss was reversed (included in cost of sales). The estimate of recoverable amount was based on the value in use of the machines, calculated using a pre-tax discount rate of seven percent (2005: eight percent). Capital commitments During the six months ended 30 June 2006 the Group entered into a contract to purchase property, plant and equipment for 1,465 thousand (six months ended 30 June 2005: nil); delivery is expected in March 2008.
IAS 34.16(d)
IAS 34.17(e)
24

IAS 34.16(d), 17(b)
IAS 34 requires disclosure of the nature and amount of changes in estimates, and identifies impairment losses as an example of the kinds of disclosures required by the standard. In these condensed interim financial statements we have illustrated all of the disclosures that would be required by IAS 36 Impairment of Assets in respect of the annual impairment testing of goodwill in a complete set of IFRS financial statements.
25
Reference

15. Goodwill1 The Group performed its annual impairment testing of goodwill during the six months ended 30 June 2006. As a result of this testing, the carrying amount of the European forestry cashgenerating unit, which comprises operations of the Forestry segment (see note 6), was determined to be higher than its recoverable amount and an impairment loss of 116 thousand (six months ended 30 June 2005: 131 thousand) was recognised. The impairment loss was allocated fully to goodwill, and is included in cost of sales . The impairment resulted from an increase in the expected future environmental costs due to regulatory developments in several European countries where the Group cultivates and sells wood. Goodwill is allocated to cash-generating units as follows as at 30 June 2006 (31 December 2005):
2006 2005
IAS 34.16(d), 17(b)
European paper manufacturing and distribution European forestry Multiple units without significant goodwill Total goodwill
2,470 1,213 3,683 157 3,840
2,320 1,329 3,649 157 3,806
The European paper manufacturing and distribution units impairment test was based on fair value less costs to sell. In the past year competing businesses in the same sector and of generally similar size have been bought and sold by companies in the industry as part of the ongoing consolidation in the industry. The sales prices for these units were used to derive a price / earnings ratio, which was applied to the earnings of the unit to determine recoverable amount. This recoverable amount significantly exceeds the carrying amount of the unit including goodwill; management considers that it is not reasonably possible for the assumed price / earnings ratio to change by such a significant amount so as to eliminate this excess. The recoverable amount of the European forestry cash-generating unit was based on value in use calculations. Those calculations use cash flow projections based on actual operating results and the five-year business plan. Cash flows for a further 20-year period were extrapolated using a two percent growth rate, which was consistent with the long-term average growth rate for the industry. A pre-tax discount rate of eight percent was used in discounting the projected cash flows. The key assumptions and the approach to determining their value were: Assumption Timber price growth Environmental cost growth How determined Statistical analysis of long-term market price trends adjusted annually for actual experience. Prediction of change in government regulation. New regulations are being discussed and have been reflected in increased costs from 2007 .
The timber price growth was assumed to be one percent per annum above inflation in the first five years. Environmental cost growth was considered to be 25 percent in 2007 and in line with inflation thereafter. This represents an increase over the 20 percent estimate used in the impairment testing in 2005, and reflects various regulatory developments in a number of European countries where the unit operates.
26

IAS 34.16(e) IAS 34.8, 13
IAS 34 requires the disclosure of issues and repurchases of equity securities. IAS 34 is unclear as to whether an entity that presents a statement of recognised income and expense in its condensed interim financial statements should disclose details of other changes in equity in the notes thereto. In these condensed interim financial statements we have illustrated the disclosure of all movements in equity, which includes disclosure about the issue and repurchase of equity securities.
Reference
IAS 34.16(e)

16. Capital and reserves1 Reconciliation of movements in equity
Attributable to shareholders of the Company Reserve Share Share Translation premium reserve Hedging Fair value reserve reserve for own shares Retained earnings Total Minority interest Total equity
capital
Balance at 1 January 2005 Total recognised income and expense 52 thousand own shares acquired Share-based payments (net of tax) Dividends to shareholders Balance at 30 June 2005 Balance at 1 January 2006 Total recognised income and expense Issue of 165 thousand ordinary shares Issue of convertible notes (net of tax) 4 thousand own shares sold Dividends to shareholders Share-based payments (net of tax) Balance at 30 June 2006
14,550 14,550 14,550 465 15,015
3,500 3,500 3,500 1,105 109 8 4,722
(129) 125 (4) 78 486 564
478 478 423 (93) 330
80 80 135 235 370
(280) (280) (280) 22 (258)
10,539 2,001 540 (520) 12,560 14,121 1,444 (1,243) 833 15,155
29,018 2,126 (280) 540 (520) 30,884 32,527 2,072 1,570 109 30 (1,243) 833 35,898
601 100 701 820 123 943
29,619 2,226 (280) 540 (520) 31,585 33,347 2,195 1,570 109 30 (1,243) 833 36,841
IAS 34.16(f)
Dividends The following dividends were declared and paid by the Group: For the six months ended 30 June
2006 2005
0.27 per qualifying ordinary share (2005: 0.03) 0.24 per non-redeemable preference share (2005: 0.24)
823 420 1,243
100 420 520
27
28

IAS 34.16(e)
IAS 34 requires the disclosure of issues and repayments of debt securities. The disclosure in these illustrative condensed interim financial statements goes beyond the strict requirements of IAS 34 by reconciling the opening and closing balance of total loans and borrowings. These condensed interim financial statements do not illustrate any loan default or breach of a loan agreement that has not been remedied on or before the interim reporting date; these are examples of the kinds of disclosures required by IAS 34.
2.
IAS 34.17(i)
29
Reference
IAS 34.16(e)

17. Loans and borrowings1, 2 The following loans and borrowings (non-current and current) were issued and repaid during the six months ended 30 June 2006:
Interest rate Face value Carrying amount Year of maturity
Currency
nominal*
effective*
Balance at 1 January 2006 New issues Convertible notes Redeemable preference shares Loan acquired (see note 10) Repayments Loan from associate Secured bank loan Finance lease liabilities Balance at 30 June 2006
23,592 euro euro USD 3.25% 4.40% 3.80% 3.50% 4.51% 3.65% 5,000 2,000 530 (1,000) (3,811) (130) 4,678 1,948 500 (1,000) (3,811) (130) 25,777 2009 2011 2009 -
euro 4.80% euro LIBOR+% euro 7 .25%
* Dividend rate for redeemable preference shares. Convertible notes

Proceeds from issue of convertible notes Transaction costs Net proceeds Amount classified as equity Accreted interest Carrying amount at 30 June 2006
5,000 (250) 4,750 (163) 91 4,678
The notes are convertible into 250 thousand ordinary shares in June 2009 at the option of the holder, which is a rate of one share for every five convertible notes; unconverted notes become repayable on demand. The notes are subject to interest rate swaps that ensure the appropriate mix of fixed and floating rate exposure consistent with the Groups policy. Redeemable preference shares
Proceeds from issue of redeemable preference shares Transaction costs Carrying amount at 30 June 2006
2,000 (52) 1,948
The redeemable preference shares do not carry the right to vote, and participate with regard to the Companys residual assets only to the extent of the face value of the shares adjusted for any dividends in arrears. Redeemable shares are subject to interest rate swaps that ensure the appropriate mix of fixed and floating rate exposure consistent with the Groups policy.
30
Note Reference Explanatory note 1. Although not required explicitly by IAS 34, details of share-based payment transactions may be material to an understanding of the current interim period, in which case such details would be disclosed.
IAS 34.17(c)
2.
The reversal of a restructuring provision is an example of the kinds of disclosures required by IAS 34. Litigation settlements are an example of the kinds of disclosures required by IAS 34.
3.
IAS 34.17(f)
31
Reference

18. Share-based payments1 In 2005 the Group established a share option programme that entitles key management personnel and senior employees to purchase shares in the entity. The terms and conditions of the share option programme are disclosed in the consolidated financial statements as at and for the year ended 31 December 2005. In January 2006 a further grant on similar terms was made to key management personnel. The terms and conditions of the grants made during the six months ended 30 June 2006 are as follows:
Number of Grant date instruments Vesting conditions Contractual life of options
Option grant at 1 January 2006
100,000
Three years of service
10 years
Fair value of share options and assumptions for the six months ended 30 June 2006: Fair value at grant date Share price Exercise price Expected volatility (expressed as weighted average volatility used in the modelling under binomial lattice model) Option life (expressed as weighted average life used in the modelling under binomial lattice model) Expected dividends Risk-free interest rate (based on government bonds) 4.2 12.0 12.0
40.3 - 42.5% 5.4 - 8.6 years 3.2% 3.8% - 3.9%
The basis of measuring fair value is consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2005.
IAS 34.17(c)
19. Restructuring provision2 A provision of 200 thousand was reversed during the six months ended 30 June 2006 in respect of the Groups exit from the French market, which was disclosed in the consolidated financial statements as at and for the year ended 31 December 2005. The Groups exit was completed in May 2006. 20. Contingencies In January 2005 an environmental agency brought an action against a wholly-owned subsidiary. As at 31 December 2005 no provision was recorded as the probability of outflow of economic resources related to the action was assessed as being remote. During the six months ended 30 June 2006 the action was dismissed with no settlement amount being paid by the subsidiary.3
IAS 34.16(j)
IAS 34.17(f)
32

IAS 34.17(j)
Related party transactions are an example of the kinds of disclosures required by IAS 34. Given the increasing importance of corporate governance issues, in our view it is preferable that related party transactions be disclosed in condensed interim financial statements in all circumstances, except when clearly immaterial. Even if related party transactions are not material by virtue of their size, we encourage highlighting their existence, together with a reference to the relevant disclosure in the most recent annual financial statements. If related party transactions also are material in terms of size, then more extensive disclosure may be required. This issue is discussed in our publication Insights into IFRS.
33
Reference
IAS 34.17(j)

21. Related parties1 Parent and ultimate controlling party During the six months ended 30 June 2006 a majority of the Companys shares were acquired by [name of new parent] from [name of old parent]. As a result the new ultimate controlling party of the Group is [name]. Transactions with key management personnel Unsecured loans to directors during the six months ended 30 June 2006 amounted to 65 thousand (six months ended 30 June 2005: 32 thousand). No interest is payable by the directors. As at 30 June 2006 the balance outstanding was 15 thousand (31 December 2005: 12 thousand). Key management personnel receive compensation in the form of short-term employee benefits, post-employment benefits and share-based payments (see note 18). Key management personnel received total compensation of 750 thousand for the six months ended 30 June 2006 (six months ended 30 June 2005: 725 thousand). Other related party transactions
Transaction value Six months ended Balance outstanding
30 June 2006
30 June 2005
30 June 31 December 2006 2005
Sale of goods Parent of the Group Associate Expenses Associate administrative services Associate interest expense Company controlled by a director lease of property
3,400 725
2,890 400
2,300 560
1,690 350
133 16 34
45 -
120 48 -
68 12 -
All outstanding balances with these related parties are to be settled in cash within six months of the balance sheet date. None of the balances is secured. In addition, during the six months ended 30 June 2006 the Group repaid a loan of 1,000 thousand received from one of its associates see note 17 .
IAS 34.16(h)
22. Subsequent event Subsequent to the interim balance sheet date, one of the Groups major trade debtors went into liquidation following a number of environmental protests staged at its operating plant. The environmental campaign against the company commenced after 30 June 2006. Of the 100 thousand owed by the debtor as at 30 June 2006, the Group expects to recover less than 10 thousand. No impairment loss has been recognised in these interim financial statements.
34
Note Reference Explanatory note 1. The review report illustrated in these condensed interim financial statements is based on the International Standard on Review Engagements (ISRE) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, which is effective for reviews of interim financial information for periods beginning on or after 15 December 2006; earlier adoption of the standard (in its entirety) is permissible. If a review of interim financial information is carried out under local laws and standards, then the form of the report will conform to those laws and standards.
35
Independent report on review of condensed consolidated interim financial information1

[Appropriate Addressee] [Name of entity]
Introduction We have reviewed the accompanying condensed consolidated balance sheet of [name of entity] as at 30 June 2006 and the related condensed consolidated statements of income, recognised income and expense and cash flows for the six-month period then ended (interim financial information). Management is responsible for the preparation and presentation of this interim financial information in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.
[Name of firm signing] [Date] [Address]
This page has been left blank intentionally.
KPMG International Financial Reporting Group is part of KPMG IFRG Limited. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent firms operating under the KPMG name. KPMG International provides no audit or other client services. Such services are provided solely by member firms of KPMG International (including sublicensees and subsidiaries) in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any other member firm, nor does KPMG International have any such authority to obligate or bind any member firm, in any manner whatsoever. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. Printed in the UK. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Cover design: Mytton Williams Ltd Publication no: 300848 Publication name: Illustrative condensed interim financial statements Publication date: March 2006
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Illustrative condensed interim financial statements

International Financial Reporting Standards March 2006

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The principles of preparing interim financial statements

Form and content of interim financial statements

Measurement and recognition

Disclosure in condensed interim financial statements

First-time adopters of IFRSs

Insights into IFRS

Note Reference Explanatory note 1.

IFRS Illustrative Condensed Interim Financial Statements March 2006

IAS 34.30(b), 33, 39

IAS 34.30(c), B12-22

Condensed consolidated interim income statement

IAS 34.11 IAS 34.11

* See change in accounting policy note 3; and discontinued operation note 8.

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1.

Condensed consolidated interim statement of recognised income and expense1

IAS 34.8(c)(ii), 20(c)

511 5 (93) 235 658 1,537 2,195

133 (8) (10) 115 2,111 2,226

2,072 123 2,195

2,126 100 2,226

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1. 2.

IAS 34.B35, B36

Condensed consolidated interim balance sheet 1

15,015 4,722 1,006 15,155 35,898 943

14,550 3,500 356 14,121 32,527 820 33,347

IFRS Illustrative Condensed Interim Financial Statements March 2006

Condensed consolidated interim statement of cash flows1

680 62 4,217 3,900 (2,125) (10,226) (4,090) (3,077) (1,581) (12,240)

85 100 406 849 (2,315) (350) (1,225)

* See change in accounting policy note 3; and discontinued operation note 8.

IFRS Illustrative Condensed Interim Financial Statements March 2006

This page has been left blank intentionally.

Condensed consolidated interim statement of cash flows (continued)

1,570 5,000 2,000 30 (302) (4,811) (130) (1,243) 2,114

(280) (1,492) (123) (520) (2,415)

356 10,890 11,246 658 1,568 10 2,236

948 852 1,800 9,028 966 7 10,001

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1.

Notes to the condensed consolidated interim financial statements

IFRS Illustrative Condensed Interim Financial Statements March 2006

Notes to the condensed consolidated interim financial statements

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1.

Notes to the condensed consolidated interim financial statements

IAS 34.16(g) IAS 34.16(g)

54,023 2,670 (789) 1,881 (338) 1,543

60,011 3,690 (306) 3,384 (436) 2,948

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1.

IAS 34.17(b) IAS 34.16(i)

Notes to the condensed consolidated interim financial statements

8,043 (7 ,705) 338 (365) (27) 846 (330) 489

12,418 (11,982) 436 (148) 288 288

8,756 2,750 1,385 (3,650) 9,241

IAS 34.16(i) IFRS 3.66(a), 67(a)-(d), 67(i), 70

IFRS Illustrative Condensed Interim Financial Statements March 2006

Note Reference Explanatory note 1.