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These illustrative 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 financial statements in accordance with International
Financial Reporting Standards (IFRSs). It illustrates one possible format for 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 reflects IFRSs in issue at 1 August 2007 that are required to be applied by an entity with an
annual period beginning on 1 January 2007 (currently effective requirements). IFRSs that are effective for
annual period beginning after 1 January 2007 (forthcoming requirements) have not been adopted early in
preparing these illustrative financial statements.
When preparing financial statements in accordance with IFRSs, an entity should have regard to its local legal
and regulatory requirements. This publication does not consider any requirements of a particular jurisdiction. For
example, IFRSs do not require the presentation of separate financial statements for the parent entity, and this
publication includes only consolidated financial statements. However, in some jurisdictions parent entity financial
information also may be required.
This publication does not illustrate IFRS 4 Insurance Contracts or IAS 26 Accounting and Reporting by
Retirement Benefit Plans.
This publication illustrates only the financial statement component of a financial report. However, typically a
financial 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 (see Technical guide).
While this publication is up to date at the time of printing, IFRSs and their interpretation change over time.
Accordingly, these illustrative financial statements should not be used as a substitute for referring to the
standards and interpretations themselves.
References
The illustrative financial statements are contained on the odd-numbered pages of this publication. The evennumbered pages contain explanatory comments and notes on disclosure requirements of IFRSs. These
explanatory comments are not intended to be an exhaustive commentary. To the left of each item disclosed, a
reference to the relevant standard is provided; generally the references relate only to disclosure requirements.
The illustrative financial statements also include references to Insights into IFRS.
The Illustrative financial statements is an annual publication of KPMG IFRG. This publication has been updated to
incorporate the following:
IFRS 7 Financial Instruments: Disclosures requirements
Insights into IFRS paragraph references
l example of a statement of cash flows prepared using the direct method
l example disclosure of segment information in accordance with IFRS 8 Operating Segments.
l
l
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
We have a range of publications that can assist you further, including Insights into IFRS, The Application of
IFRSs: Disclosures in Practice, IFRS: An overview, Illustrative financial statements: banks, Disclosure checklist,
illustrative financial statements for first-time adopters of IFRSs and illustrative condensed interim financial
statements. Technical information is available at www.kpmgifrg.com.
For access to an extensive range of accounting, auditing and financial reporting guidance and literature, visit
KPMGs Accounting Research Online. This Web-based subscription service can be a valuable tool for anyone
who wants to stay informed in todays dynamic environment. For a free 15-day trial, go to www.aro.kpmg.com
and register today.
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Technical guide
Form and content of financial statements
IAS 1 Presentation of Financial Statements sets out the overall requirements for the presentation of financial
statements, including their content and structure. Other standards and interpretations deal with the recognition,
measurement and disclosure requirements related to specific transactions and events. IFRSs are not limited to
a particular legal framework. Therefore financial statements prepared under IFRSs often contain supplementary
information required by local statute or listing requirements, such as directors reports (see below).
The accounting policies disclosed in these illustrative financial statements reflect the facts and circumstances
of the fictitious corporation on which these financial statements are based. They should not be relied upon for a
complete understanding of the requirements of IFRSs and should not be used as a substitute for referring to the
standards and interpretations themselves. The accounting policy disclosures appropriate for an entity depend
on the facts and circumstances of that entity and may differ from the disclosures presented in these illustrative
financial statements. The recognition and measurement requirements of IFRSs are discussed in our publication
Insights into IFRS.
Reporting by directors
Generally local laws and regulations determine the extent of reporting by directors in addition to the
presentation of financial statements. IAS 1 encourages, but does not require, entities to present, outside the
financial statements, a financial review by management. The review should describe and explain the main
features of the entitys financial performance and financial position, and the principal uncertainties it faces. Such
a report may include a review of:
l
l
l
the main factors and influences determining financial performance, including changes in the environment in
which the entity operates, the entitys response to those changes and their effect, and the entitys policy for
investment to maintain and enhance financial performance, including its dividend policy
the entitys sources of funding and its targeted ratio of liabilities to equity
the entitys resources not recognised on the balance sheet in accordance with IFRSs.
In October 2005 the International Accounting Standards Board (IASB) published Discussion Paper Management
Commentary, which considers the role of the IASB in developing principles for management commentary that
accompanies financial statements, and includes proposals for the main components of a standard. The Board
will consider responses to the discussion paper when deliberating presentation and disclosure issues as part of
its conceptual framework project. The Board is in the process of determining the timing for the next consultation
document (discussion paper or exposure draft) on this topic.
These illustrative financial statements assume that the entity is not a first-time adopter of IFRSs. IFRS 1 Firsttime Adoption of International Financial Reporting Standards applies to an entitys first financial statements
prepared in accordance with IFRSs. IFRS 1 requires extensive disclosures explaining how the transition from
previous GAAP to IFRSs affects the reported financial position, financial performance and cash flows of an
entity. These disclosures include reconciliations of equity and reported profit or loss at the date of transition
to IFRSs and at the end of the comparative period presented in the entitys first IFRS financial statements,
explaining material adjustments to the balance sheet and income statement, and identifying separately the
correction of any errors made under previous GAAP. An entity that presented a cash flow statement under
previous GAAP also should explain any material adjustments to its cash flow statement.
Our illustrative financial statements published in November 2004 illustrate a set of financial statements for a
first-time adopter of IFRSs. While IFRSs have changed since the issue of that publication, nevertheless it may be
useful in assessing the extent of additional disclosures for a first-time adopter of IFRSs.
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Contents
Reference
IAS 1.44, 1.8
Page
11
13
17
165
I
II
III
IV
V
Appendices
Consolidated statement of changes in equity (full format)
Consolidated statement of cash flows (direct method)
Operating segments
Currently effective requirements
Forthcoming requirements
166
168
171
176
182
2006 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 1.69, 72
Additional line items, headings and subtotals should be presented on the face of the balance
sheet when such presentation is relevant to an understanding of the entitys financial
position. The judgement used should be based on an assessment of the nature and liquidity
of the assets, the function of assets within the entity as well as the amounts, nature and
timing of liabilities. Additional line items may include, e.g., other assets for the inclusion of
prepayments.
3.
IAS 1.51, 52
4.
IFRS 5.40
Comparatives are not restated to reflect classification as held for sale at the current reporting date.
In our view, non-current assets, assets of disposal groups and liabilities of disposal groups
classified as held for sale are classified as current in the balance sheet as they are expected
to be realised within 12 months of the date of classification as held for sale. Consequently
the presentation of a three column balance sheet with the headings of Assets / Liabilities
not for sale, Assets / Liabilities held for sale and Total generally would not be appropriate
if the assets and liabilities held for sale continue to be included in non-current line items. This
issue is discussed in our publication Insights into IFRS (5.4.110.30).
5.
IFRS 7.19
When a breach of a loan agreement occurred during the period, and the breach has not been
remedied or the terms of the loan payable have not been renegotiated by the reporting date,
the entity should determine the effect of the breach on the classification and disclosure of the
liability in accordance with Explanatory note 3 above.
IFRS 7.18
For loans payable recognised at the reporting date, an entity should disclose:
l
l
l
details of any defaults during the period of principal, interest, sinking fund, or redemption
terms of those loans payable
the carrying amount of the loans payable in default at the reporting date
whether the default was remedied, or that the terms of the loans payable were
renegotiated, before the financial statements were authorised for issue.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
As at 31 December
In thousands of euro
Assets
Property, plant and equipment
Intangible assets
Biological assets
Investment property
Investments in equity accounted investees
Other investments, including derivatives
Deferred tax assets
Total non-current assets3
IAS 1.68(a)
IAS 1.68(c)
IAS 1.68(f)
IAS 1.68(b)
IAS 1.68(e), 28.38
IAS 1.68(d)
IAS 1.68(n), 70
IAS 1.51
IAS 1.68(g)
IAS 1.68(f)
IAS 1.68(d)
IAS 1.68(m)
IAS 1.68(h)
IAS 1.68(i)
IFRS 5.38-40,
IAS 1.68A(a)
IAS 1.51
Inventories
Biological assets
Other investments, including derivatives
Current tax assets
Trade and other receivables
Prepayments for current assets
Cash and cash equivalents
Assets classified as held for sale4
Total current assets3
Total assets
Equity
Share capital
Share premium
Reserves
Retained earnings
Total equity attributable to equity holders of the Company
Minority interest
Total equity
IAS 1.68(l)
IAS 1.69
IAS 1.69, 20.24
IAS 1.68(k)
IAS 1.68(n), 70
IAS 1.51
IAS 1.69
IAS 1.68(l)
IAS 1.68(j)
IAS 1.69, 11.42(b)
IAS 1.68(k)
IFRS 5.38-40,
IAS 1.68A(b)
IAS 1.51
Liabilities
Loans and borrowings
Derivatives
Employee benefits
Deferred income
Provisions
Deferred tax liabilities
Total non-current liabilities3, 5
Bank overdraft
Loans and borrowings
Trade and other payables, including derivatives
Deferred income
Provisions
Liabilities classified as held for sale4
Total current liabilities3, 5
Total liabilities
Total equity and liabilities
Note
2007
16
17
18
19
20
21
22
26,686
5,832
7,014
2,070
2,025
3,631
138
47,396
31,049
4,661
8,716
1,050
1,558
3,525
1,376
51,935
23
18
21
25
8
14,867
245
662
81
13,647
330
1,835
14,410
14,119
140
1,032
228
17,999
1,200
1,850
-
46,077
93,473
36,568
88,503
14,955
4,812
1,104
19,394
40,265
14,550
3,500
449
14,006
32,505
1,132
842
26
41,397
33,347
28
20,942
20
2,347
1,462
910
2,602
28,283
19,206
5
2,110
1,500
400
1,567
24,788
25
28
33
24
32
8
334
4,390
13,759
140
760
4,410
282
4,386
24,370
130
1,200
-
23,793
52,076
93,473
30,368
55,156
88,503
24
29
31
32
22
2006
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 1.88
This analysis of expenses is based on functions within the entity. The analysis of expenses also
may be presented based on the nature of expenses. Individually material items are classified in
accordance with their nature or function, consistent with the classification of items that are not
individually material. This issue is discussed in our publication Insights into IFRS (4.1.30).
3.
IAS 32.41
When relevant in explaining its performance, an entity should present separately on the face
of the income statement any gain or loss arising from remeasurement of a financial liability
that includes a right to the residual interest in the assets of an entity in exchange for cash or
another financial asset (e.g., puttable instruments).
4.
IAS 28.38
An entity should present separately its share of any discontinued operations of its associates.
5.
IFRS 5.33(a)
An entity should present a single amount on the face of the income statement comprising
the post-tax profit or loss from discontinued operations and the post-tax gain or loss arising
from disposal or measurement to fair value less cost to sell.
IFRS 5.33(b)
An entity also should disclose revenue, expenses, and the pre-tax profit or loss from
discontinued operations; income tax on profit or loss from discontinued operations; gain or
loss on the disposal or measurement to fair value less cost to sell; and income tax on that
gain or loss. In this publication we have illustrated this analysis in the notes. An entity also
may present this analysis on the face of the income statement, in a section identified as
relating to discontinued operations. For example, a columnar format presenting the results
from continuing and discontinued operations in separate columns is acceptable.
IAS 33.2
An entity is required to present earnings per share if its ordinary shares or potential ordinary
shares are publicly traded, or if it is in the process of issuing ordinary shares or potential
ordinary shares in public securities markets.
IAS 33.69
Basic and diluted earnings per share are presented even if the amounts are negative (a loss
per share).
6.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
Continuing operations
Revenue
Cost of sales2
Gross profit
IAS 1.81(a)
IAS 1.88, 92, 2.36(d)
IAS 1.92
IAS 1.83
Other income
Distribution expenses2
Administrative expenses2
Research and development expenses2
Other expenses2
Results from operating activities
IAS 1.81(b)
Finance income
Finance expenses
Net finance expense3
IAS 1.88, 92
IAS 1.88, 92
IAS 1.88, 92, 38.126
IAS 1.88, 92
IAS 1.82(b)
IAS 1.82(a), 27.33
IAS 1.81(f)
IAS 33.66
IAS 33.66
IAS 33.66
IAS 33.66
Note
2007
2006
Restated*
10
99,810 96,636
(55,475) (56,186)
44,335 40,450
11
1,095
315
(17,984) (18,012)
(17,142) (15,269)
(1,109)
(697)
(460)
8,735
6,787
12
6
14
911
(1,760)
(849)
480
(1,676)
(1,196)
20
467
8,353
587
6,178
15
(2,528)
5,825
(1,800)
4,378
379
6,204
(422)
3,956
5,828
376
6,204
3,737
219
3,956
27
27
1.75
1.67
1.08
1.07
27
27
1.63
1.56
1.22
1.21
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
10
In these illustrative financial statements the above information is disclosed in the notes to the
consolidated financial statements (see note 26). A consolidated statement of changes in
equity is illustrated in Appendix I.
IAS 19.93B
If an entity elects to recognise actuarial gains and losses directly in equity, then it should present a
statement of recognised income and expense; it may not present a statement of changes in equity.
2.
IFRS 7.23(d)
An entity should disclose the change in the fair value of a cash flow hedge that was removed
from equity during the period and included in the initial cost or other carrying amount of a
non-financial asset or non-financial liability whose acquisition or incurrence was a hedged
highly probable forecast transaction.
3.
IAS 12.61
Generally income tax (current and deferred) should be recognised directly in equity if it relates to
items that are credited or charged directly to equity. There is no explicit requirement to disclose
this tax separately on the face of the statement rather than in the notes. In this publication
income tax related to items in the recognised income and expense is disclosed separately.
4.
IFRS 5.38
An entity should present separately any income or expense recognised directly in equity
relating to a non-current asset (or disposal group) classified as held for sale.
IAS 28.39
An entity should present separately its share of changes recognised directly in the equity
of an equity accounted investee. In our view, when a statement of changes in equity is
presented, it is preferable to present a separate line item for the entitys share of changes in
equity of equity accounted investees, with each change included in the appropriate column.
When a statement of recognised income and expense is presented, we recommend using a
separate line item for the entitys share of gains and losses from equity accounted investees.
This issue is discussed in our publication Insights into IFRS (3.5.720.20).
IAS 1.96(d)
An entity is required to disclose the effects of changes in accounting policies and corrections
of errors for each component of equity.
5.
This publication does not illustrate changes in accounting policies; however, in our view, if an
entity makes a change in accounting policy, then the effect of the change should be presented
in the statement of recognised income and expense as a current year item, the measurement
of which includes elements relating to both the comparative period profit or loss and to
opening retained earnings of the comparative period. While several different presentations
have been used in practice, we prefer the effect of a change in accounting policy or the
correction of an error to be presented in the statement of recognised income and expenses
as a current year item only. The impact of the change in accounting policies on retained
earnings at the beginning of the period is not included in the Total recognised income and
expense for the period, as the amount does not relate to the current period. These issues are
discussed in our publication Insights into IFRS (2.2.60.20 - .40).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
In thousands of euro
11
IAS 1.8(c)(ii), 96, 104 For the year ended 31 December
IAS 1.96(b)
IAS 1.96(b)
IFRS 7.23(d)
IAS 1.96(b),
Note
16
2007
2006
501
(3)
200
(93)
330
(8)
77
199
(11)
94
(64)
72
(15)
(104)
(48)
708
419
6,204
3,956
6,912
4,375
6,509
403
6,912
4,134
241
4,375
IFRS 7.20(a)(ii)
IFRS 7.20(a)(ii)
IAS 1.96(b)
IAS 19.93B
IAS 1.96(b)
IAS 1.96(a)
IAS 1.96(c)
IAS 1.96(c)
IAS 1.96(c)
Attributable to:
Equity holders of the Company
Minority interest
Total recognised income and expense for the period5
19
26
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
12
An entity should disclose investing and financing transactions that are excluded from the cash
flow statement because they do not require the use of cash or cash equivalents in a way that
provides all relevant information about these activities.
IAS 7.50(b),
(c)
2.
the aggregate amounts of the cash flows from each of operating, investing and financing
activities related to interests in joint ventures reported using proportionate consolidation
the aggregate amount of cash flows that represent increases in operating capacity
separately from those cash flows that are required to maintain operating capacity.
For an entity that elects to present operating cash flows using the indirect method, often
there is confusion about the correct starting point: should it be profit or loss (i.e., the final
figure in the income statement) or can a different figure, such as profit before income tax, be
used? The standard itself refers to the profit or loss, but the example provided in the appendix
to the standard starts with a different figure (i.e., profit before taxation). Our preference is
to follow the standard since the appendix is illustrative only and therefore does not have the
same status. This issue is discussed in our publication Insights into IFRS (2.3.30.20).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
For the year ended 31 December
In thousands of euro
Note
2007
2006
6,204
3,956
Interest paid
Income tax paid
Net cash from operating activities
4,910
780
(393)
(100)
116
25
(650)
(11)
(120)
849
(467)
(26)
(516)
755
2,503
13,859
(686)
127
(2,733)
870
(4,837)
299
(38)
6,861
(1,367)
(400)
5,094
5,102
795
1,123
285
(50)
(15)
(100)
1,196
(587)
(100)
250
1,756
13,611
2,715
63
(1,318)
(1,210)
(2,450)
320
11,731
(1,509)
(1,400)
8,822
200
380
1,177
987
10,890
(2,125)
(200)
(16,051)
(200)
(305)
(320)
(1,272)
(6,839)
155
330
481
849
11
(2,408)
(437)
(2,411)
(515)
(3,945)
IAS 7.31
IAS 7.35
IAS 7.10
IAS 7.31
IAS 7.31
IAS 7.16(a)
IAS 7.21
IAS 7.16(h)
IAS 7.39
IAS 7.39
IAS 7.16(c)
IAS 7.16(a)
IAS 7.16(a)
IAS 7.21
IAS 7.16(a)
IAS 7.21
IAS 7.10
13
17
16
17
17
8
18
18
19
14
11
7
30
15
18
29, 32
7
9
9
16
19
17
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
14
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
In thousands of euro
IAS 7.17(a)
IAS 7.17(c)
IAS 7.17(c)
IAS 7.21
IAS 7.21
IAS 7.21
IAS 7.17(b)
IAS 7.17(d)
IAS 7.17(e)
IAS 7.31
IAS 7.10
IAS 7.28
Note
2007
26
28
28
26
26
28
26
28
28
26
25
15
2006
1,550
5,000
2,000
30
50
(311)
(5,117)
(269)
(1,243)
1,690
(280)
(4,492)
(214)
(524)
(5,510)
(55)
1,568
(12)
1,501
(633)
2,226
(25)
1,568
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
16
IAS 1.11
The notes to the financial statements should include narrative descriptions or break-downs of
amounts disclosed on the face of the primary statements. They also include information about
items that do not qualify for recognition in the financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
17
Page
1.
Reporting entity
19
101
2.
Basis of preparation
19
103
3.
21
23. Inventories
109
4.
53
109
5.
57
111
6.
Segment reporting
65
113
7.
Discontinued operation
71
117
8.
73
121
9.
125
129
133
32. Provisions
135
137
139
155
157
37. Contingencies
157
159
163
163
10. Revenue
73
77
77
77
77
79
81
85
89
95
97
99
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
18
IAS 1.49
When the entitys reporting date changes and annual financial statements are presented for
a period longer or shorter than one year, an entity should disclose the reason for the change
and the fact that comparative amounts presented are not entirely comparable.
In this and other cases an entity may wish to present pro forma information that is not
required by IFRSs, for example pro forma comparative financial statements prepared as if
the change in reporting date were effective for all periods presented. The presentation of pro
forma information is discussed in our publication Insights into IFRS (2.1.80).
2.
IAS 10.17
In these illustrative financial statements we have assumed that the Group did not early adopt
any standards that are not mandatory for annual periods beginning on 1 January 2007. If an
entity does early adopt any such standards, then that fact should be disclosed.
3.
4.
An entity should disclose the date when the financial report is authorised for issue and who
gave that authorisation.
5.
IAS 10.17
If the entitys owners or others have the power to amend the financial statements after their
issue, then an entity should disclose that fact.
6.
IAS 1.23,
An entity should disclose any material uncertainties related to events or conditions that may
cast significant doubt upon the entitys ability to continue as a going concern, whether they
arise during the period or after the reporting date.
10.16(b)
7.
IAS 21.53
If the consolidated financial statements are presented in a currency different from the parent
entitys functional currency, then an entity should disclose that fact, its functional currency,
and the reason for using a different presentation currency.
IAS 29.39
IAS 21.54
the fact that the financial statements have been restated for changes in the general
purchasing power of the functional currency and as a result are stated in terms of the
measuring unit current at the reporting date
whether the financial statements are based on a historical cost approach or a current
cost approach
the identity and level of the price index at the reporting date and the movement in the
index during the current and the previous reporting period.
If there is a change in the functional currency of either the entity or a significant foreign
operation, then the entity should disclose that fact together with the reason for the change.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 1.8(e)
1.
IAS 1.126(a), (b)
IAS 1.46(a)-(c)
IAS 1.103(a)
IAS 1.14
IAS 10.17
IAS 1.108(a)
19
2. Basis of preparation2
(a) Statement of compliance3
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs).4
The financial statements were approved by the Board of Directors on [date].5
(b) Basis of measurement6
The consolidated financial statements have been prepared on the historical cost basis except
for the following:
The methods used to measure fair values are discussed further in note 4.
IAS 1.46(d), (e)
20
2.
3.
IAS 8.49
If any prior period errors are corrected in the current years financial statements, then an
entity should disclose the nature of the prior period error; to the extent practicable, the
amount of the correction for each financial statement line item affected, and basic and
diluted earnings per share for each prior period presented; the amount of the correction
at the beginning of the earliest prior period presented; and if retrospective restatement is
impracticable for a particular prior period, then the circumstances that led to the existence of
that condition and a description of how and from when the error has been corrected.
4.
IAS 27.40(e)
If the reporting date or reporting period of the financial statements of a subsidiary used to
prepare consolidated financial statements is different from that of the parent, then an entity
should disclose that reporting date or period and the reason for using it.
5.
The accounting for common control transactions in the absence of specific guidance in IFRSs
is discussed in our publication Insights into IFRS (2.6.670). This publication illustrates one
possible accounting policy choice.
6.
In our view, it would be misleading for the investors accounting policy notes to include
additional notes in respect of the accounting policies of equity accounted investees.
If disclosure of the accounting policies of an investee is considered necessary for an
understanding of income from, or the carrying amount of, equity accounted investees,
then in our view this information should be included in the accounting policy note regarding
investments in equity accounted investees. This issue is discussed in our publication Insights
into IFRS (3.5.760).
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Reference
IAS 1.103(a),
108(a)
IAS 1.38
21
IAS 31.57
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22
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23
24
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25
IFRS 7.21
Non-derivative financial instruments are recognised initially at fair value plus, for instruments
not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to
initial recognition non-derivative financial instruments are measured as described below.
IAS 7.46
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are
repayable on demand and form an integral part of the Groups cash management are included
as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Accounting for finance income and expense is discussed in note 3(r).
IFRS 7.21
Held-to-maturity investments
If the Group has the positive intent and ability to hold debt securities to maturity, then they are
classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost
using the effective interest method, less any impairment losses.
IFRS 7.21
IFRS 7.21
IFRS 7.21
Other
Other non-derivative financial instruments are measured at amortised cost using the effective
interest method, less any impairment losses.
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26
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Reference
27
IAS 32.35
Interest, dividends, losses and gains relating to the financial liability are recognised in profit or
loss. Distributions to the equity holders are recognised against equity, net of any tax benefit.
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28
Issues related to the classification of preference share capital as debt or equity are
discussed in our publication Insights into IFRS (3.11.170). The disclosures illustrated here are
not intended to be a complete description of accounting policies that may be applicable to
preference share capital.
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Reference
IFRS 7.21
29
IAS 16.73(a)
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30
IFRS 6.24
An entity should disclose its accounting policies related to the exploration for and evaluation
of mineral resources, and the amounts of assets and liabilities, income and expense, and
operating and investing cash flows arising from these activities.
IFRS 6.25
An entity also should provide all of the disclosures required by IAS 16 Property, Plant and
Equipment with respect to tangible exploration and evaluation assets, and all of the
disclosures required by IAS 38 Intangible Assets with respect to intangible exploration and
evaluation assets.
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31
(iv) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term. Land is not depreciated.
IAS 16.73(b)
IAS 16.73(c)
The estimated useful lives for the current and comparative periods are as follows:
buildings
plant and equipment
fixtures and fittings
major components
40 years
5-12 years
5-10 years
3-5 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Estimates in respect of certain items of plant and equipment were revised in 2007 (see note 16).
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1.
2.
IAS 41.54(a),
(b)
If biological assets are measured at cost less any accumulated depreciation and accumulated
impairment losses because their fair value cannot be estimated reliably, then an entity should
disclose a description of such biological assets and an explanation of why their fair value
cannot be measured reliably.
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Reference
33
IAS 38.118(a),
(v) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill, from the date that they are available for use. The
estimated useful lives for the current and comparative periods are as follows:
(b)
10-20 years
5-7 years.
34
IAS 40.75(c)
If the classification of property is difficult, then an entity should disclose the criteria developed
to distinguish investment property from owner-occupied property and from property held for
sale in the ordinary course of business.
2.
IAS 40.56,
If an entity accounts for investment property using the cost model, then it should disclose
the depreciation method and the useful lives or the depreciation rates used, as well as the fair
value of such investment property.
3.
SIC 27.10(b)
An entity should disclose the accounting treatment applied to any fee received in an
arrangement in the legal form of a lease to which lease accounting is not applied because the
arrangement does not, in substance, involve a lease.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 40.75(a)
35
IAS 40.75(b)
IAS 2.36(a)
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36
IFRS 7.B5(f)
An entity should disclose the measurement basis (or bases) used in preparing the financial
statements and the other accounting policies used that are relevant to an understanding of
the financial statements. For financial instruments, such disclosure may include: the criteria
the entity uses to determine that there is objective evidence that an impairment loss has
occurred.
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Reference
IFRS 7.B5(f)
37
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38
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Reference
39
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40
IAS 19.93B
If an entity elects to recognise actuarial gains and losses directly in equity, then it should present
a statement of recognised income and expense; it may not present a statement of changes in
equity.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 19.120A(a)
41
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42
Site restoration provisions is a complex issue that involves analysing specific facts and
circumstances. The site restoration provision is required to be recognised as either an
expense in profit or loss or to be treated as part of the cost of the related asset, depending
on the circumstances. Site restoration provisions are discussed in our publication Insights into
IFRS (3.12.420).
2.
Revenue recognition can be complex and appropriate disclosures will depend on the
circumstances of the individual entity. Revenue recognition issues, such as combining and
segmenting construction contracts, software revenue recognition, real estate sales and barter
transactions, are discussed in our publication Insights into IFRS (4.2).
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43
(i) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The
provision is based on historical warranty data and a weighting of all possible outcomes against
their associated probabilities.
(ii) Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal
restructuring plan, and the restructuring either has commenced or has been announced
publicly. Future operating costs are not provided for.
(o) Revenue2
(i) Goods sold
Revenue from the sale of goods is measured at the fair value of the consideration received or
receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when
the significant risks and rewards of ownership have been transferred to the buyer, recovery
of the consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and the
amount of revenue can be measured reliably.
IAS 18.35(a)
Transfers of risks and rewards vary depending on the individual terms of the contract of sale.
For sales of timber and paper products, transfer usually occurs when the product is received
at the customers warehouse; however, for some international shipments transfer occurs upon
loading the goods onto the relevant carrier. For sales of livestock transfer occurs upon receipt
by the customer.
(ii) Services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of
completion of the transaction at the reporting date. The stage of completion is assessed by
reference to surveys of work performed.
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44
2.
IAS 20.24
An entity also may present government grants related to assets as a deduction in arriving at
the carrying amount of the asset.
IFRSs do not contain specific guidance on how to account for rent that was considered
contingent at inception of the lease but is confirmed subsequently. The treatment of
contingent rent is discussed in our publication Insights into IFRS (5.1.390.30).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 11.39
45
(iv) Commissions
When the Group acts in the capacity of an agent rather than as the principal in a transaction,
the revenue recognised is the net amount of commission made by the Group.
IAS 20.39
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46
IAS 23.29
If an entity elects to apply the alternative treatment allowed by IAS 23 Borrowing Costs and
capitalises the borrowing costs, it shall disclose:
l
l
l
2.
IAS 1.35
In accordance with IAS 1.35 gains and losses arising from a group of similar transactions are
reported on a net basis, for example, foreign exchange gains and losses or gains and losses
arising on financial instruments held for trading.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.20, 24
47
IAS 1.35
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48
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49
IAS 14.75
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IAS 8.28, 29
These illustrative financial statements do not illustrate changes in accounting policy. For
voluntary changes in accounting policies that have an effect on current, prior or future periods,
an entity should disclose, in addition to the nature and financial impact of the change, the
reasons why the new accounting policy results in reliable and more relevant information. A
change in accounting policy also may arise from the adoption of a new or revised standard
or interpretation. In this case the specific transitional requirements of that standard or
interpretation should be followed, as they take precedence over the general requirements for
changes in accounting policies.
IAS 8.29
2.
An example of the segment disclosure in accordance with IFRS 8 is included in Appendix III.
3.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 8.30, 31
51
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52
IAS 40.75(e)
An entity is encouraged, but not required, to determine fair value by reference to a valuation by
an independent valuer who holds a recognised and relevant professional qualification and who
has recent experience in the location and category of the investment property being valued. An
entity should disclose the extent to which the fair value is based on a valuation by an appropriate
independent valuer. If there has been no such valuation, that fact should be disclosed.
IAS 40.77
When a valuation obtained for investment property is adjusted significantly for the purpose
of the financial statements, an entity should disclose a reconciliation between the valuation
obtained and the adjusted valuation included in the financial statements, showing separately
the aggregate amount of any recognised lease obligations that have been added back and any
other significant adjustments.
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Reference
53
IAS 1.116
IAS 1.116
IAS 41.47
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54
IFRS 7.27
the methods and significant assumptions applied in determining the fair values of financial
assets and financial liabilities, separately for each significant class
whether the fair values of financial assets and financial liabilities are determined directly,
in full or in part, by reference to published price quotations in an active market, or are
estimated using a valuation technique
whether the financial statements include financial instruments measured at fair values that
are determined, in full or in part, using a valuation technique based on assumptions that
are not supported by observable market prices or rates. If changing such an assumption
to a reasonably possible alternative would result in a significantly different fair value, then
the entity should state this fact and disclose the effect on the fair value of a range of
reasonably possible alternative assumptions
the total amount of the change in fair value estimated using a valuation technique that was
recognised in profit or loss during the period.
2.
IFRS 7.29(a)
For financial instruments such as short-term trade receivables and payables, no disclosure of
fair value is required when the carrying amount is a reasonable approximation of fair value.
3.
IFRS 2.47(b)
An entity also should disclose how it determined the fair value of equity instruments granted,
other than share options granted in transactions in which fair value of goods and services
received was determined based on fair value of the equity instruments granted. Such
disclosure should include:
IFRS 2.47(c)
if fair value was not measured on the basis of an observable market price, how it was
determined
whether and how expected dividends were incorporated into the measurement of fair value
whether and how any other features of the equity instruments granted were incorporated
into the measurement of fair value.
An entity should disclose how it determined the incremental fair value of any share-based
payment arrangements that were modified during the period.
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Reference
IAS 1.116
55
IFRS 7.27
IFRS 7.27
IFRS 7.27
(viii) Derivatives1
The fair value of forward exchange contracts is based on their listed market price, if available. If
a listed market price is not available, then fair value is estimated by discounting the difference
between the contractual forward price and the current forward price for the residual maturity
of the contract using a risk-free interest rate (based on government bonds).
The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for
reasonableness by discounting estimated future cash flows based on the terms and maturity
of each contract and using market interest rates for a similar instrument at the measurement
date.
IFRS 7.27
IFRS 2.46,
47(a)(i)-(iii)
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IFRS 7.31, 32
An entity is required to disclose information that enables users of its financial statements to
evaluate the nature and extent of risks arising from financial instruments to which the entity is
exposed at the reporting date. Those risks typically include, but are not limited to, credit risk,
liquidity risk and market risk.
IFRS 7.33
2.
3.
IAS 1.124A
An entity should disclose information that enables users of its financial statements to
evaluate the entitys objectives, policies and processes for managing capital.
IFRS 7.3, 5
The disclosure requirements of IFRS 7 are limited to financial instruments that fall within the
scope of that standard; therefore operational risks that do not arise from the entitys financial
instruments are excluded from the requirements, as are commodity contracts that meet the
own use exemption detailed in paragraphs 5-7 of IAS 39 Financial Instruments: Recognition
and Measurement.
In these illustrative financial statements the qualitative disclosures in respect of financial
instruments have been separated from the related quantitative disclosures. Alternatively, all
financial instrument disclosures could be grouped together in the financial statements.
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Reference
IFRS 7.31
57
credit risk
liquidity risk
market risk.
This note presents information about the Groups exposure to each of the above risks, the
Groups objectives, policies and processes for measuring and managing risk, and the Groups
management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.3
IFRS 7.33
The Board of Directors has overall responsibility for the establishment and oversight of the
Groups risk management framework. The Board has established the Risk Management
Committee, which is responsible for developing and monitoring the Groups risk management
policies. The committee reports regularly to the Board of Directors on its activities.
The Groups risk management policies are established to identify and analyse the risks faced
by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence
to limits. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Groups activities. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Groups
risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its
oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Groups
receivables from customers and investment securities.
IFRS 7.33
IFRS 7.34(c)
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IFRS 7.IG30,
31
The IFRS 7 implementation guidance provides guidance on the entitys description of how it
manages the liquidity risk inherent in the maturity analysis of financial liabilities. In particular, it
lists factors that an entity might consider when providing this disclosure.
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59
IFRS 7.36(b)
The Group establishes an allowance for impairment that represents its estimate of incurred
losses in respect of trade and other receivables and investments. The main components of this
allowance are a specific loss component that relates to individually significant exposures, and
a collective loss component established for groups of similar assets in respect of losses that
have been incurred but not yet identified. The collective loss allowance is determined based on
historical data of payment statistics for similar financial assets.
Investments
The Group limits its exposure to credit risk by only investing in liquid securities and only with
counterparties that have a credit rating of at least A1 from Standard & Poors and A from
Moodys. Given these high credit ratings, management does not expect any counterparty to fail
to meet its obligations.
Guarantees
The Groups policy is to provide financial guarantees only to wholly-owned subsidiaries. At
31 December 2007 no guarantees were outstanding (2006: none).
IFRS 7.33
Liquidity risk1
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they
fall due. The Groups approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Groups reputation.
IFRS 7.39(b)
The Group uses activity-based costing to cost its products and services, which assists it in
monitoring cash flow requirements and optimising its cash return on investments. Typically
the Group ensures that it has sufficient cash on demand to meet expected operational
expenses for a period of 60 days, including the servicing of financial obligations; this excludes
the potential impact of extreme circumstances that cannot reasonably be predicted, such as
natural disasters. In addition, the Group maintains the following lines of credit:
IAS 7.50(a)
e5 million overdraft facility that is unsecured. Interest would be payable at the rate of
EURIBOR plus 150 basis points.
e10 million that can be drawn down to meet short-term financing needs. The facility has
a 30-day maturity that renews automatically at the option of the Group. Interest would be
payable at a rate of EURIBOR plus 100 basis points.
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2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.33
61
Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are
denominated in a currency other than the respective functional currencies of Group entities,
primarily the euro (e), but also U.S. Dollars (USD) and Sterling (GBP). The currencies in which
these transactions primarily are denominated are euro, USD, GBP and Swiss Francs (CHF).
IFRS 7.22
At any point in time the Group hedges 75 to 85 percent of its estimated foreign currency
exposure in respect of forecast sales and purchases over the following six months. The Group
also hedges at least 80 percent of all trade receivables and trade payables denominated in
a foreign currency. The Group uses forward exchange contracts to hedge its currency risk,
most with a maturity of less than one year from the reporting date. When necessary, forward
exchange contracts are rolled over at maturity.
IFRS 7.22
The principal amounts of the Groups GBP and USD bank loans, taken out by euro functional
currency Group entities, have been fully hedged using forward contracts that mature on the
same dates that the loans are due for repayment.
Interest on borrowings is denominated in currencies that match the cash flows generated by
the underlying operations of the Group, primarily euro, but also GBP and USD. This provides an
economic hedge and no derivatives are entered into.
In respect of other monetary assets and liabilities denominated in foreign currencies, the
Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign
currencies at spot rates when necessary to address short-term imbalances.
The Groups investment in its Swiss subsidiary is hedged by a CHF-denominated secured bank
loan, which mitigates the currency risk arising from the subsidiarys net assets. The Groups
investments in other subsidiaries are not hedged as those currency positions are considered to
be long-term in nature.
IFRS 7.22
IFRS 7.22
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IAS 1.124B
IAS 1.124B
When applicable, an entity should describe changes in quantitative and qualitative data about
its objectives, policies and processes for managing capital as compared to the prior period, a
statement of whether it has complied with externally imposed capital requirements and any
instances of non-compliance therewith.
(c)-(e)
IAS 1.124C
When an aggregate disclosure of capital requirements and how capital is managed would not
provide useful information or distorts a financial statement users understanding of an entitys
capital resources, the entity should disclose separate information for each capital requirement
to which the entity is subject.
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63
IFRS 7.B5(a)(iii)
The primary goal of the Groups investment strategy is to maximise investment returns in order
to meet partially the Groups unfunded defined benefit obligations; management is assisted
by external advisors in this regard. In accordance with this strategy certain investments are
designated at fair value through profit or loss because their performance is actively monitored
and they are managed on a fair value basis.
The Group does not enter into commodity contracts other than to meet the Groups expected
usage and sale requirements; such contracts are not settled net.
IAS 1.124A
IAS 1.124B(a), (b)
Capital management1
The Boards policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. The Board of Directors
monitors the return on capital, which the Group defines as net operating income divided by
total shareholders equity, excluding non-redeemable preference shares and minority interests.
The Board of Directors also monitors the level of dividends to ordinary shareholders.
IAS 1.124B(a)
The Boards target is for employees of the Group to hold five percent of the Companys
ordinary shares by 2011. At present employees hold one percent of ordinary shares, or
just under three percent assuming that all outstanding share options vest and / or are
exercised. Currently management is discussing alternatives for extending the Groups share
option programme beyond key management and other senior employees; at present other
employees are awarded share appreciation rights. The Group is in discussions with employee
representatives, but no decisions have been made.
IAS 1.124B(a)
The Board seeks to maintain a balance between the higher returns that might be possible
with higher levels of borrowings and the advantages and security afforded by a sound capital
position. The Groups target is to achieve a return on capital of between 12 and 16 percent; in
2007 the return was 15.4 percent (2006: 15.3 percent). In comparison the weighted average
interest expense on interest-bearing borrowings (excluding liabilities with imputed interest)
was 5.7 percent (2006: 5.4 percent).
IAS 1.124B(a)
From time to time the Group purchases its own shares on the market; the timing of these
purchases depends on market prices. Primarily the shares are intended to be used for issuing
shares under the Groups share option programme. Buy and sell decisions are made on a
specific transaction basis by the Risk Management Committee; the Group does not have a
defined share buy-back plan.
IAS 1.124B(c)
There were no changes in the Groups approach to capital management during the year.
IAS 1.124B(a)
Neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements.
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64
2.
IAS 14.3, 5
An entity is required to present segment information if its securities are publicly traded, or
if it is in the process of issuing equity or debt securities in public securities markets. Other
entities may choose to present segment information, but should comply fully with IAS 14
Segment Reporting if they do so.
An example of the segment disclosure in accordance with IFRS 8 is included in Appendix III.
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Reference
IAS 14.81
6. Segment reporting1, 2
Business segments
The Group comprises the following main business segments:
IAS 41.46(a)
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 2007 (see note 7).
Other operations include the cultivation and sale of farm animals (sheep and cattle), the
construction of storage units and warehouses, and the manufacture of furniture and related parts.
IAS 41.46(a)
65
Geographical segments
The paper and forestry segments are managed on a worldwide basis, but operate in two
principal geographical areas, Europe and America. In Europe manufacturing facilities and sales
offices are operated in France, the Netherlands and Germany.
In presenting information on the basis of geographical segments, segment revenue is based
on the geographical location of customers. Segment assets are based on the geographical
location of the assets.
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IAS 14.76
Changes in the accounting policies adopted for segment reporting that have a material effect
on segment information should be disclosed, and comparative segment information should
be restated unless it is impracticable to do so. The disclosure should include:
IAS 14.76
IAS 14.52
An entity should disclose segment result for each reportable segment, presenting the result
from continuing operations separately from the result from discontinued operations.
IAS 14.52A
3.
IAS 14.74
4.
IAS 14.59, 60
An entity is encouraged, but not required, to disclose the nature and amount of any items of
segment revenue or expense that are of such size, nature, or incidence that their disclosure is
relevant to an understanding of the performance of each reportable segment for the period.
5.
IAS 14.53
If an entity can compute segment profit or loss or some other measure of segment
profitability other than segment result without arbitrary allocations, then an entity is
encouraged to report and describe such amount(s) in addition to the segment result. If that
measure is prepared on a basis other than the accounting policies adopted for the financial
statements, then the entity should disclose a clear description of the basis of measurement.
6.
IAS 14.67
2.
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IAS 14.67
IAS 14.64
Segment result4, 5
IAS 14.52, 67
7,067
4,526
4,599
6,631
accounted investees
9,274
587
6,640
2,612
2,591
1,317
2006
2006
2,835
(162)
(466)
8,483 26,028
940
7,543 23,193
2007
430
2,605
891
1,714
2007
256
1,618
765
853
2006
2007
2006
7,846
- 107,353 119,829
2006
(7,549) (9,516)
2007
Eliminations
587
6,204
516
3,956
(2,503) (1,756)
467
(849) (1,196)
6,321
2006
2007
2006
Continuing
Operations2
(379)
(516)
(25)
162
162
8,312
6,787
467
587
(849) (1,196)
8,735
(1,886) (1,525)
422
5,825
4,378
466
466 10,621
2007
Less
Packaging
Consolidated (Discontinued)2
8,573
IAS 14.51, 67
1,192
91,029 89,152
2007
Other
operations
Inter-segment revenue
2006
Packaging
(Discontinued)
(1,886) (1,525)
External revenues3, 4
2007
Forestry
Unallocated expenses
In thousands of euro
Paper
IAS 14.50
Reference
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
67
68
IAS 7.50(d),
14.63
2.
IAS 14.70
An entity is encouraged, but not required, to disclose cash flows from operating, investing and
financing activities for each reported business and geographical segment. If this information is
disclosed, then an entity is not required to disclose depreciation and amortisation expenses.
If an entitys primary format for reporting segment information is geographical segments
(whether based on location of assets or location of customers), then the following should
be disclosed for each business segment whose revenue from sales to external customers is
10 percent or more of the entitys total revenue from sales to external customers or whose
segment assets are 10 percent or more of the total assets of the entity:
IAS 14.71
IAS 14.72
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
15,037
IAS 14.69(a)
Capital expenditure
2007
IAS 14.69(c)
2006
1,580
82,770
49,852
2006
1,408
1,555
2,901
670
17,930
41,765
1,558
Europe
(493)
IAS 14.69(b)
18,065
2,950
675
16,824
52,461
2,025
2007
68,350
53,030
In thousands of euro
Paper
IAS 14.69
14.61, 63
IAS 36.129(b),
14.61, 63
IAS 36.129(a),
IAS 14.58, 63
IAS 14.58, 63
Capital expenditure
Depreciation1
Amortisation of intangible assets1
Impairment losses on intangible assets
and property, plant and equipment
Impairment losses reversed on intangible
assets and property, plant and equipment
Geographical segments2
IAS 14.57
IAS 14.67
Segment liabilities
Unallocated liabilities
Total liabilities
IAS 14.67
IAS 14.66
IAS 14.56
Segment assets
Investment in equity accounted investees
Unallocated assets
Total assets
In thousands of euro
IAS 14.55
Reference
3,750
36,982
30,828
2007
2006
983
35,267
28,268
2006
1,091
772
125
8,553
20,606
-
America
116
903
1,197
105
7,005
25,567
-
2007
Forestry
741
2,021
1,548
2007
360
1,792
1,184
2006
127
1,250
-
2,959
13,250
-
2006
Other regions
623
-
2007
Packaging
(Discontinued)
2007
2007
2006
1,408
2,923
5,122
795
29,896
25,260
55,156
79,304
1,558
7,641
88,503
2006
Consolidated
(493)
116
19,528
5,001
780
24,066
28,010
52,076
85,406
2,025
6,042
93,473
2007
Consolidated
19,528
2,923
- 107,353 119,829
- 85,406 79,304
2006
150
199
-
454
3,683
-
2006
Unallocated
560
231
-
237
7,378
-
2007
Other
operations
70
IFRS 5.35
The nature and amount of any adjustments relating to the disposal of discontinued operations
in prior periods are classified and disclosed separately.
2.
IFRS 5.33(b)
This information is not required to be presented for a newly acquired subsidiary that is
classified as held for sale on acquisition.
3.
IAS 33.9, 68
Basic and diluted earnings per share for discontinued operations may be shown either on the
face of the income statement or in the notes.
4.
IFRS 5.33(c)
The net cash flow attributable to the operating, investing and financing activities of
discontinued operations may instead be disclosed on the face of the cash flow statement.
IFRS 5.33(c)
This information need not be presented for a newly acquired subsidiary that is classified as
held for sale on acquisition.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
7.
IFRS 5.41(a), (b),
(d)
Discontinued operation1
In May 2007 the Group sold its entire Packaging segment; the segment was not a discontinued
operation or classified as held for sale as at 31 December 2006 and the comparative income
statement has been re-presented to show the discontinued operation separately from
continuing operations. Management committed to a plan to sell this division early in 2007 due
to the strategic decision to place greater focus on the Groups key competencies, being the
manufacture of paper used in the printing industry and forestry.
In thousands of euro
IAS 1.87(e)
71
IFRS 5.33(b)(i)
IFRS 5.33(b)(i)
IFRS 5.33(b)(i)
IAS 12.81(h)(ii),
IFRS 5.33(b)(ii)
IFRS 5.33(b)(iii)
IAS 12.81(h)(i),
Note
2007
2006
7,543
23,193
(7,705) (23,659)
(162)
(466)
25
44
(137)
(422)
846
(330)
-
IFRS 5.33(b)(iv)
IAS 33.68
IAS 33.68
IFRS 5.33(c), 34
IAS 7.40(d)
379
(422)
27
27
0.12
0.11
(0.14)
(0.14)
(225)
10,890
10,665
(910)
852
(58)
IAS 7.40(c)
Inventories
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Note
22
2007
(7,986)
(134)
(3,955)
(110)
110
1,921
(10,154)
(11,000)
110
(10,890)
72
IFRS 3.67(e)
An entity should disclose details of any operations that are to be disposed of as a result of a
business combination.
2.
IFRS 5.42
If there are changes to a plan of sale and an asset or a disposal group no longer is classified
as held for sale, then the entity should disclose, in the period of change, a description of the
facts and circumstances leading to the decision and the effect of the decision on the results
of operations for the period and any prior periods presented.
3.
IFRS 5.38,
The major classes of assets and liabilities classified as held for sale may be disclosed on the
face of the balance sheet. This disclosure is not required if the disposal group is a newly
acquired subsidiary that meets the criteria to be classified as held for sale on acquisition.
39
IFRS 3.62
If the initial accounting for an acquisition was based on provisional estimates of fair values of
assets, liabilities, contingent liabilities or the cost of the combination and those provisional
values are adjusted within 12 months of the acquisition date, then comparative information
should be restated, including recognition of any additional depreciation, amortisation or other
profit or loss effect resulting from finalising the provisional values.
IFRS 3.73
An entity should disclose and explain any gain or loss recognised in the current period that
relates to the identifiable assets acquired or liabilities or contingent liabilities assumed in a
business combination that was effected in the current or a previous period and is of such size,
nature or incidence that disclosure is relevant to an understanding of the combined entitys
financial performance. An entity also should disclose and explain adjustments to provisional
estimates in respect of acquisitions in the prior period.
5.
IFRS 3.77
6.
IFRS 3.67(d)
When equity instruments are issued or issuable as part of the cost of the business
combination, the entity also should disclose the number of equity instruments issued or
issuable, the fair value of those instruments, the basis for determining that fair value and, if
a published price does not exist for the instruments at the date of exchange, the significant
assumptions used to determine fair value. If a published price exists at the date of exchange
but was not used as the basis for determining the cost of the combination, that fact should
be disclosed together with: the reasons the published price was not used; the method and
significant assumptions used to attribute a value to the equity instruments; and the aggregate
amount of the difference between the value attributed to, and the published price of, the
equity instruments.
IFRS 3.67(i),
If disclosure of the acquirees profit or loss since the acquisition date, or the pro forma
revenue and profit or loss of the combined entity as if acquisition had occurred at the
beginning of the period, is impracticable, then the entity should disclose that fact together
with an explanation of why this is the case.
4.
7.
70
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 5.41
(a), (b), (d)
IFRS 5.41(c)
IFRS 5.38
IFRS 5.38
In thousands of euro
IFRS 3.66(a),
67(a)-(d),
67(i), 70
73
Note
2007
16
8,164
2,750
3,496
14,410
Note
2007
22
4,270
140
4,410
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
74
IFRS 3.67(f)
If the disclosure of the amounts recognised at the acquisition dates for each class of the
acquirees assets, liabilities and contingent liabilities is impracticable, then an entity should
disclose that fact together with an explanation of why this is the case.
IFRS 3.69
If the fair values of assets and liabilities acquired or the purchase consideration can be
determined only on a provisional basis at the reporting date, then an entity should disclose
that fact and state the reasons.
IFRS 3.47
If the fair value of a contingent liability acquired as part of a business combination cannot be
measured reliably and therefore is not recognised separately by the acquiree as part of allocating
the cost of a business combination, then the entity should disclose information about that
contingent liability as required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
IFRS 3.67(g)
An entity should disclose the amount of any negative goodwill (i.e., excess of the net fair
value of the identifiable assets, liabilities and contingent liabilities acquired over the cost of
the acquisition) recognised in profit or loss, and the line item in the income statement in
which it is recognised.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 7.40(d)
75
IFRS 3.67(f)
In thousands of euro
IFRS 3.67(d),
Note
Pre-
acquisition
Recognised
carrying
Fair value
values on
amounts adjustments acquisition
16
17
22
32
1,845
125
365
404
375
(530)
(2)
(410)
2,172
17
110
125
10
30
(77)
(20)
178
1,955
250
375
404
375
(500)
(79)
(20)
(410)
2,350
150
2,500
Cash acquired
IAS 7.40(c)
(375)
2,125
IFRS 3.67(d)
IAS 1.116
IFRS 3.67(h)
The goodwill recognised on the acquisition is attributable mainly to the skills and technical
talent of the acquired businesss work force, and the synergies expected to be achieved from
integrating the company into the Groups existing paper business (see note 17).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
76
IAS 18.35(c)
An entity should disclose the amount of revenue arising from exchanges of goods or services
included in each significant category of revenue.
SIC 29.6
If an entity is a concession operator, then it should disclose a description and the significant
terms of the arrangement, changes in the arrangement during the period, and the nature
and extent of rights and obligations assumed, including rights to use specified assets,
obligations to provide services, obligations to acquire or build items of property, plant and
equipment, obligations to deliver specified assets at the end of the concession period, and
renewal and termination options.
2.
Issues related to identifying and accounting for agency relationships are discussed in our
publication Insights into IFRS (4.2.30).
3.
In our view, whether changes in the fair value of biological assets should be presented as a
separate line item on the face of the income statement or as part of other income depends
on the relative significance of agricultural activities. This issue is discussed in our publication
Insights into IFRS (3.9.110).
4.
In our view, the income statement presentation of a government grant related to assets
should be consistent with its balance sheet presentation. If the grant is deducted from the
cost of the related asset, then depreciation is based on the net carrying amount of the asset.
If the grant is recognised as deferred income, then the grant is recognised as income and
depreciation of the asset is shown separately. An entity may offset a grant relating to income
against the related expenditure, or include it in other income. In our view gross presentation
is preferable. These issues are discussed in our publication Insights into IFRS (4.3.130).
5.
IAS 1.85, 86
An entity shall not present any items of income and expense as extraordinary items, either
on the face of the income statement or in the notes. This issue is discussed in our publication
Insights into IFRS (4.1.86).
6.
IAS 1.93
An entity classifying expenses by function should disclose employee benefits expense. The
level of disclosure presented in these illustrative financial statements is optional.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
77
Continuing
operation
operations
(see note 7)
In thousands of euro
Discontinued
2007
2006
2007
84,770
13,120
451
810
659
99,810
80,690
14,786
307
212
641
96,636
7,543
7,543
2006
Consolidated
2007
2006
IAS 18.35(b)(i)
IAS 18.35(b)(ii)
IAS 18.35(b)(iv)
IAS 40.75(f)(i)
IAS 11.39(a)
IAS 1.113
Sales
Services
Commissions
Investment property rentals
Construction contract revenue
Total revenues
Commission relates to the sale of products in which the Group acts as an agent in the
transaction rather than as the principal.2 In the absence of specific guidance in IFRSs on
distinguishing between an agent and a principal, management considered the following factors:
IAS 1.86
The Group does not take title of the goods and has no responsibility in respect of the
goods sold.
Although the Group collects the revenue from the final customer, all credit risk is borne by
the supplier of the goods.
The Group cannot vary the selling prices set by the supplier by more than one percent.
In thousands of euro
IAS 41.40
IAS 40.76(d)
IAS 1.87(c)
IAS 1.86
Note
2007
2006
18
18
19
31
650
11
120
238
26
50
1,095
50
15
100
100
50
315
Note
2007
2006
25
435
460
35
IAS 19.46
Note
29
30
30
2007
2006
18,635
1,468
455
522
26
755
440
22,301
16,659
1,267
419
500
12
250
70
19,177
78
IAS 23.29
If an entity capitalised any borrowing costs during the period, then it should disclose the
amount capitalised and the capitalisation rate used to determine the amount.
3.
IFRS 7.20(b)
An entity is required to disclose total interest income for financial assets not at fair value
through profit or loss. In this publication we illustrate interest income disaggregated by
class of financial assets. While this level of disaggregation is optional, an entity is required
to disclose separately any material items of income, expense and gains and losses resulting
from financial assets and liabilities.
IFRS 7.20(d)
Interest income accrued on impaired financial assets also should be disclosed separately.
4.
The accounting for interest on available-for-sale debt securities is discussed in our publication
Insights into IFRS (4.6.190).
5.
(a)(i), (ii)
IFRS 7.20
(a)(iii)-(v)
net gains or losses on financial assets or financial liabilities at fair value through profit or
loss and available-for-sale financial assets
net gains or losses on held-to-maturity investments, loans and receivables, and financial
liabilities measured at amortised cost
fee income and expense, other than amounts included in determining the effective
interest rate
for fair value hedges, gains or losses on the hedging instrument and on the hedged item
attributable to the hedged risk
the ineffective portion of the change in fair value of a net investment hedge
for cash flow hedges, the amount removed from equity and recognised on the balance
sheet.
IFRS 7.20(c)
IFRS 7.24(a)
IFRS 7.24(c)
IFRS 7.23(e)
6.
IAS 32.40
Dividends classified as an expense may be presented in the income statement either with
interest on other liabilities or as a separate item. If there are differences between interest
and dividends with respect to matters such as tax deductibility, then it is desirable to disclose
them separately in the income statement.
7.
IFRS 7.28
An entity should disclose the following in respect of any day one gain or loss:
l
l
an accounting policy
the aggregate difference still to be recognised in profit or loss, and a reconciliation
between the opening and closing balance thereof.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 1.86
79
In thousands of euro
IAS 18.35(b)(iii),
2007
2006
131
89
7
34
25
366
64
6
27
29
318
-
11
284
911
480
(1,413)
(201)
(1,299)
(293)
(60)
(50)
(20)
(16)
(1,760)
(849)
(41)
(30)
(13)
(1,676)
(1,196)
197
(1,413)
151
(1,299)
IFRS 7.20(b)
IFRS 7.20(d)
IFRS 7.20(b)
IFRS 7.20(b)
IAS 18.35(b)(v)
IFRS 7.20(a)(ii)
IFRS 7.23(d)
IFRS 7.20(a)(i)
IFRS 7.20(b)
IAS 21.52(a)
IFRS 7.20(a)(i)
IAS 37.84(e)
IFRS 7.20(e)
IFRS 7.20(e)
IFRS 7.24(b)
IFRS 7.20(b)
IFRS 7.20(b)
In thousands of euro
IAS 1.96(b)
IFRS 7.23(c), 1.96(b)
IFRS 7.23(d)
IFRS 7.20(a)(ii),
2007
2006
501
(3)
(93)
330
(8)
77
199
(11)
94
(64)
(14)
526
(53)
429
IAS 1.96(b)
IFRS 7.20(a)(ii),
IAS 1.96(b)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
80
2.
IAS 12.80(h)
An entity should disclose the amount of income tax expense (income) relating to those
changes in accounting policies and errors that are included in the determination of profit or
loss in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors because they cannot be accounted for retrospectively.
In this publication total income tax expense includes income tax expense of the Group and
income tax expense of equity accounted investees. A different presentation that excludes tax
expense of equity accounted investees also is possible.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
81
Reference
Attributable to:
Equity holders of the Company
Minority interest
Finance income recognised directly in equity, net of tax
Recognised in:
Fair value reserve
Hedging reserve
Translation reserve
IAS 1.96(c)
IAS 1.96(c)
IAS 12.80(a)
IAS 12.80(b)
IAS 12.80(c)
IAS 12.80(d)
IAS 12.80(g)
IAS 12.80(f)
IAS 12.81(h)(ii)
IAS 12.81(h)(i)
2007
2006
499
27
526
407
22
429
90
(62)
471
499
63
44
300
407
2007
2006
120
97
217
1,181
(34)
1,147
2,338
(15)
13
(50)
2,286
844
5
(240)
609
2,503
1,756
2,528
(25)
2,503
1,800
(44)
1,756
330
251
3,084
316
2,072
Note
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
82
IAS 12.85
The reconciliation of the effective tax rate should be based on an applicable tax rate that
provides the most meaningful information to users. In this example, the reconciliation is based
on the entitys domestic tax rate, with a reconciling item in respect of tax rates applied by the
Group entities in other jurisdictions. However, in some cases it might be more meaningful
to aggregate separate reconciliations prepared using the domestic tax rate in each individual
jurisdiction.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 12.81(c)
Profit for the period
2007
IAS 12.81(d)
2007
2006
2006
investees
discontinued operation
Non-deductible expenses
Tax incentives
was recognised
IAS 12.81(a)
83
6,204
3,084
9,288
3,956
2,072
6,028
33.00% 3,065
(0.42%)
(39)
33.00% 1,989
2.19%
132
0.15%
14
0.30%
18
0.55%
(0.16%)
1.69%
(0.85%)
(1.56%)
(0.54%)
51
(15)
157
(79)
(145)
(50)
1.76%
(0.51%)
(3.98%)
106
(31)
(240)
0.16%
15
0.14%
13
97
1.04%
33.20% 3,084
2.11%
127
0.08%
5
(0.56%)
(34)
34.39% 2,072
The subsidiary acquired in 2007 (see note 9) operates in a tax jurisdiction with lower tax
rates.
In thousands of euro
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Note
2007
28
22
66
(31)
45
24
104
54
158
2006
22
31
(5)
48
48
84
IAS 16.73(d),
(e)
An entity is required to present a reconciliation of the carrying amount of property, plant and
equipment at the beginning and at the end of the period. The separate reconciliations of the
gross carrying amount and accumulated depreciation illustrated here are not required and a
different format may be used. However, an entity is required to disclose the gross carrying
amount and accumulated depreciation at the beginning and at the end of the period.
IAS 16.74(d)
An entity should disclose the amount of compensation from third parties for items of property,
plant and equipment that were impaired, lost or given up that is included in profit or loss.
IAS 16.77
If an entity uses the revaluation model to account for property, plant and equipment, then it
should disclose:
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
85
Reference
IAS 16.73(d), (e)
In thousands of euro
IAS 16.73(d)
IAS 16.73(e)(i)
IAS 16.73(e)(ii)
IAS 16.73(e)(viii)
IAS 16.73(d)
IAS 16.73(d)
IAS 16.73(e)(iii)
IAS 16.73(e)(i), 74(b)
IAS 16.73(e)(ix)
IAS 16.73(e)(iv)
IAS 16.73(e)(ix)
IAS 16.73(e)(ii)
IAS 16.73(e)(ii)
IAS 16.73(e)(viii)
IAS 16.73(d)
IAS 16.73(d)
IAS 16.73(e)(vii), 1.93
IAS 16.73(e)(vi)
IAS 16.73(e)(ii)
IAS 16.73(e)(viii)
IAS 16.73(d)
IAS 16.73(d)
IAS 16.73(e)(vii), 1.93
IAS 16.73(e)(vi)
IAS 16.73(e)(ix)
IAS 16.73(e)(ii)
IAS 16.73(e)(ii)
IAS 16.73(e)(viii)
IAS 16.73(d)
IAS 1.75(a)
Note
Plant and
Land and
equip-
buildings
ment
7,328 29,509
193
1,540
- (1,081)
316
7,521 30,284
5,289
675
171
6,135
7,521
185
1,750
30,284
1,580
9,544
6,135
190
657
4,100
43,940
1,955
16,051
(300)
(300)
200
(700)
- (9,222)
- (11,972)
91
8,656 20,305
(2,100)
50
4,932
200
(700)
- (9,222)
- (14,072)
141
4,100 37,993
At 31 December 2007
Fixtures
Under
and construcfittings
tion
Total
- 42,126
2,408
- (1,081)
487
- 43,940
693
123
816
5,557
4,240
1,123
(700)
98
10,318
939
759
59
1,757
7,189
5,122
1,123
(700)
157
- 12,891
816
120
-
10,318
4,140
(393)
1,757
741
-
12,891
5,001
(393)
(300)
636
(1,058)
(3,808)
63
9,262
(1,127)
38
1,409
(300)
(1,058)
(4,935)
101
11,307
6,635
6,705
23,952
19,966
4,350
4,378
34,937
31,049
6,705
8,020
19,966
11,043
4,378
3,523
4,100
31,049
26,686
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
86
IAS 36.131
In respect of the aggregate amount of impairment losses or reversals that are not disclosed
because they are not considered material, an entity should disclose:
2.
IAS 8.40
If the amount of the effect in subsequent periods is not disclosed because estimating it is
impracticable, then the entity should disclose that fact.
3.
IAS 1.39
If reclassifying comparative amounts is impracticable, then the entity should disclose the
reason for not reclassifying the amounts, and the nature of the adjustments that would have
been made if the amounts had been reclassified.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
Security
At 31 December 2007 properties with a carrying amount of e5,000 thousand (2006: e4,700
thousand) are subject to a registered debenture to secure bank loans (see note 28).
Change in estimates
During the year ended 31 December 2007 the Group conducted an operational efficiency
review at one of its plants, which resulted in changes in the expected usage of certain items
of property, plant and equipment. Certain dye equipment, which management previously
intended to sell after five years of use, is now expected to remain in production for a period
of eight years from the date of purchase. As a result the expected useful lives of these assets
increased and their estimated residual values decreased. The effect of these changes on
depreciation expense, recognised in cost of sales, in current and future periods is as follows:2
IAS 16.74(a)
IAS 16.74(b)
In thousands of euro
IAS 16.76,
8.39
IAS 1.38(a), (c)
IAS 1.38(b)
87
2007
2008
2009
2010
2011
Later
(256)
(256)
(113)
150
150
300
Change in classification
During the current year the Group modified the income statement classification of depreciation
expense on certain office space from administrative expense to distribution expense to reflect
more appropriately the way in which economic benefits are derived from the use of the office
space. Comparative amounts were reclassified for consistency, which resulted in e120
thousand being reclassified from administrative to distribution expenses.3
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
88
IAS 38.122
IAS 38.118,
IFRS 3.75
In presenting a reconciliation of the carrying amount of intangible assets and goodwill, an entity
also should disclose, if applicable:
IAS 38.124
IAS 28.23
assets classified as held for sale or included in a disposal group classified as held for sale
in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
and other disposals
decreases and increases in the carrying amount of intangible assets during the period
resulting from impairment losses recognised or reversed directly in equity
adjustments to goodwill resulting from the subsequent recognition of deferred tax assets.
If an entity uses the revaluation model to account for intangible assets, then it should disclose:
2.
for an intangible asset assessed as having an indefinite useful life, the carrying amount of
that asset and the reasons supporting the assessment of an indefinite useful life. In giving
these reasons, the entity should describe the factor(s) that played a significant role in
determining that the asset has an indefinite useful life
a description, the carrying amount and remaining amortisation period of any individual
intangible asset that is material to the financial statements
for intangible assets acquired by way of a government grant and recognised initially at fair value:
the fair value recognised initially for these assets
their carrying amount
whether they are measured after recognition under the cost model or the revaluation model
the existence and carrying amounts of intangible assets whose title is restricted and the
carrying amounts of intangible assets pledged as security for liabilities
the amount of contractual commitments for the acquisition of intangible assets.
the effective date of the revaluation for each class of the intangible assets
the carrying amount of each class of revalued intangible assets
the carrying amount that would have been recognised had the revalued class of intangible
assets been measured after recognition using the cost model
the amount of the revaluation surplus that relates to intangible assets at the beginning
and end of the period, indicating the changes during the period and any restrictions on the
distribution of the balance to shareholders
the methods and significant assumptions applied in estimating the assets fair values.
In our view, it is not necessary to provide the disclosures for goodwill arising in a business
combination in respect of goodwill on associates. This issue is discussed in our publication
Insights into IFRS (3.5.750.30).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
89
Reference
In thousands of euro
IFRS 3.74
IAS 38.118,
Cost
Balance at 1 January 2006
ment
Goodwill2
marks
costs
Total
3,545
1,264
4,111
8,920
(171)
515
(75)
515
(246)
IFRS 3.75(a)
IAS 38.118(e)(i)
IAS 38.118(e)(vii)
IAS 38.118,
IFRS 3.75(h)
3,545
1,093
4,551
9,189
IAS 38.118,
3,545
1,093
4,551
9,189
150
250
400
87
-
186
1,272
100
87
1,272
286
3,782
1,529
5,923
11,234
138
552
2,801
3,491
118
(31)
677
285
(12)
795
285
(43)
IFRS 3.75(a)
IAS 38.118(e)(i),
IFRS 3.75(b)
IAS 38.118(e)(i)
IAS 38.118(e)(vii)
IAS 38.118,
IFRS 3.75(h)
IAS 38.118,
IFRS 3.75(a)
IAS 38.118(e)(vi), 1.93
IAS 38.118(e)(iv)
IAS 38.118(e)(vii)
IAS 38.118(c),
IFRS 3.75(h)
138
639
3,751
4,528
IAS 38.118,
138
639
3,751
4,528
116
-
139
61
641
(100)
17
780
116
(100)
78
IFRS 3.75(h)
254
839
4,309
5,402
IAS 38.118(c)
Carrying amounts
At 1 January 2006
At 31 December 2006
3,407
3,407
712
454
1,310
800
5,429
4,661
At 1 January 2007
At 31 December 2007
3,407
3,528
454
690
800
1,614
4,661
5,832
IFRS 3.75(a)
IAS 38.118(e)(iv), 1.93
IFRS 3.75(e)
IAS 38.118(e)(v)
IAS 38.118(e)(vii)
IAS 38.118,
IAS 38.118(c)
IAS 38.118(c)
IAS 38.118(c)
IAS 38.118(d)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
90
IAS 36.130(f)
IAS 36.130(c)
If an impairment loss is recognised for an individual asset, then an entity should disclose:
IAS 36.130
(d)(iii)
If an impairment loss is recognised for a cash-generating unit, and the aggregation of assets for
identifying the cash-generating unit has changed since the previous estimate of recoverable
amount, then an entity should describe the current and former way of aggregating assets
and the reasons for changing the way the cash-generating unit is identified.
IAS 36.126(c), If
(d)
2.
IAS 36.133
If any portion of the goodwill acquired in a business combination during the period has not
been allocated to a cash-generating unit at the reporting date, then the entity should disclose
the amount of the unallocated goodwill together with the reasons why that amount remains
unallocated. The practical difficulties of this exception, combined with the requirement for
annual impairment testing, is discussed in our publication Insights into IFRS (3.10.130).
3.
IAS 36.99
Instead of calculating recoverable amount, an entity may use its most recent previous
calculation of the recoverable amount of a cash-generating unit containing goodwill, if all of
the following criteria are met:
There have been no significant changes in the assets and liabilities making up the unit
since the calculation.
The calculation resulted in a recoverable amount that exceeded the carrying amount of the
unit by a substantial margin.
Based on an analysis of the events and circumstances since the calculation, the likelihood
that the current recoverable amount would be less than the current carrying amount of the
unit is remote.
The disclosures illustrated here are based on the assumption that the calculation of the
recoverable amount was prepared in the current period. If a calculation made in a preceding
period is used, then the disclosures should be adjusted accordingly.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 36.132
91
IAS 36.130(e)
The recoverable amount of the cash-generating unit (the production line that produces the
product) was estimated based on its value in use, assuming that the production line would go live
in August 2010. Based on the assessment in 2006, the carrying amount of the product line was
determined to be e1,408 thousand lower than its recoverable amount, and an impairment loss
was recognised (see below). In 2007, following certain changes to the recovery plan, the Group
reassessed its estimates and e493 thousand of the initially recognised impairment was reversed.
IAS 36.130(g)
The estimate of value in use was determined using a discount rate of 9 percent (2006: 11 percent).
The impairment loss and its subsequent reversal was allocated pro rata to the individual assets
constituting the production line as follows:
In thousands of euro
Original
carrying Impairment
amount loss in 2006
1,987
504
2,491
1,123
285
1,408
Reversal
in 2007
(393)
(100)
(493)
The impairment loss and subsequent reversal was recognised in cost of sales.
Due to the same circumstances inventory associated with this product line was written down to
its net realisable value, resulting in a loss of e42 thousand in 2006. Following the change in the
recovery plan and related estimates in 2007, e17 thousand of the loss was reversed (see note 23).
92
IAS 36.134(f)
If a reasonably possible change in a key assumption on which management has based its
determination of the units (group of units) recoverable amount would cause the units (group
of units) carrying amount to exceed its recoverable amount, then an entity should disclose:
the amount by which the units (group of units) recoverable amount exceeds its carrying
amount
the value assigned to the key assumption
the amount by which the value assigned to the key assumption must change, after
incorporating any consequential effects of that change on the other variables used to
measure recoverable amount, in order for the units (group of units) recoverable amount to
be equal to its carrying amount.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
93
Reference
In thousands of euro
2007
2006
2,372
960
3,332
196
3,528
2,135
1,076
3,211
196
3,407
IAS 36.135
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
industry consolidation. The sales prices for these units were used to derive a price to earnings
ratio that was applied to the earnings of the unit to determine recoverable amount. Price to
earnings ratios in the industry ranged from 21 to 25; the Group used a lower range estimate of 21
to estimate the recoverable amount of the unit. Unit earnings were determined for purposes of
this calculation to be e3,375 thousand, based on the units actual operating results, adjusted for
an allocation of the Groups net finance costs and income tax expense. The estimated recoverable
amount of e70,875 thousand significantly exceeds the carrying amount of the unit of e23,597
thousand (including goodwill). Management considers that it is not reasonably possible for the
assumed price to earnings ratio to change so significantly as to eliminate this excess.
The recoverable amount of the European forestry cash-generating unit was based on its value
in use and was determined with the assistance of independent valuers. The carrying amount
of the unit was determined to be higher than its recoverable amount and an impairment loss of
e116 thousand (2006: nil) was recognised. The impairment loss was allocated fully to goodwill,
and is included in cost of sales.
Value in use was determined by discounting the future cash flows generated from the
continuing use of the unit and was based on the following key assumptions:1
Cash flows were projected based on actual operating results and the 5-year business plan.
Cash flows for a further 20-year period were extrapolated using a constant growth rate
of 5 percent, which does not exceed the long-term average growth rate for the industry.
Management believes that this forecast period was justified due to the long-term nature of
the forestry business.
Revenue was projected at about e2,200 thousand in the first year of the business plan. The
anticipated annual revenue growth included in the cash flow projections was 5 to 7 percent
for the years 2008 to 2012. Management plans to achieve annual revenue of e2,800
thousand by the fifth year of the business plan.
The timber price growth was assumed to be 1 percent per annum above inflation in the
first 5 years. The estimate was based on statistical analysis of long-term market price
trends adjusted annually for actual experience.
Environmental cost growth was considered to be 25 percent in 2008 and in line with
inflation thereafter. This represents an increase over the 20 percent estimate used in the
impairment testing in 2006, and reflects various regulatory developments in a number of
European countries in which the unit operates.
Cash flows for a further 20 years were extrapolated based on a 2 percent growth rate,
which was consistent with the long-term average growth rate for the industry.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
94
IAS 41.43
Entities are encouraged, but not required, to provide a quantified description of each group
of biological assets, distinguishing between consumable and bearer biological assets or
between mature and immature biological assets. The basis for making such distinctions
should be disclosed.
IAS 41.54
(a)-(c), (f)
IAS 41.55
When biological assets are measured at cost less accumulated depreciation and accumulated
impairment losses, an entity should disclose separately any gain or loss recognised on the
disposal of such biological assets and a reconciliation of changes in their carrying amount
at the beginning and at the end of the period, including impairment losses, reversals of
impairment losses and depreciation.
IAS 41.56
If the fair value of biological assets measured previously at cost less accumulated depreciation and
accumulated impairment losses becomes reliably measurable, then an entity should disclose:
IAS 41.49(a)
An entity should disclose the existence and carrying amounts of biological assets whose title
is restricted, and the carrying amount of biological assets pledged as security for liabilities.
IAS 41.49(b)
An entity should disclose the amount of commitments for the development or acquisition of
biological assets.
IAS 41.50(e)
IAS 41.51
An entity is encouraged, but not required, to disclose the changes in fair value less estimated
point-of-sale costs due to price changes and due to physical changes.
IAS 41.53
If an agricultural activity is exposed to climatic, disease and other natural risks and an event
occurs that gives rise to a material item of income and expense, then the entity should
disclose the nature and amount of the item of income and expense.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
95
IAS 36.134(f)
An increase of 1 percentage point in the discount rate used would have increased the
impairment loss by e105 thousand.
A 10 percent decrease in future planned revenues would have increased the impairment
loss by e250 thousand.
IAS 41.50(b)
IAS 41.50(b)
IAS 41.50(c)
IAS 41.50(g)
IAS 41.40, 50(a)
IAS 41.50(d)
IAS 41.50(f)
IAS 41.50
IAS 41.50(b)
IAS 41.50(b)
IAS 41.50(c)
IAS 41.50(g)
IAS 41.40, 50(a)
IAS 41.50(d)
IAS 41.50(f)
IAS 41.50
In thousands of euro
Note
46(b)(i), (ii)
IAS 41.48
Total
7,672
415
35
(168)
68
8,022
800
22
(63)
15
15
45
834
8,472
415
22
(63)
15
50
(168)
113
8,856
Non-current
Current
8,022
8,022
694
140
834
8,716
140
8,856
8,022
294
481
(2,480)
30
6,347
834
11
(127)
11
169
14
912
8,856
294
11
(127)
11
650
(2,480)
44
7,259
6,347
6,347
667
245
912
7,014
245
7,259
11
11
11
11
Non-current
Current
IAS 41.41,
Standing
timber Livestock
At 31 December 2007 standing timber comprised approximately 3,270 hectares of pine tree
plantations (2006: 4,360 hectares), which range from newly established plantations to
plantations that are 30 years old. During the year the Group harvested approximately 74,242
tonnes of wood (2006: 5,295 tonnes), which had a fair value less point-of-sale costs of e2,480
thousand at the date of harvest (2006: e168 thousand).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
96
IAS 40.79
If investment property is accounted for under the cost model, then an entity should disclose:
(a)-(c), (e)
IAS 40.78
For items for which fair value cannot be determined reliably, an entity should disclose:
IAS 40.75
(f)(iv)
IAS 40.76(b),
(c), (e)
IAS 40.78
IAS 40.79(d)
IAS 40.75(g),
(h)
2.
An entity should disclose the cumulative change in fair value recognised in profit or loss on
a sale of investment property from a pool of assets in which the cost model is used into a
pool in which the fair value model is used.
In presenting a reconciliation of carrying amounts at the beginning and at the end of the period,
an entity also should disclose changes in the carrying amounts of investment property resulting
from acquisitions through business combinations, amounts classified as held for sale,
disposals and foreign currency differences. Items for which fair value cannot be measured
reliably should be presented separately in the reconciliation. A reconciliation of property
accounted under the cost model also should include depreciation, and the amount of
impairment losses recognised and / or reversed in accordance with IAS 36 Impairment of
Assets.
An entity should disclose the existence and amounts of restrictions on the realisability
of investment property or the remittance of income and proceeds of disposal. An entity
also should disclose any material contractual obligations to purchase, construct or develop
investment property or for repairs, maintenance or enhancements.
Since IAS 40 Investment Property makes no reference to making disclosures on a class-byclass basis, it could be assumed that the minimum requirement is to make the disclosures on
an aggregate basis for the whole investment property portfolio. In our view, when investment
property represents a significant portion of the assets it is preferable to disclose additional
analysis, for example portfolio by type of investment property. This issue is discussed in our
publication Insights into IFRS (3.4.270.20).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
97
Reference
The Group is exposed to a number of risks related to its pine tree plantations:
IAS 41.49(c)
IAS 40.76(a)
IAS 40.76(f)
IAS 40.76(d)
IAS 40.76
In thousands of euro
Balance at 1 January
Acquisitions
Transfer from property, plant and equipment
Change in fair value
Balance at 31 December
Note
2007
2006
16
1,050
200
700
120
2,070
950
100
1,050
IAS 17.56(c)
Investment property comprises a number of commercial properties that are leased to third
parties. Each of the leases contains an initial non-cancellable period of 10 years. Subsequent
renewals are negotiated with the lessee. No contingent rents are charged. See note 35 for
further information.
The range of yields applied to the net annual rentals to determine fair value of property for which
current prices in an active market are unavailable is as follows:
Offices
UK
France
IAS 1.113
Yields
5.5% - 8.2%
5.0% - 7.0%
The Group has sublet a vacated warehouse, but has decided not to treat this property as
investment property because it is not the Groups intention to hold it for the long term or for
capital appreciation or rental. Accordingly, the property still is treated as a lease of property,
plant and equipment.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
98
IAS 28.37(b)
IAS 31.56
A venturer should disclose a listing and description of interests in significant joint ventures
and the proportion of ownership interest held. A venturer that uses equity accounting or the
line-by-line reporting format for proportionate consolidation should disclose the aggregate
amounts of each of current assets, long-term assets, current liabilities, long-term liabilities,
income and expenses related to its interests in joint ventures. In this publication we have
illustrated these disclosures together with the disclosures for associates, and have presented
the financial information of joint ventures unadjusted for the percentage of ownership held by
the Group. Other methods of presentation also may be used.
IAS 28.37(a)
An entity should disclose the fair value of investments in associates for which there are
published price quotations.
IAS 28.37(i)
IAS 28.37(c), If
(d)
IAS 28.37(e),
(f)
2.
IAS 28.37(b),
31.56
3.
an entity uses equity accounting for an investment in which it has less than a 20 percent
interest, then it should disclose the reasons for this. Similarly, if an entity has an interest of
20 percent or more in an investment but does not account for it as an associate, then the
reasons for this should be disclosed.
Further disclosures are required if: the entity has used financial statements of an equity
accounted investee with a different reporting date to its own in preparing the consolidated
financial statements; and / or there are restrictions over the ability of the investee to transfer
funds to the entity.
This information is not required to be disclosed by IAS 28.37(b) for associates, but is required
by IAS 31.56 for joint ventures for which the entity uses equity accounting or the line-byline reporting format for proportionate consolidation. A listing, description and proportion of
interest held is required to be disclosed for all jointly controlled entities.
information is not required to be disclosed by IAS 31.56 for joint ventures, but is required
by IAS 28.37(b) for associates.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
40%
20%
49%
2007
Paletel AB (joint venture)
1,348
3,210
3,460
8,018
1,310
4,220
5,530
Current
assets2
5,953
4,790
7,592
18,335
4,440
7,030
11,470
Non-
current
asset2
7,301
8,000
11,052
26,353
5,750
11,250
17,000
543
2,220
2,850
5,613
1,130
3,250
4,380
665 1,208
5,780 8,000
8,185 11,035
14,630 20,243
1,320 2,450
6,810 10,060
8,130 12,510
25,796 (23,003)
32,635 (34,810)
(469)
58,431 (58,282)
21,750 (20,725)
16,600 (15,715)
38,350 (36,440)
Non-
2,793
(2,175)
(469)
149
1,025
885
1,910
Profit /
(loss)3
During the year the Group acquired a 49 percent investment in Paper Web SARL. This investee was established together with other companies
in the paper industr y to develop a Web-based marketing operation. Based on an evaluation of the risks and rewards of the investee it is not
consolidated by the Group. The Group provides management ser vices to the investee.
40%
20%
2006
Paletel AB (joint venture)
Cellulose S.A. (associate)
wnership2
O
In thousands of euro
Summar y financial information for equity accounted investees, not adjusted for the percentage ownership held by the Group:
IAS 28.37(g)
Reference
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
99
100
IFRS 7.30
If investments in unquoted equity instruments or derivatives linked to, and to be settled in,
such equity instruments are measured at cost because their fair value cannot be measured
reliably, then an entity should disclose:
IFRS 7.30(c)
An entity should disclose information about the market for the financial instruments.
IFRS 7.30(e)
When the above financial assets are sold, an entity should disclose:
IFRS 7.13
An entity may have either transferred a financial asset or entered into the type of transaction
described in IAS 39 in such a way that the arrangement does not qualify as a transfer of
a financial asset. If the entity either continues to recognise all of the asset or continues
to recognise the asset to the extent of the entitys continuing involvement, then detailed
disclosures are required.
IFRS 7.14
If an entity has pledged any financial asset as collateral, then it should disclose:
IFRS 7.15
If an entity has accepted collateral that it is permitted to sell or repledge in the absence of a
default by the owner of the collateral, then it should disclose:
2.
that fact
a description of the financial instruments
their carrying amount
an explanation of why fair value cannot be measured reliably
if possible, the range of estimates within which fair value is likely to lie.
IFRS 7.12
If the entity has reclassified a financial asset as one measured at cost or amortised cost
rather than at fair value, then an entity should disclose the reason for that reclassification.
IFRS 7.9, 11
An entity should disclose the following if a loan or receivable (or group of loans or receivables)
is designated at fair value through profit or loss:
the maximum exposure to credit risk at the reporting date, and the amount by which any
instruments mitigate that risk
the change in fair value of the loan or receivable (during the period and cumulatively) that is
attributable to changes in credit risk, and the method used to comply with this disclosure
requirement; if the entity believes that this disclosure does not represent faithfully the
change in fair value attributable to changes in credit risk, then it should disclose the
reasons therefor and the relevant factors
the change in fair value of any instruments that mitigate the related credit risk (during the
period and cumulatively) that is attributable to changes in credit risk.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
101
Reference
IFRS 7.8(b)
IFRS 7.8(a)(i)
IFRS 7.8(d)
IFRS 7.8(a)(ii)
Non-current investments
Held-to-maturity investments
Financial assets designated at fair value through profit or loss
Available-for-sale financial assets
Derivatives used for hedging
Current investments
Investments held for trading
Derivatives not used for hedging
Financial assets held for trading
Derivatives used for hedging
2007
2006
2,236
301
978
116
3,631
2,256
254
884
131
3,525
243
122
365
297
662
568
89
657
375
1,032
IFRS 7.7
IFRS 7.B5(a)(i)
The financial assets designated at fair value through profit or loss are equity securities that
otherwise would have been classified as available-for-sale.2
The Groups exposure to credit, currency and interest rate risks related to other investments is
disclosed in note 34.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
102
IFRS 7.40(a)
The sensitivity analysis should be based on changes in the risk variable that were reasonably
possible at the reporting date.
IFRS 7.40(b),
An entity should disclose the methods and assumptions used in preparing the sensitivity
analysis, and changes therein and the reasons therefor compared to the comparative period.
(c)
IFRS 7.41
IFRS 7.42
When the sensitivity analysis required by IFRS 7 Financial Instruments: Disclosures is not
representative of the underlying risks, e.g., the reporting date analysis is not representative of
the position during the year, then an entity should disclose that fact and the reasons therefor.
For example, if for whatever reason an entitys investment portfolio at the reporting date is
materially different from its usual mix of investments, then a sensitivity analysis based on the
position at the reporting date would not be representative.
IFRS 7.B,
Guidance in respect of the sensitivity analysis is provided in appendix B to IFRS 7 and in the
related implementation guidance.
IG
2.
IAS 12.81(i),
87A
An entity should disclose the amount of income tax consequences of dividends to shareholders
that were proposed or declared before the financial statements were authorised for issue, but
that are not recognised as a liability in the financial statements. An entity also should disclose
the important features of the income tax system(s) and the factors that will affect the amount
of the potential income tax consequences of dividends.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.40
103
In some of the countries in which the Group operates, local tax laws provide that gains on
the disposal of certain assets are tax exempt, provided that the gains are not distributed. At
31 December 2007 the total tax exempt reserves amounted to e600 thousand (2006: e540
thousand) which would result in a tax liability of e198 thousand (2006: e178 thousand) should
the subsidiaries pay dividends from these reserves.
IAS 12.82A
IAS 12.81(e)
2007
2006
103
272
375
200
653
853
The tax losses expire in 2010. The deductible temporary differences do not expire under
current tax legislation. Deferred tax assets have not been recognised in respect of these items
because it is not probable that future taxable profit will be available against which the Group
can utilise the benefits therefrom.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
104
IAS 12.81(g)
An entity is required to disclose, in respect of each type of temporary difference, the amount
of deferred tax assets and liabilities recognised in the balance sheet. IFRSs are unclear as to
what constitutes a type of a temporary difference. Disclosures presented in these illustrative
financial statements are based on the balance sheet captions related to the temporary
differences. Another possible interpretation is to present disclosures based on the reason for
the temporary difference, e.g., depreciation.
In our view, it is not appropriate to disclose gross deductible temporary differences with
the related valuation allowance shown separately because, under IFRSs, it is recognised
temporary differences that are required to be disclosed.
These issues are discussed in our publication Insights into IFRS (3.13.670.40 - .50).
2.
IAS 12.82
An entity should disclose the nature of the evidence supporting the recognition of a deferred
tax asset when:
utilisation of the deferred tax asset is dependent on future taxable profits in excess of the
profits arising from the reversal of existing temporary differences
the entity has suffered a loss in either the current or preceding period in the tax jurisdiction
to which the deferred tax asset relates.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 1.113
IAS 12.81(g)(i)
105
In thousands of euro
Intangible assets
Biological assets
Investment property
Held-to-maturity investments
Derivatives
Inventories
Share-based payments
Provisions
Other items
Liabilities
2007
2006
(235)
(61)
(7)
(9)
(83)
(561)
(583)
(557)
(68)
(436)
(2,600)
2,462
(138)
Net
2007
2006
2007
2006
(373)
(94)
-
2,727
1,164
345
188
1,503
495
127
148
2,492
1,103
345
188
1,130
401
127
148
(4)
(41)
(511)
(317)
(528)
(213)
(386)
(2,467)
1,091
(1,376)
167
160
177
136
5,064
(2,462)
2,602
73
115
197
2,658
(1,091)
1,567
167
160
(7)
168
(83)
136
(561)
(583)
(557)
(68)
(436)
2,464
2,464
73
115
193
(41)
(511)
(317)
(528)
(213)
(386)
191
191
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
106
IAS 12.81
(g)(ii)
2.
When the amount of deferred tax recognised in the income statement in respect of each type
of temporary difference is apparent from the changes in the amounts recognised in the
balance sheet, this disclosure is not required.
This disclosure is not required by IFRSs.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 12.81(g)(ii)
Reference
790
303
21
33
26
(41)
(40)
(106)
(90)
(55)
(240)
609
340
98
106
115
47
84
163
(466)
(211)
(438)
(158)
(146)
(466)
31
22
(5)
48
Included in
discontinued
operations
Acquired in
(note 7)
business and assets
Recognised
Balance
in profit Recognised
combin- held for sale
in equity
or loss
1 Jan 06
ations
(note 8)
(203)
195
766
758
Balance
1 Jan 06
73
115
193
(41)
(511)
(317)
(528)
(213)
(386)
191
1,130
401
127
148
(61)
5
127
71
(240)
(240)
(264)
200
653
589
3
9
(6)
79
35
38
-
(40)
(250)
(210)
-
(84)
13
15
(56)
(50)
(50)
(110)
(346)
(456)
Decrease due
to sale of
discontinued
Additions Recognition operation
45
(31)
54
24
158
94
(7)
6
(5)
73
(74)
(266)
(23)
145
(50)
2,286
Balance
31 Dec 06
66
-
1,471
664
218
40
Included in
discontinued
operations
Acquired in
(note 7)
Recognised
business and assets
Balance
in profit Recognised
combin- held for sale
31 Dec 06
or loss
in equity
ations
(note 8)
Decrease due
to sale of
discontinued
Additions Recognition
operation
Movement in unrecognised deferred tax assets and liabilities during the year2
(348)
103
272
27
Balance
31 Dec 07
167
160
(7)
168
(83)
136
(561)
(583)
(557)
(68)
(436)
2,464
2,492
1,103
345
188
Balance
31 Dec 07
108
IAS 2.39
In our view, write-downs of inventory to net realisable value as well as any reversals of such
write-downs should be presented in the same line item in the income statement as the cost
of inventories sold. This issue is discussed in our publication Insights into IFRS (3.8.440.70).
2.
3.
When an entity presents an analysis of expenses using classification based on the nature of
expenses in the income statement, it should disclose the costs recognised as an expense for
raw materials and consumables, labour and other costs, together with the amount of the net
change in inventories for the period.
IFRS 7.9(a)
When an entity has designated a loan or receivable (or group of loans or receivables) at fair
value through profit or loss, an entity should disclose:
4.
the amount by which any related credit derivative or similar instrument mitigates the
maximum exposure to credit risk
the amount of change during the period and cumulatively in the fair value of the loan or
receivable (or group of loans or receivables) that is attributable to changes in credit risk
determined either as the amount of change in its fair value that is not attributable to
changes in market conditions that give rise to market risk; or using an alternative method
that more faithfully represents the amount of change in its fair value that is attributable to
changes in credit risk
the amount of the change in the fair value of any related credit derivative or similar
instrument that has occurred during the period and cumulatively since the loan or
receivable was designated; the methods used to determine this amount; and, if the entity
considers that the amount disclosed does not faithfully represent the change in the fair
value attributable to changes in credit risk, the reasons for reaching this conclusion and the
factors that the entity believes to be relevant.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
109
Reference
23. Inventories1
In thousands of euro
IAS 2.36(c)
IAS 2.36(h)
IAS 1.93, 2.36(e)-(f)
IAS 1.87(a)
2007
2006
5,660
2,943
6,264
14,867
6,553
2,061
5,505
14,119
1,425
2,450
985
2,090
In 2007 raw materials, consumables and changes in finished goods and work in progress
recognised as cost of sales amounted to e41,698 thousand (2006: e44,273 thousand). In 2007
the write-down of inventories to net realisable value amounted to e45 thousand (2006: e125
thousand). The reversal of write-downs amounted to e17 thousand as discussed below
(2006: nil). The write-down and reversal are included in cost of sales.2
Due to regulatory restrictions imposed on a new product in the American paper manufacturing
and distribution division in 2006, the Group tested the related product line for impairment and
also wrote down the related inventories to their net realisable value, which resulted in a loss of
e42 thousand. In 2007, following a change in estimates, e17 thousand of the write-down was
reversed (see note 17). These amounts are included in the total amount of write-downs and
reversals above.
IAS 2.36(g)
In thousands of euro
IAS 1.75(b)
IAS 1.75(b)
IFRS 7.8(c)
IAS 1.75(b), 11.40(a)
Note
2007
2006
38
38
1,236
78
11,985
13,299
348
13,647
642
32
17,045
17,719
280
17,999
At 31 December 2007 aggregate costs incurred under open construction contracts and
recognised profits, net of recognised losses, amounted to e570 thousand (2006: e530
thousand). Progress billings and advances received from customers under open construction
contracts amounted to e362 thousand (2006: e380 thousand).
Advances for which the related work has not started, and billings in excess of costs incurred
and recognised profits, are presented as deferred income (see note 31) and amounted to
e140 thousand at 31 December 2007 (2006: e130 thousand).
IAS 11.40(c)
At 31 December 2007 trade receivables include retentions of e200 thousand (2006: e180
thousand) relating to construction contracts in progress.
The Groups exposure to credit and currency risks and impairment losses related to trade and
other receivables (excluding construction work in progress) are disclosed in note 34.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
110
IAS 7.48
An entity should disclose, together with a commentary from management, the amount of
significant cash and cash equivalent balances not available for use by the entity.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 7.45
Bank balances
Call deposits
Cash and cash equivalents
Bank overdrafts used for cash management purposes
Cash and cash equivalents in the statement of cash flows
IFRS 7.40, 41
111
2007
381
1,454
1,835
(334)
1,501
2006
988
862
1,850
(282)
1,568
The Groups exposure to interest rate risk and a sensitivity analysis for financial assets and
liabilities are disclosed in note 34.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
112
IAS 1.77
An entity without share capital (e.g., a partnership) should disclose information equivalent to
that required for other entities, disclosing movements during the period in each category
of equity interest and the rights, preferences, and restrictions attaching to each category of
equity interest.
2.
IFRIC 1.6(d)
Changes in a revaluation surplus related to the revaluation of property, plant and equipment
arising from changes in decommissioning, restoration and similar liabilities should be
separately identified, disclosed and described as such in the statement of changes in equity.
3.
IAS 32.33
An entity should present own shares purchased as a deduction from equity, either on the
face of the balance sheet or in the notes. Consideration received when own shares held
are reissued is presented as a change in equity and no gain or loss is recognised. We have
presented the surplus arising on the reissue of own shares as share premium. However,
before following this approach, an entity should check local legal requirements. This issue is
discussed in our publication Insights into IFRS (3.11.310).
4.
IFRS 2.7
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 1.97(a)
IAS 1.97(a)
IAS 1.97(a)
IAS 1.97(a)
In thousands of euro
30
30
28
30
Note
Share
3,500
1,160
109
8
35
4,812
390
15
14,955
3,500
14,550
14,550
3,500
14,550
capital premium
Share
lation
Trans-
471
642
80
90
170
(62)
416
63
80
17
reserve
value
Fair
478
44
478
300
171
171
434
reserve
Hedging
134
134
reserve
tion
Revalua-
28,925
Total
Total
equity
842 33,347
403
6,912
- 1,550
109
30
- (1,243)
(113)
(113)
755
50
1,132 41,397
6,509
- 5,876
1,550
109
30
22
- (1,243) (1,243)
755
755
50
(258) 19,394 40,265
241 4,375
(280)
250
(524)
842 33,347
601 29,526
interest
Minority
32,505
(280) 14,006
- 3,727
4,134
(280)
(280)
250
250
(524)
(524)
(280) 14,006 32,505
- 10,553
shares earnings
Reserve
(129)
reserve
Reference
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
113
114
IAS 1.76(a)(iii)
If shares have no par value, then an entity should disclose that fact.
2.
IAS 1.76(a)(ii)
An entity should disclose the number of shares issued but not fully paid.
IAS 1.76(a)(vii) An
entity should disclose details of shares reserved for issue under options and sales
contracts, including the terms and amounts.
3.
IAS 16.77(f)
If items of property, plant and equipment are stated at revalued amounts, then the entity
should disclose the revaluation surplus, indicating the change for the period and any
restrictions on the distribution of the balance to shareholders.
4.
IAS 1.76(a)(vi),
An entity should disclose separately the amount of treasury shares held, either on the face of
the balance sheet or in the notes.
32.34, 24.17
IAS 32.34
If any of the shares are acquired from parties who are able to control or exercise significant
influence over the Group, then an entity should disclose details of the transaction.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
115
Ordinary shares
IAS 1.76(a)(iv)
In thousands of shares
IAS 1.76(a)(ii)
On issue at 1 January
Issued for cash
Exercise of share options
On issue at 31 December
Non-redeemable
preference shares
Redeemable
preference shares
2007
2006
2007
2006
2007
2006
3,100
130
5
3,235
3,100
3,100
1,750
1,750
1,750
1,750
1,000
1,000
The Group also has issued share options (see note 30).
IAS 1.76(a)(i), (iii),
IFRS 7.7
The holders of ordinary shares are entitled to receive dividends as declared from time to time
and are entitled to one vote per share at meetings of the Company. Holders of non-redeemable
preference shares receive a non-cumulative dividend of e0.25 per share at the Companys
discretion or whenever dividends to ordinary shareholders are declared. They do not have the
right to participate in any additional dividends declared for ordinary shareholders. Preference
shares (redeemable and non-redeemable) do not carry the right to vote. All shares rank equally
with regard to the Companys residual assets, except that preference shareholders participate
only to the extent of the face value of the shares. In respect of the Companys shares that are
held by the Group (see below), all rights are suspended until those shares are reissued.
IAS 1.76(a)(v),
IFRS 7.7
At 31 December 2007 the authorised share capital comprised 10,000 thousand ordinary shares
(2006: 10,000 thousand), 2,000 thousand non-redeemable non-cumulative preference shares
(2006: 2,000 thousand) and 1,000 thousand redeemable preference shares (2006: nil). The
redeemable preference shares have a par value of e2; all other shares have a par value of e3.1
All issued shares are fully paid.2 The redeemable preference shares are classified as liabilities.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation
of the financial statements of foreign operations as well as from the translation of liabilities that
hedge the Companys net investment in a foreign subsidiary.
IAS 1.76(b)
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the
fair value of cash flow hedging instruments related to hedged transactions that have not yet
occurred.
Revaluation reserve3
The revaluation reserve relates to the revaluation of property, plant and equipment prior to its
reclassification as investment property.
IAS 1.76(b)
IAS 1.76(b)
IAS 1.76(b)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
116
IAS 1.125(b)
An entity should disclose the amount of any cumulative preference dividends not recognised.
2.
IAS 33.2
An entity is required to present earnings per share if its ordinary shares or potential ordinary
shares are publicly traded, or if it is in the process of issuing ordinary shares or potential
ordinary shares in public securities markets.
3.
IAS 33.64
When earnings per share calculations reflect changes in the number of shares due to events
that happened after the reporting date, an entity should disclose that fact.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 1.95
117
In thousands of euro
2007
2006
806
437
1,243
92
432
524
10.13, 12.81(i)
After 31 December 2007 the following dividends were proposed by the directors for 2007. The
dividends have not been provided for and there are no income taxes consequences.1
In thousands of euro
IAS 1.125(a),
892
437
1,329
IAS 33.70(a)
In thousands of euro
2007
Discontin-
Continuing
ued
operations operation
2006
Discontin Continuing
ued
Total operations operation
Total
5,449
379
5,828
4,159
(422)
3,737
(432)
(432)
(432)
(432)
5,017
379
5,396
3,727
(422)
3,305
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Note
2007
2006
26
26
26
26
3,100
(49)
3
29
3,083
3,100
(40)
3,060
118
2.
IAS 33.73
If an entity discloses, in addition to basic and diluted earnings per share, per share amounts
using a reported component of profit other than profit or loss for the period attributable
to ordinary shareholders, such amounts should be calculated using the weighted average
number of ordinary shares determined in accordance with IAS 33 Earnings per Share.
IAS 33.73
If a component of profit is used that is not reported as a line item in the income statement,
then an entity should give a reconciliation between the component used and a line item that
is reported in the income statement.
IAS 33.70(c)
An entity should disclose instruments, including contingently issuable shares, that could
potentially dilute basic earnings per share in the future, but which were not included in the
calculation of diluted earnings per share because they were anti-dilutive for the periods
presented.
3.
In our view, this reconciliation is not required if basic and diluted earnings per share are equal.
This issue is discussed in our publication Insights into IFRS (5.3.370.50).
4.
In our view, the method used to determine the average market value of the entitys shares for
purposes of calculating the dilutive effect of outstanding share options should be disclosed,
particularly with respect to unquoted equity instruments. This issue is discussed in our
publication Insights into IFRS (5.3.170.70).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
119
Reference
IAS 33.70(a)
In thousands of euro
IAS 33.70(b)
2007
Discontin-
Continuing
ued
operations operation
2006
Discontin Continuing
ued
Total operations operation
Total
5,017
379
5,396
3,727
(422)
3,305
262
262
5,279
379
5,658
3,727
(422)
3,305
Note
2007
2006
28
30
3,083
250
47
3,060
18
3,380
3,078
The average market value of the Companys shares for purposes of calculating the dilutive
effect of share options was based on quoted market prices for the period that the options
were outstanding.4
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
120
IFRS 7.8(e)
An entity should disclose the carrying amount of financial liabilities designated at fair value
through profit or loss, and the carrying amount of financial liabilities held for trading. (While
this footnote is attached to the loans and borrowings disclosure, this is not meant to indicate
that liabilities at fair value through profit or loss would be classified as loans and borrowings.)
IFRS 7.10, 11
An entity should disclose the following if a financial liability is designated at fair value through
profit or loss:
l
the change in fair value of the financial liability (during the period and cumulatively) that is
attributable to changes in credit risk, and the method used to comply with this disclosure
requirement; if the entity believes that this disclosure does not represent faithfully the
change in fair value attributable to changes in credit risk, then it should disclose the
reasons therefor and the relevant factors
the difference between the carrying amount of the financial liability and the amount that
the entity is contractually required to pay at maturity.
2.
IAS 7.50(a)
An entity is encouraged, but not required, to disclose the amount of undrawn borrowing
facilities that may be available for future operating activities and to settle capital
commitments, and any restrictions on the use of these facilities.
3.
IFRS 7.18, 19
An entity should disclose information about any defaults that occurred during the period, or
any other breach of the terms of a loan.
4.
IAS 1.64
5.
IFRS 7.7
An entity discloses information that enables users of its financial statements to evaluate the
significance of financial instruments for its financial position and performance.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.7, 8
IAS 1.74
IFRS 7.7
121
Non-current liabilities4
Secured bank loans
Unsecured bond issues
Convertible notes
Redeemable preference shares
Finance lease liabilities
Loan from associate
2007
2006
3,512
9,200
4,678
1,939
1,613
20,942
7,093
9,200
1,913
1,000
19,206
3,500
75
300
515
4,390
4,000
269
117
4,386
Current liabilities
Current portion of secured bank loans
Dividends on redeemable preference shares
Current portion of finance lease liabilities
Unsecured bank facility
Currency
Nominal
interest rate
Year of
maturity
31 Dec 2007
Face Carrying
value amount
31 Dec 2006
Face Carrying
value amount
CHF
3.90%
2011
USD
4.70%
2009
4.50% 2008-2009
euro
GBP
LIBOR+1% 2007-2008
USD
3.80%
2010
euro
5.50%
2007
euro LIBOR +1/2%
2011
euro LIBOR +1%
2012
LIBOR
2009
euro
4.80%
2008
euro
6.00%
2010
euro
1,250
500
4,460
850
530
1,023
5,113
3,064
5,000
1,260
447
4,460
845
515
1,023
5,113
3,064
4,678
1,250
500
4,460
4,850
117
1,023
5,113
3,064
1,000
-
1,257
521
4,460
4,855
117
1,023
5,113
3,064
1,000
-
euro
2013
2,000
1,939
2008
6.5-7.0% 2007-2022
75
2,663
75
1,913
3,186
2,182
euro
euro
4.40%
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
122
IFRS 7.17
If an entity has issued an instrument that contains both a liability and an equity component
and the instrument has multiple embedded derivative features the values of which are
interdependent (such as a callable convertible debt instrument), an entity should disclose the
existence of those features.
2.
IFRIC 2.13
3.
IAS 17.31(d)
An entity should disclose the total minimum lease payments expected to be received under
non-cancellable subleases at the reporting date.
IAS 17.31(e)(iii) An
entity should disclose any restrictions imposed by lease arrangements, such as those
concerning dividends, additional debt, and further leasing.
IAS 17.31(b)
An entity should disclose a reconciliation between the total of future minimum lease
payments at the reporting date, and their present value. In addition, an entity should disclose
the total of future minimum lease payments at the reporting date, and their present value, for
each of the following periods:
l
l
l
later than one year and not later than five years
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 16.74(a),
IFRS 7.7
123
IFRS 7.17
Convertible notes1
In thousands of euro
Transaction costs
Net proceeds
Accreted interest
5,000
(250)
4,750
(163)
91
4,678
The amount of the convertible notes classified as equity of e163 thousand is net of attributable
transaction costs of e7 thousand.
IFRS 7.17
The notes are convertible into 250 thousand ordinary shares in June 2010 at the option of the
holder, which is a rate of one share for every five convertible notes; unconverted notes become
repayable on demand.
Convertible notes become repayable on demand if the Group fails to maintain a debt to equity
ratio of 75 percent or less, where debt comprises loans and borrowings.
IFRS 7.17
2,000
(61)
1,939
Transaction costs
In thousands of euro
IAS 17.31(c),
(e)(i), (ii)
Present
value of
minimum
lease
Interest payments
Future
minimum
lease
payments
Present
value of
minimum
lease
Interest payments
Future
minimum
lease
payments
2007
2007
2007
2006
2006
2006
535
1,128
1,000
2,663
235
343
172
750
300
785
828
1,913
531
1,124
1,531
3,186
262
385
357
1,004
269
739
1,174
2,182
Certain leases provide for additional payments that are contingent upon changes in the market
rental rate. Contingent rents recognised in profit or loss under finance leases amounted to
e17 thousand (2006: e15 thousand).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
124
2.
IAS 19.118
Entities are not required to split post-employment benefit assets and liabilities into current
and non-current classifications.
IAS 19.122
When an entity has more than one defined benefit plan, the disclosures may be made in
total, separately for each plan, or in such groupings as are considered to be the most useful;
for example, the entity may distinguish groupings by criteria such as geographical location or
the risks related to the plans.
IAS 19.30
For any multi-employer defined benefit plans for which sufficient information is not available
to use defined benefit accounting, an entity should disclose that fact and the reason why
sufficient information is not available. To the extent that a surplus or deficit in the plan may
affect the amount of future contributions, an entity should disclose any available information
about that surplus or deficit, the basis used to determine that surplus or deficit, and the
implications, if any, for the entity.
IAS 19.120A
If applicable an entity should disclose the following in the reconciliation of defined benefit
obligations and plan assets to the liability (asset) recognised in the balance sheet:
(f)(i)-(iv)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
125
Although the arrangement is not in the legal form of a lease, the Group concluded that the
arrangement contains a lease of the equipment, because fulfilment of the arrangement is
economically dependent on the use of the equipment and it is unlikely that any parties other
than the Group will receive more than an insignificant part of the output. The lease was
classified as a finance lease. The Group could not estimate reliably the relative fair values of
the lease element and other elements of the required payments. Therefore at inception of
the lease the Group recognised an asset and a liability at an amount equal to the estimated
fair value of the equipment (see note 16). The imputed finance expense on the liability was
determined based on the Groups incremental borrowing rate (4.25 percent).
In thousands of euro
Note
30
2007
2006
1,035
1,121
2,156
(456)
1,700
207
440
2,347
980
1,059
2,039
(490)
1,549
181
380
2,110
IAS 19.120A(b)
The Group makes contributions to two non-contributory defined benefit plans that provide
pension and medical benefits for employees upon retirement. Plans entitle a retired employee
to receive an annual payment equal to 1/60 of final salary for each year of service that the
employee provided, and to the reimbursement of certain medical costs.
IAS 19.120A(j)
In thousands of euro
IAS 19.120A(k)(ii)
IAS 19.120A(k)(i)
Equity securities
Government bonds
Property occupied by the Group
Companys own ordinary shares
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
2007
2006
140
110
153
53
456
167
110
162
51
490
126
IAS 19.120A
(c)(iii), (v),
If applicable an entity should disclose the following in the reconciliation of the opening and
closing balances of the defined benefit obligations:
(vii-x)
2.
IAS 19.120A
(e)(iii), (v),
If applicable an entity should disclose the following in the reconciliation of the opening and
closing balances of plan assets:
(vii)
3.
IAS 19.120A
(g)(iv)
(g)(v)
(g)(vi)
(g)(vii)
(g)(viii)
(m)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 19.120A(c)
IAS 19.120A(c)(vi)
IAS 19.120A(c)(i), (ii)
IAS 19.120A(c)(iv)
IAS 19.120A(e)
In thousands of euro
IAS 19.120A(e)(iv)
IAS 19.120A(e)(vi)
IAS 19.120A(e)(i)
IAS 19.120A(e)(ii)
2007
2006
2,039
(374)
573
(82)
2,156
1,913
(444)
552
18
2,039
2007
2006
490
299
(374)
51
(10)
456
500
379
(444)
52
3
490
2007
2006
398
175
(51)
522
413
139
(52)
500
2007
2006
313
109
100
522
297
154
49
500
42
44
2007
2006
(103)
72
(31)
(88)
(15)
(103)
IAS 19.120A(g)
In thousands of euro
IAS 19.120A(g)(i)
IAS 19.120A(g)(iii)
IAS 19.120A(g)
The expense is recognised in the following line items in the income statement:
In thousands of euro
IAS 19.120A(g)(ii)
Cost of sales
Distribution expenses
Administrative expenses
IAS 19.120A(m)
In thousands of euro
IAS 19.120A(i)
IAS 19.120A(h)(i)
IAS 19.120A(i)
127
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
128
IAS 19.120A
(n)(iii)
If applicable an entity should disclose the expected rate of return for periods presented on any
reimbursement right recognised as an asset.
2.
actuarial assumptions should be disclosed in absolute terms and not, for example, as
a margin between different percentages or other variables.
3.
IAS 19.160
An entity may disclose the historical information required by IAS 19.120A(p) as the amounts
are determined for each annual period prospectively from the first annual period presented in
the financial statements in which the entity first applies the Amendment to IAS 19 Employee
Benefits Actuarial Gains and Losses, Group Plans and Disclosures.
4.
IFRS 2.56
IFRS 2 Share-based Payment is not required (or permitted) to be applied for all equity-settled
share-based payment transactions (e.g., grants made before 7 November 2002 where the fair
value was not disclosed at that time). However, the disclosure requirements in IFRS 2.44 and
.45 apply to equity-settled grants whether or not they are accounted for according to IFRS 2.
IFRS 2.52
An entity should provide additional disclosures if the required disclosures in IFRS 2 are not
sufficient to enable the user to understand the nature and extent of the share-based payment
arrangements, how the fair value of services have been determined for the period, and the
effect on profit or loss.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
129
IAS 1.116
IAS 19.120A(n)(i)
IAS 19.120A(n)(ii)
IAS 19.120A(n)(iv)
IAS 19.120A(n)(v)
IAS 19.120A(n)(vi)
2007
2006
5.0%
6.0%
2.5%
4.5%
3.0%
4.8%
5.9%
2.5%
4.0%
2.0%
IAS 19.120A(n)(vi)
Assumptions regarding future mortality are based on published statistics and mortality tables.
The average life expectancy of an individual retiring at age 65 is 18 for males and 20 for females.
IAS 19.120A(l)
The overall expected long-term rate of return on assets is 6.0 percent. The expected long-term
rate of return is based on the portfolio as a whole and not on the sum of the returns on individual
asset categories. The return is based exclusively on historical returns, without adjustments.
IAS 19.120A(o)
Assumed healthcare cost trend rates have a significant effect on the amounts recognised in
profit or loss. A one percentage point change in assumed healthcare cost trend rates would
have the following effects:
point
point
increase
decrease
One
Historical information3
In thousands of euro
IAS 19.120A(p)(i)
IAS 19.120A(p)(i)
IAS 19.120A(p)(i)
IAS 19.120A(p)(ii)(A)
IAS 19.120A(p)(ii)(B)
IAS 19.120A(q)
One
percentage percentage
20
380
(14)
(250)
2003
2007
2006
2005
2004
2,156
456
(1,700)
2,039
490
(1,549)
1,913
500
(1,413)
2,101
483
(1,618)
2,040
475
(1,565)
(110)
(8)
(50)
10
32
(9)
(10)
(12)
49
(13)
The Group expects e350 thousand in contributions to be paid to the funded defined benefit
plans and e250 thousand in benefits to be paid for the unfunded plans in 2008.
Additionally, two share option arrangements granted before 7 November 2002 exist. The
recognition and measurement principles in IFRS 2 have not been applied to these grants.
On 1 January 2007 the Group granted share appreciation rights (SARs) to other employees
that entitle the employees to a cash payment. The amount of the cash payment is determined
based on the increase in the share price of the Company between grant date and vesting date.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
130
IFRS 2.45
(b)(v)
An entity should disclose the number and the weighted average exercise price of options that
expired unexercised during the period.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 2.45(a)
Number of
instruments
in thousands
Vesting conditions
250
10 years
150
10 years
100
10 years
100
3 years service
10 years
250
10 years
100
950
3 years service
10 years
100
4 years service
300
400
3 years service
IFRS 2.45(b),
Contractual
life of options
131
The number and weighted average exercise prices of share options is as follows:1
In thousands of options
IFRS 2.45(b)(i)
IFRS 2.45(b)(iii)
IFRS 2.45(b)(iv)
IFRS 2.45(b)(ii)
IFRS 2.45(b)(vi)
IFRS 2.45(b)(vii)
Outstanding at 1 January
Forfeited during the period
Exercised during the period
Granted during the period
Outstanding at 31 December
Exercisable at 31 December
Weighted
Weighted
average Number average Number
exercise
of exercise
of
price options
price options
2007
e9.9
e9.5
e10.0
e12.0
e10.8
e10.1
2007
2006
2006
550
(50)
(5)
350
845
300
e9.5
e9.5
e10.5
e9.9
e9.8
400
(50)
200
550
350
IFRS 2.45(d)
The options outstanding at 31 December 2007 have an exercise price in the range of e9.0 to
e12.0 and a weighted average contractual life of 6.8 years.
IFRS 2.45(c)
The weighted average share price at the date of exercise for share options exercised in 2007
was e11.50 (2006: no shares exercised).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
132
IFRS 2.10, 11
IFRS 2.48
If the entity has measured the fair value of goods or services received during the period
directly, then the entity should disclose how that fair value was determined (e.g., whether fair
value was measured at a market price for those goods or services).
IFRS 2.49
If goods and services received in transactions other than with employees and others providing
similar services were measured at the fair value of equity instruments granted because the fair
value of the goods and services could not be estimated reliably, then the entity should disclose
that fact and give an explanation of why the fair value could not be measured reliably.
IFRS 2.47(b), If
(c)
2.
IAS 20.39(c),
41.57(b), (c)
the fair value of goods and services received was measured based on the fair value of equity
instruments granted, then an entity should disclose the number and weighted average fair
value at the measurement date of any equity instruments other than share options, as well
as the nature and incremental fair value of any modifications made to share-based payment
arrangements during the period.
An entity should disclose any unfulfilled condition and other contingencies attaching to
government grants. For government grants related to agricultural activity, an entity also should
disclose significant decreases expected in the level of the grants.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 2.46, 47
(a)(i), IAS 1.116
IFRS 2.47(a)(i)
IFRS 2.47(a)(i)
Share price
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Risk-free interest rate (based on government bonds)
Employee expenses
In thousands of euro
IFRS 2.47(a)(i)
IFRS 2.47(a)(i)
IFRS 2.47(a)(i)
IFRS 2.47(a)(i)
Key
Key
manage-
manage
ment
ment
Senior
Senior
personnel personnel employees employees
2007
2006
2007
2006
e4.5
e4.0
e3.9
e3.5
e12.0
e12.0
42.5%
8.6 years
3.2%
3.9%
IFRS 2.51(a)
IFRS 2.51(a)
IFRS 2.51(b)(i)
IFRS 2.51(b)(ii)
IFRS 2.51(a)
IFRS 2.51(a), (b)
IFRS 2.51(a), (b)
133
e10.5
e12.0
e10.5
e10.5
e12.0
e10.5
40.9%
40.3%
39.5%
8.8 years 5.4 years 5.5 years
3.2%
3.2%
3.2%
3.9%
3.8%
3.8%
Note
2007
2006
250
505
300
140
1,195
250
70
320
440
380
380
13
13
13
13
The carrying amount of the liability at 31 December 2006 was settled during 2007.
IFRS 2.52
IAS 1.113, 116
The fair value of SARs at grant date is determined using the Black-Scholes formula. The model
inputs were: the share price of e12.0, the exercise price of e12.0, expected volatility of
41.5 percent, expected dividends of 3.2 percent, a term of four years and a risk-free interest
rate of 4.4 percent. The fair value of the liability is remeasured at each reporting date and at
settlement date.
Expected volatility is estimated by considering historic average share price volatility.
31. Deferred income
Deferred income classified as current consists of customer advances for construction work
in progress (deferred revenue), and deferred income classified as non-current consists of
deferred government grants.
IAS 20.39(b)
IAS 41.57(a)
The Group has been awarded two government grants.2 One of the grants, received in 2006,
amounted to e1,500 thousand and was conditional upon the construction of a factory on a
specified site. The factory has been in operation since the beginning of 2007 and the grant,
recognised as deferred income, is being amortised over the useful life of the building. The
second grant, received in 2007, was unconditional, amounted to e200 thousand and related to
pine trees. It was recognised as other income when it became receivable.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
134
IAS 37.92
In extremely rare cases, disclosure of some or all of the information required in respect of
provisions can be expected to seriously prejudice the position of the entity in a dispute with
other parties. In such cases only the following need be disclosed:
IAS 37.85
IAS 37.85(a)
IAS 37.85(b)
IAS 37.85(c)
a brief description of the nature of the obligation and the expected timing of any resulting
outflows of economic benefits
an indication of the uncertainties about the amount or timing of those outflows; where
necessary to provide adequate information, an entity shall disclose the major assumptions
made concerning future events
the amount of any expected reimbursement, stating the amount of any asset that has
been recognised in that regard.
In our view, the reversal of a provision should be presented in the same income statement
line item as the original estimate. This issue is discussed in our publication Insights into IFRS
(3.12.850).
2.
IAS 1.87(f),
(g)
3.
IAS 37.9
An entity should disclose separately items of income and expense related to reversals of
provisions and litigation settlements.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets applies to provisions for
restructuring, including in the context of discontinued operations. When a restructuring meets
the definition of a discontinued operation, additional disclosures may be required by IFRS 5
Non-current Assets Held for Sale and Discontinued Operations.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
135
32. Provisions1
In thousands of euro
IAS 37.84(a)
200
280
(200)
500
400
(500)
900
750
(500)
160
-
20
-
1,600
20
1,590
(1,200)
280
400
(400)
60
810
160
20
(400)
60
1,670
Non-current
Current
100
180
280
400
400
810
810
160
160
20
20
910
760
1,670
IFRS 3.50
IAS 37.84(b)
IAS 37.84(c)
IAS 37.84(d)
IAS 37.84(e)
IAS 37.84(a)
IAS 1.75(d)
IAS 1.75(d)
Legal
Total
Restructuring costs expensed as incurred amounted to e68 thousand in 2007 and were
recognised in administrative expenses (2006: nil).3
Warranties
The provision for warranties relates mainly to paper sold during the years ended 31 December
2006 and 2007. The provision is based on estimates made from historical warranty data
associated with similar products and services. The Group expects to incur most of the liability
over the next year.
Restructuring3
During the year ended 31 December 2006 the Group committed to a plan to discontinue one of
the product lines in the American paper manufacturing and distribution division due to a
decrease in demand. Following the announcement of the plan the Group recognised a
provision of e500 thousand for expected restructuring costs, including contract termination
costs, consulting fees and employee termination benefits. Estimated costs were based on the
terms of the relevant contracts. e500 thousand was charged against the provision in 2007. The
restructuring was completed in 2007.
During the year ended 31 December 2007 a provision of e400 thousand was made to cover
the costs associated with restructuring part of a manufacturing facility within the Paper
segment that will be retained when the remainder of the facility is sold (see note 8). Estimated
restructuring costs mainly include employee termination benefits and are based on a detailed
plan agreed between management and employee representatives. The restructuring and the
sale are expected to be complete by June 2008.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
136
IFRIC 5.11
An entity should disclose its interest in and the nature of any decommissioning, restoration and
environmental rehabilitation funds, as well as any restrictions on access to the funds assets.
IFRIC 5.13,
If a right to receive reimbursement from the fund has been recognised as an asset, then an
entity should disclose the amounts of the asset and expected reimbursement.
IAS 37.85(c)
IFRIC 5.12,
IAS 37.86
If an obligation to make contributions to the fund has not been recognised as a liability,
then an entity should disclose the estimated financial effect of the obligation, a description of
uncertainties related to the amount or timing of contributions, and any possible reimbursement.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 1.116
IAS 37.85(a)
137
In accordance with Romanian law, land contaminated by the Groups subsidiary in Romania must
be restored to its original condition before the end of 2011. During the year ended 31 December
2007 the Group provided e750 thousand for this purpose. Because of the long-term nature of
the liability, the biggest uncertainty in estimating the provision is the costs that will be incurred.
In particular, the Group has assumed that the site will be restored using technology and materials
that are available currently. The provision has been calculated using a discount rate of 10 percent.
The rehabilitation is expected to occur progressively over the next four years.
IAS 34.26
The provision has increased as compared to the amount of e650 thousand reported in the
Companys interim report as at and for the six months ended 30 June 2007 due to a change
in estimated costs. At the time of preparing the interim report the extent of restoration work
required was uncertain as the inspection report by the Romanian authorities had not yet been
finalised. The estimates were revised subsequently based on the final report.
IFRS 7.8(f)
Onerous contracts
In 2006 the Group entered into a non-cancellable lease for office space which, due to changes
in its activities, the Group had ceased to use by 31 December 2007. The lease expires in 2010.
The facilities have been sublet for the remaining lease term, but changes in market conditions
have meant that the rental income is lower than the rental expense. The obligation for the
discounted future payments, net of expected rental income, has been provided for.
Legal
As a result of the acquisition of Papyrus Pty Limited (see note 9) the Group assumed a
contingent liability related to a legal action brought by a former employee of Papyrus. The
plaintiff is claiming e100 thousand in damages. Management is defending the case vigorously
and based on the advice of its legal counsel estimates that the most likely outcome is that the
Group will be required to pay e20 to settle this obligation.
Note
2007
2006
38
319
12,850
8
582
13,759
351
23,525
7
487
24,370
34
The Groups exposure to currency and liquidity risk related to trade and other payables is
disclosed in note 34.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
138
1.
2.
IFRS 7.34
IFRS 7 requires the disclosure of risk information in a format based on the information
provided internally to key management personnel of the entity (as defined in IAS 24 Related
Party Disclosures), e.g., the entitys board of directors or chief executive.
IFRS 7.35,
If the quantitative data at the reporting date are not representative, then an entity should
provide further information that is representative, e.g., the entitys average exposure to risk
during the year. For example, if an entitys business is seasonal and the balance of loans and
receivables fluctuates materially during the year, then a sensitivity analysis based solely on
the position at the reporting date would not be representative.
IG20
3.
IFRS 7.36(a)
An entity discloses information about the nature and extent of its exposure to credit risk. The
disclosure of the maximum exposure to credit risk ignores any collateral held or other credit
enhancement.
maximum credit risk exposure typically is the gross carrying amount of the financial
asset, net of any amounts offset in accordance with IAS 32 Financial Instruments:
Presentation and any impairment losses recognised in accordance with IAS 39.
IFRS 7.36,
B1-B3
IFRS 7.IG
21-29
4.
IFRS 7.B8,
IG18, 19
The disclosures in respect of credit risk apply to each class of financial asset, which is not
defined in IFRS 7. Classes are distinct from the categories of financial instruments specified
in IAS 39. In determining classes of financial instrument an entity should at a minimum
distinguish instruments measured at amortised cost from those measured at fair value and
treat as a separate class or classes those financial instruments outside the scope of IFRS 7.
The IFRS 7 implementation guidance provides additional guidance on the disclosures without
specifying a minimum standard disclosure.
The identification of concentrations of risk requires judgement taking into account the
circumstances of the entity. For example, concentrations of credit risk may arise from
industry sectors, credit rating or other measures of credit quality, geographical distribution or
a limited number of individual counterparties. Therefore the disclosure of risk concentrations
includes a description of the shared characteristics.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.36(a)
139
In thousands of euro
Carrying amount
Note
2007
2006
21
21
21
24
25
978
2,236
544
13,299
1,835
884
2,256
822
17,719
1,850
21
116
131
21
21
297
122
19,427
375
89
24,126
IFRS 7.34(a)
The maximum exposure to credit risk for trade receivables at the reporting date by geographic
region was:4
In thousands of euro
Domestic
euro-zone countries
United Kingdom
Other European countries
United States
Other regions
Carrying amount
2007
2006
3,580
3,195
2,029
431
3,939
47
13,221
4,300
4,450
2,590
367
5,938
42
17,687
IFRS 7.34(a)
The maximum exposure to credit risk for trade receivables at the reporting date by type of
customer was:4
In thousands of euro
Wholesale customers
Retail customers
End-user customers
IFRS 7.34(a)
Carrying amount
2007
2006
9,504
3,478
239
13,221
11,231
5,600
856
17,687
The Groups most significant customer, a European wholesaler, accounts for e6,034 thousand
of the trade receivables carrying amount at 31 December 2007 (2006: e4,986 thousand).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
140
IFRS 7.38
2.
IFRS 7.16,
IAS 39.64
the nature and carrying amount of any collateral or other credit enhancements obtained
its policy for disposing of collateral that is not readily convertible into cash.
When financial assets are impaired by credit losses and the entity records the impairment
in a separate account (e.g., in an allowance account used to record individual impairments
or a similar account used to record a collective impairment of assets), it should disclose a
reconciliation of changes in that account during the period for each class of financial assets.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.37(a)
141
In thousands of euro
Gross Impairment
2007
9,281
3,920
40
80
13,321
2007
20
80
100
Gross Impairment
2006
15,025
2,612
100
17,737
2006
50
50
IFRS 7.16
The movement in the allowance for impairment in respect of trade receivables during the year
was as follows:
In thousands of euro
Balance at 1 January
Impairment loss recognised
Balance at 31 December
2007
2006
50
50
100
20
30
50
The impairment loss at 31 December 2007 of e80 thousand relates to a customer that was declared
bankrupt during the year. Although the goods sold to the customer were subject to a retention
of title clause, the Group has no indication that the customer is still in possession of the goods.
IFRS 7.36(c)
Based on historic default rates, the Group believes that no impairment allowance is necessary
in respect of trade receivables not past due or past due by up to 30 days; 80 percent of the
balance, which includes the amount owed by the Groups most significant customer (see
above), relates to customers that have a good track record with the Group.
IFRS 7.36(d)
During 2007 the Group renegotiated the terms of a trade receivable of e500 thousand from
a long-standing customer. If it had not been for this renegotiation, the receivable would have
been overdue by 60 days. No impairment loss was recognised (2006: no instances).
IFRS 7.16
In thousands of euro
Balance at 1 January
Impairment loss recognised
Balance at 31 December
2007
2006
20
20
40
20
20
The allowance accounts in respect of trade receivables and held-to-maturity investments are
used to record impairment losses unless the Group is satisfied that no recovery of the amount
owing is possible; at that point the amounts considered irrecoverable and is written off against
the financial asset directly. At 31 December 2007 the Group does not have any collective
impairments on its trade receivables or its held-to-maturity investments (2006: nil).2
IAS 39.64
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
142
IFRS 7.B11,
B13
In preparing the contractual maturity analysis for financial liabilities an entity uses its
judgement to determine an appropriate number of time bands. Payments in instalments
should be allocated to the respective time bands.
IFRS 7.B12
If the counterparty can ask for payment at different dates, then the maturity is the earliest
date on which the entity can be required to pay.
IFRS 7.B14
Contractual cash flows are undiscounted and therefore may not agree with the carrying
amounts in the balance sheet.
IFRS 7.B16
The disclosure of residual contractual maturities is based on conditions at the reporting date.
IFRS 7.IG30
If an entity manages liquidity risk on the basis of expected maturity dates, then it might
disclose a maturity analysis of the expected maturity dates of both financial liabilities and
financial assets. If an entity presents an expected maturity analysis, then it would clarify
that expected dates are based on estimates made by management, and explain how the
estimates are determined and the principal reasons for differences from the contractual
maturity analysis that is required by IFRS 7.39(a).
2.
IFRS 7 does not define contractual maturities. It therefore leaves open to interpretation
the amounts that need to be included in the analysis for certain types of financial liabilities,
such as derivatives and perpetual instruments. It is our preference that both the interest and
principal cash flows be included in the analysis as this best represents the liquidity risk being
faced by the entity. As a minimum, the principal amount should be disclosed and sufficient
appropriate narrative disclosures should be provided in order to present a meaningful picture
of the entitys liquidity exposures. This issue is discussed in our publication Insights into IFRS
(5.6.770.30).
3.
In these illustrative financial statements derivative assets are disclosed separately when the
Group settles its derivative contracts on a gross basis in order to show the contractual outflow.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.39(a)
IFRS 7.B15
IFRS 7.B15
143
Non-derivative financial
liabilities
Secured bank loans
Convertible notes
Redeemable preference
shares
Bank overdraft
Derivative financial
liabilities3
Interest rate swaps
Outflow
Inflow
contracts:
Outflow
Inflow
7,012
(7,463)
9,200 (10,631)
4,678 (5,750)
6 mths
More than
1-2 years
2-5 years
5 years
(4,503)
(230)
(150)
(60)
(230)
(150)
(1,527)
(3,524)
(300)
(1,373)
(5,522)
(5,150)
(1,125)
-
1,939 (2,792)
(44)
1,913 (2,663)
(267)
515
(523)
(523)
13,751 (13,751) (13,751)
334
(334)
(334)
(44)
(268)
-
(88)
(450)
-
(264)
(678)
-
(2,352)
(1,000)
-
20
(21)
(21)
8
(297)
(10)
326
(3)
150
(7)
176
(989)
(122)
1,110
38,951 (43,491) (19,655)
(604)
(989)
1,110
(5,768) (12,987)
(4,477)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
144
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.39(a)
IFRS 7.B15
IFRS 7.B15
145
6 mths
In thousands of euro
Non-derivative financial
liabilities
Secured bank loans
Unsecured bond issues
Finance lease liabilities
Loan from associate
Unsecured bank facility
Trade and other payables*
Bank overdraft
Derivative financial
liabilities
Interest rate swaps
used for hedging
Forward exchange contracts
used for hedging:
Outflow
Inflow
Other forward exchange
contracts:
Outflow
Inflow
More than
1-2 years
2-5 years
5 years
(140)
(230)
(266)
(240)
-
(3,780)
(460)
(458)
(1,480)
-
(3,108)
(4,444)
(666)
-
(7,056)
(1,531)
-
(5)
(5)
7
(375)
(9)
405
(5)
185
(4)
220
(861)
(89)
950
47,785 (53,992) (30,433)
(665)
(861)
950
(6,089)
(8,218)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
(8,587)
146
IFRS 7.23(b)
An entity also should describe any forecast transaction for which hedge accounting has been
used previously, but which is no longer expected to occur.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IFRS 7.23(a)
Reference
140
(21)
326
(10)
435
116
(20)
297
(8)
385
Carrying Expected
2007
150
(3)
159
12
-
176
(7)
184
36
(21)
54
-
54
27
-
27
11
11
-
5 years
More than
6 mths
375
(7)
494
131
(5)
405
(9)
546
155
(5)
Carrying Expected
2006
185
(5)
195
15
-
220
(4)
235
24
(5)
33
33
-
59
59
-
24
24
-
5 years
More than
6 mths
In thousands of euro
140
(21)
326
(10)
435
116
(20)
297
(8)
385
Carrying Expected
2007
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
105
(4)
113
12
-
123
(3)
135
36
(21)
78
(2)
103
27
-
20
(1)
73
54
-
11
11
-
5 years
More than
6 mths
375
(7)
494
131
(5)
405
(9)
546
155
(5)
Carrying Expected
2006
175
(5)
185
15
-
178
(3)
194
24
(5)
52
(1)
84
33
-
59
59
-
24
24
-
5 years
More than
or less 6-12 mths 1-2 years 2-5 years
6 mths
The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are expected to impact
profit or loss.
In thousands of euro
148
IFRS 7.34
IFRS 7 requires the disclosure of risk information based on the information provided internally
to key management personnel of the entity (as defined in IAS 24 Related Party Disclosures),
e.g., the entitys board of directors or chief executive.
IFRS 7.35,
If the quantitative data at the reporting date are not representative of an entitys risk exposure
during the year, then an entity should provide further information that is representative, e.g.,
the entitys average exposure to risk during the year. For example, the IFRS 7 implementation
guidance indicates that if an entity typically has a large exposure to a particular currency but
unwinds that position at the reporting date, then it might present a graph that shows the
currency exposure at various times during the period, or disclose the highest, lowest and
average exposures.
IG20
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.34
149
euro
Trade receivables
Secured bank loans
Trade payables
Gross balance sheet
exposure
USD
GBP
31 December 2007
CHF
USD
GBP
31 December 2006
CHF
Estimated forecast
purchases
(10,000) (10,000) (4,000)
Gross exposure
(1,000) 1,000 4,000
Forward exchange
contracts
Net exposure
euro
- 18,700
8,000 10,000
(9,800) (3,000)
8,900 5,000
(7,000)
3,000
(950)
(946)
(1,042)
(870)
101
(65)
224
(1,250)
6,588
(537)
380
(1,250)
euro
Average rate
2007
2006
USD 1
GBP 1
CHF 1
0.749
1.482
0.611
0.775
1.471
0.635
Reporting date
spot rate
2007
2006
0.725
1.483
0.604
0.793
1.484
0.629
IFRS 7.40
Sensitivity analysis
A 10 percent strengthening of the euro against the following currencies at 31 December would
have increased (decreased) equity and profit or loss by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2006.
Profit
Equity
or loss
31 December 2007
USD
GBP
CHF
31 December 2006
USD
GBP
CHF
740
510
4
(25)
(17)
-
880
670
3
(85)
(92)
-
A 10 percent weakening of the euro against the above currencies at 31 December would have
had the equal but opposite effect on the above currencies to the amounts shown above, on the
basis that all other variables remain constant.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
150
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.40
151
In thousands of euro
Carrying amount
2007
4,522
(15,621)
(11,099)
2006
4,479
(9,819)
(5,340)
(10,045) (14,055)
Effect in thousands of euros
Profit or loss
100 bp
100 bp
increase decrease
Equity
100 bp
100 bp
increase decrease
31 December 2007
Variable rate instruments
(100)
61
(39)
100
(61)
39
310
310
(302)
(302)
31 December 2006
Variable rate instruments
Interest rate swap
Cash flow sensitivity (net)
(142)
61
(81)
142
(61)
81
280
280
(275)
(275)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
152
IFRS 7.26,
B1-B3
The disclosures in respect of fair values apply to each class of financial asset, which is not
defined in IFRS 7. Classes are distinct from the categories of financial instruments specified
in IAS 39. In determining classes of financial instrument an entity should at a minimum
distinguish instruments measured at amortised cost from those measured at fair value and
treat as a separate class or classes those financial instruments outside the scope of IFRS 7.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 7.25
IFRS 7.22(b)
IFRS 7.22(b)
IFRS 7.22(b)
153
In thousands of euro
Held-to-maturity investments
31 December 2007
Carrying
Fair
amount
value
31 December 2006
Carrying
Fair
amount
value
978
2,236
978
2,250
884
2,256
884
2,265
301
243
13,299
1,835
301
243
13,299
1,835
254
568
17,719
1,850
254
568
17,719
1,850
116
(20)
116
(20)
131
(5)
131
(5)
297
297
375
375
(8)
(8)
(7)
(7)
122
122
89
89
(7,012)
(7,385) (11,093) (10,984)
(9,200) (8,739) (9,200) (9,346)
(4,678)
(5,216)
(1,939) (1,936)
(1,913) (1,856)
(2,182) (2,078)
(1,000) (1,040)
(75)
(75)
(515)
(515)
(117)
(117)
(13,751) (13,751) (24,363) (24,363)
(334)
(334)
(282)
(282)
(20,018) (20,394) (24,123) (24,087)
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
154
SIC 27.10
If an entity has any arrangement that is in the legal form of a lease but to which lease
accounting is not applied because it does not, in substance, involve a lease, then it should
provide appropriate disclosures in order for users of the financial statements to understand
the arrangement and the accounting treatment, including at least the following:
IFRIC 4.13,
15
In a case of an arrangement that is not in the legal form of a lease but to which lease
accounting is applied because it contains a lease, payments and other consideration required
by such an arrangement are separated into those for the lease and those for other elements,
on the basis of their relative fair values. In a case of an operating lease, if an entity concludes
that it is impracticable to separate the payments reliably, then it should:
2.
IAS 17.35(d)
(iii)
the significant terms of the arrangement including its life, the underlying asset and any
restrictions on its use, and the transactions that are linked together, including any options
the amount recognised as income in the period and the line item of the income statement
in which it is included.
treat all payments as future minimum lease payments for disclosure purposes
disclose those payments separately from the minimum lease payments of other
arrangements that do not include payments for non-lease elements
state that the disclosed payments also include payments for non-lease elements in
the arrangement.
An entity should disclose any restrictions imposed by lease agreements, such as restrictions
on dividends, additional debt and further leasing.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
2007
Derivatives
Loans and borrowings
Leases
IAS 17.35(a)
2006
In thousands of euro
IAS 17.35(b)
155
2007
2006
417
419
1,764
2,600
435
486
1,805
2,726
The Group leases a number of warehouse and factory facilities under operating leases.2 The
leases typically run for a period of 25 years, with an option to renew the lease after that date.
Lease payments are increased every five years to reflect market rentals. Some leases provide
for additional rent payments that are based on changes in a local price index.
One of the leased properties has been sublet by the Group. The lease and sublease expire in
2010. Sublease payments of e50 thousand are expected to be received during the following
financial year. The Group has recognised a provision of e160 thousand in respect of this lease
(see note 32).
IAS 17.35(c)
During the year ended 31 December 2007 e435 thousand was recognised as an expense in
the income statement in respect of operating leases (2006: e447 thousand). Contingent rent
recognised as an expense amounted to e40 thousand (2006: e30 thousand). e50 thousand
was recognised as income in respect of subleases (2006: e50 thousand).
IAS 1.113
The warehouse and factory leases were entered into many years ago. They are combined
leases of land and buildings. When the Group adopted IFRSs at 1 January 2004, it was not
possible to obtain a reliable estimate of the split of the fair values of the lease interest between
land and buildings at inception of the leases. Therefore, in determining lease classification, the
Group evaluated whether both parts were clearly operating leases or finance leases. Firstly,
land title does not pass. Secondly, because the rent paid to the landlord for the building is
increased to market rent at regular intervals, and the Group does not participate in the residual
value of the building, it was judged that substantially all the risks and rewards of the building
are with the landlord. Based on these qualitative factors it was concluded that the leases are
operating leases.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
156
IAS 17.47
a reconciliation between the total gross investment in the lease at the reporting date, and
the present value of minimum lease payments receivable at the reporting date
the total gross investment in the lease and the present value of minimum lease payments
receivable at the reporting date grouped as follows: not later than one year; later than one
year but not later than five years; and later than five years
unearned finance income
the unguaranteed residual values accruing to the benefit of the lessor
the accumulated allowance for uncollectible minimum lease payments receivable
contingent rents recognised as income in the period
a general description of the entitys material leasing arrangements.
IAS 17.48
It also is useful to disclose the gross investment less unearned income in new business added
during the accounting period, after deducting the relevant amounts for cancelled leases.
2.
IAS 17.56(b)
An entity also should disclose the amount of contingent rents recognised as income during
the period.
3.
IAS 38.122(e),
An entity also should disclose the amount of contractual commitments for the acquisition of
intangible assets, development or acquisition of biological assets, and for the purchase,
construction, development, repairs and maintenance of investment property.
40.75(h),
41.49(b)
4.
IAS 37.89
In respect of a contingent asset, an entity should disclose a brief description of its nature and,
where practicable, an estimate of its financial effect.
IAS 37.91
When it is not practicable to estimate the potential financial effect of a contingent liability or
an asset, an entity should disclose that fact.
IAS 37.92
In extremely rare cases, disclosure of some or all of the information required in respect of
contingencies can be expected to seriously prejudice the position of the entity in a dispute
with other parties. In such cases an entity need disclose only the following:
IAS 28.40
An entity should disclose its share of the contingent liabilities of an associate incurred jointly
with other investors and those contingent liabilities that arise because the investor is severally
liable for all or part of the liabilities of the associate.
IAS 31.54
(a)-(c)
any contingencies that the entity has incurred in relation to its investments in joint ventures, and
its share in each of the contingencies that have been incurred jointly with other venturers
the entitys share of the contingencies of joint ventures for which it is contingently liable
those contingencies that arise because the venturer is contingently liable for the liabilities
of the other venturers of a joint venture.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IAS 17.56(a)
157
In thousands of euro
2007
2006
740
3,890
3,550
8,180
170
1,050
951
2,171
During the year ended 31 December 2007 e810 thousand was recognised as rental income in
the income statement (2006: e212 thousand).2 Repairs and maintenance expense, recognised
in cost of sales, was as follows:
In thousands of euro
Income-generating property
Vacant property
2007
2006
190
55
245
70
15
85
37. Contingencies4
IAS 37.86(a)-(c),
A subsidiary is defending an action brought by an environmental agency in Europe. While liability
1.116
is not admitted, if defence against the action is unsuccessful, then fines and legal costs could
amount to e950 thousand, of which e250 thousand would be reimbursable under an insurance
policy. Based on legal advice, the directors do not expect the outcome of the action to have a
material effect on the Groups financial position.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
158
IAS 24.12
If the entitys parent does not produce financial statements available for public use, then the
entity should disclose the name of the next controlling party that does so.
2.
IAS 24.22
Items of a similar nature may be disclosed in aggregate except when separate disclosure is
necessary for an understanding of the effects of the related party transactions on the financial
statements of the entity.
3.
In our view, materiality considerations cannot be used to override the explicit requirements
of IAS 24 Related Party Disclosures for the disclosure of elements of key management
personnel compensation. This issue is discussed in our publication Insights into IFRS
(5.5.110.20).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
159
Reference
In thousands of euro
2007
2006
510
475
25
420
75
1,505
420
450
430
100
1,400
IAS 24.17(b)(i)
A number of these entities transacted with the Group in the reporting period. The terms
and conditions of the transactions with key management personnel and their related parties
were no more favourable than those available, or which might reasonably be expected to be
available, on similar transactions to non-key management personnel related entities on an
arms length basis.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
160
IAS 24.18
The entity is required to disclose the related party information about the transactions and
outstanding balances for each category of the related parties, as listed in IAS 24.18, including
key management personnel. The level of disclosure illustrated by this publication is not
required specifically by IAS 24. Disclosure about individual transactions could be combined
without this level of detail.
Payments by an entity may relate to services provided by the recipients to third parties. If an
entity acts as an agent and makes payments to an individual on behalf of another party, then
in our view the entity is required to disclose only compensation paid as consideration for
services rendered to the entity.
2.
In our view, an entity is required to disclose the portions of transactions with joint ventures or
associates that are not eliminated in the consolidated financial statements.
These issues are discussed in our publication Insights into IFRS (5.5.110.40 and .120.30).
3.
IAS 24.17(c),
(d)
IAS 24.18,
19.124(a)
IAS 24.20
An entity also should disclose provisions for doubtful debts and the expense recognised during
the period in respect of bad or doubtful debts related to the amount of outstanding balances
from related parties.
Disclosure of the nature and amounts of transactions with related parties should be provided
separately for each category of related parties, including the parent, entities with joint control or
significant influence over the entity, subsidiaries, associates, joint ventures, key management
personnel of the entity or its parent, post-employment benefit plans, and any other related parties.
Examples of transactions that should be disclosed if they are with a related party include:
IAS 32.34
4.
IAS 24.21
Related party transactions should be described as having been made on an arms length basis
only if such terms can be substantiated.
5.
IAS 24.17(b)(ii)
An entity also should disclose details of any guarantees given or received in respect of
outstanding balances with related parties.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
161
Reference
In thousands of euro
Director
Transaction
F D Adair
H W James
B Q Barton I
Legal fees
Repairs and maintenance
Inventory purchases paper
IAS 24.17(b)(i)
Transaction value
Year ended
Balance outstanding
As at
31 December
31 December
Note
2007
2006
2007
(i)
(ii)
(iii)
12
176
66
13
-
45
-
2006
(i) The Group used the legal services of Mr F D Adair in relation to advice over the sale of
certain non-current assets of the Company. Amounts were billed based on normal market
rates for such services and were due and payable under normal payment terms.
(ii) The Group entered into a two-year contract with On Track Limited, a company, which is
controlled by Mr H W James, to provide repairs and maintenance services on production
equipment. The total contract value is e370 thousand. The contract terms are based on
market rates for these types of services, and amounts are payable on a quarterly basis for
the duration of the contract.
(iii) The Group purchased various paper supplies from Alumfab Limited, a company that is
significantly influenced by Mr B Q Barton. Amounts were billed based on normal market
rates for such supplies and were due and payable under normal payment terms.
From time to time directors of the Group, or their related entities, may purchase goods from
the Group. These purchases are on the same terms and conditions as those entered into by
other Group employees or customers.
IAS 24.17
In thousands of euro
Transaction value
Year ended
31 December
Expenses
Associate administrative services
Associate interest expense
IAS 24.17(b)(i)
Balance outstanding
As at
31 December
2007
2006
2007
2006
350
1,145
320
400
220
1,016
250
392
623
16
678
25
319
-
339
12
All outstanding balances with these related parties are priced on an arms length basis and
are to be settled in cash within six months of the reporting date.4 None of the balances is
secured.5
In addition, during the year ended 31 December 2007 the Group repaid a loan of e1,000
thousand received from one of its associates (see note 28).
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
162
IAS 27.40(f)
An entity should disclose the nature and extent of any significant restrictions (e.g., resulting
from borrowing arrangements or regulatory requirements) on the ability of subsidiaries to
transfer funds to the parent in the form of cash dividends or to repay loans or advances.
2.
IAS 27.40(d)
An entity should disclose the reasons why the ownership, directly or indirectly through
subsidiaries, of more than half of the voting or potential voting power of an investee does not
constitute control.
3.
IAS 10.21(b)
If the financial effect of a material non-adjusting event after the reporting date cannot be
estimated, an entity should disclose that fact.
4.
IFRS 3.66(b),
For each material category of non-adjusting event after the reporting date, an entity should
disclose the nature of the event and an estimate of its financial effect (or a statement that such
an estimate cannot be made). The following are examples of non-adjusting events that may
require disclosure:
5.41,
IAS 10.21,
22, 33.70(d)
a major business combination after the reporting date but before the financial statements
are authorised for issue
disposing of a major subsidiary
announcing a plan to discontinue an operation
major purchases of assets, classification of assets as held for sale in accordance with
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, other disposals of
assets or expropriation of major assets by government
the destruction of a major production plant by a fire after the reporting date
announcing, or commencing the implementation of, a major restructuring
ordinary share transactions or potential ordinary share transactions, other than those that
are reflected in earnings per share calculations, that occur after the reporting date and
that would have changed significantly the number of ordinary shares or potential ordinary
shares outstanding at the end of the period if those transactions had occurred before the
end of the reporting period
abnormally large changes after the reporting date in asset prices or foreign exchange rates
changes in tax rates or tax laws enacted or announced after the reporting date that have a
significant effect on current and deferred tax assets and liabilities
entering into significant commitments or contingent liabilities (e.g., by issuing significant
guarantees)
commencing major litigation arising solely out of events that occurred after the reporting
date.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
163
IAS 24.12
incorporation
Note
Baguette S.A.
Mermaid A / S
Lei Sure Limited
Papier GmbH
Oy Kossu AB
Windmill N.V.
Papyrus Pty Limited
Maple-leaf Inc
Sloan Bio-Research Co
MayCo
9
9
France
Denmark
Romania
Germany
Switzerland
Netherlands
Australia
Canada
U.K.
U.S.
Ownership
interest
2007
2006
100
100
100
100
90
75
100
48
-
100
100
100
100
90
60
48
-
IAS 27.40(c)
Although the Company does not hold any ownership interests in Sloan Bio-Research Co and
MayCo, it receives substantially all of the benefits related to their operations and net assets
based on the terms of agreements under which these entities were established. Consequently,
the Company consolidates these entities.
IAS 27.40(c)
Although the Group owns less than half of the voting power of Maple-leaf Inc, it is able to
govern the financial and operating policies of the company by virtue of an agreement with
the other investors of Maple-leaf Inc. Consequently, the Group consolidates its investment
in the company.2
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
164
The auditors report illustrated in these financial statements is based on the revised
International Standard on Auditing (ISA) 700 The Independent Auditors Report on a Complete
Set of General Purpose Financial Statements, which is effective for auditors reports dated on
or after 31 December 2006.
If the audit is carried out under local laws and standards, then the form of the report will
conform to those laws and standards.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
165
We have audited the accompanying consolidated financial statements of [name of entity] and its subsidiaries
(the Group), which comprise the consolidated balance sheet as at 31 December 2007, and the consolidated
income statement, the consolidated statement of recognised income and expense and the consolidated cash
flow statement for the year then ended, and a summary of significant accounting policies and other explanatory
notes.
Managements responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements
in accordance with International Financial Reporting Standards. This responsibility includes: designing,
implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatements, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that
we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on our judgement, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, we consider internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 December 2007, and of its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 1.97(a)
IAS 1.96(a)
IAS 1.96(b)
IAS 19.93(b)
IAS 1.96(b)
Reference
Note
In thousands of euro
14,550
14,550
-
3,500
3,500
-
Share
Share
capital premium
300
300
171
(8)
(129)
308
44
44
478
(8)
52
434
-
63
63
80
63
17
-
(10)
(10)
63
(8)
52
(8)
28,925
308
Total
equity
(10)
63
(8)
52
(8)
22
419
219 3,956
241 4,375
(280)
250
(524)
842 33,347
601 29,526
22
330
Minority
Total interest
(10)
397
- 3,737
3,737
4,134
- 3,727
(280)
(280)
250
250
(524)
(524)
(280) 14,006 32,505
- 10,553
-
Trans-
Fair Revalua- Reserve
lation Hedging
value
tion for own Retained
reserve reserve reserve reserve shares earnings
Appendix I
166
IFRS Illustrative Financial Statements
August 2007
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
IAS 1.97(a)
IAS 1.97(a)
IAS 1.97(a)
IAS 1.96(a)
IAS 1.96(b)
IAS 19.93(b)
1.96(b)
IAS 32.94(h)(ii),
IAS 1.96(b)
IAS 1.96(b)
Reference
In thousands of euro
30
30
28
Note
390
15
14,955
14,550
1,160
109
8
35
4,812
3,500
Share
Share
capital premium
471
471
642
(3)
474
171
(62)
(62)
416
(62)
478
90
90
170
(43)
133
80
134
134
134
134
22
(258)
48
(43)
133
(62)
134
(3)
474
32,505
Total
equity
48
(43)
133
(62)
134
(3)
501
27
708
376 6,204
403
6,912
- 1,550
109
30
- (1,243)
(113)
(113)
755
50
1,132 41,397
27
842 33,347
Minority
Total interest
48
681
5,828
5,828
5,876
6,509
1,550
109
30
(1,243) (1,243)
755
755
50
19,394 40,265
48
(280) 14,006
Trans-
Fair Revalua- Reserve
lation Hedging
value
tion for own Retained
reserve reserve reserve reserve shares earnings
168
Appendix II
Reference
In thousands of euro
IAS 7.18
IAS 7.14(a),(b)
IAS 7.14(c),(d)
IAS 7.31
IAS 7.35
IAS 7.10
IAS 7.21
IAS 7.31
IAS 7.31
IAS 7.16(a)
IAS 7.21
IAS 7.16(h)
IAS 7.39
IAS 7.39
IAS 7.16(c)
IAS 7.16(a)
IAS 7.16(a)
IAS 7.21
IAS 7.16(a)
IAS 7.21
IAS 7.10
Note
2007
2006
101,049
97,976
(94,188) (86,245)
6,861
11,731
(1,367) (1,300)
(400) (1,400)
5,094
9,031
200
380
1,177
987
10,890
(2,125)
(200)
(16,051)
(200)
(305)
(320)
(1,272)
(6,839)
7
9
9
16
19
17
155
330
481
849
11
(2,408)
(437)
(2,411)
(515)
(3,945)
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
169
Reference
In thousands of euro
IAS 7.21
IAS 7.17(a)
IAS 7.17(c)
IAS 7.17(c)
IAS 7.21
IAS 7.21
IAS 7.21
IAS 7.17(b)
IAS 7.17(d)
IAS 7.17(e)
IAS 7.31
IAS 7.10
IAS 7.28
IAS 7.45
Note
2007
26
28
28
26
26
28
26
28
28
26
1,550
5,000
2,000
30
50
(311)
(5,117)
(269)
(1,243)
1,690
(280)
(4,492)
(423)
(524)
(5,719)
(55)
1,568
(12)
1,501
(633)
2,226
(25)
1,568
25
2006
The notes on pages 17 to 163 are an integral part of these consolidated financial statements.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
170
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
171
Appendix III
Operating segments
IFRS 8.20-22
Segment disclosures
The Group has six reportable segments, as described below, which are the Groups strategic
business units. The strategic business units offer different products and services and are
managed separately because they require different technology and marketing strategies. The
following summary describes the operations in each of the Groups reportable segments:
IAS 41.46(a)
Standard Papers. Includes purchasing, manufacturing and distributing pulp and paper.
Recycled Papers. Includes purchasing, recycling and distributing pulp and paper.
Packaging. Includes designing and manufacturing packaging materials; this segment was
sold in May 2007 (see note 7).
Forestry. Includes cultivating and managing forest resources as well as related services.
Timber Products. Includes manufacturing and distributing softwood lumber, plywood,
veneer, composite panels, engineered lumber, raw materials and building materials.
Research and Development. Includes research and development activities.
IAS 41.46(a)
Other operations include the cultivation and sale of farm animals (sheep and cattle), the
construction of storage units and warehouses, and the manufacture of furniture and related
parts. None of these segments has ever met any of the quantitative thresholds for determining
reportable segments.
IFRS 8.27(d)
There is varying levels of integration between the Forestry and Timber Products reportable
segments and the Standard Papers and Recycled Papers reportable segments. This integration
includes transfers of raw materials and shared distribution services respectively. The
accounting policies of the reportable segments are the same as described in note 3.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
172
IFRS 8.23
Entities are required to disclose the following about each reportable segment if the specified
amounts are included in the measure of profit or loss reviewed by the chief operating decision
maker (CODM), or are otherwise regularly provided to the CODM, even if not included in that
measure of segment profit or loss:
a)
b)
c)
d)
e)
f)
IFRS 8.IG5
Because the Groups reportable segments are based on differences in products and services,
no additional disclosures of revenue information about products and services are required
(i.e., disclosures required by IFRS 8.32 with regard to revenue from external customers for
each product or service, or each group of similar products and services is not required).
3.
IFRS 8.23
An entity reports interest revenue separately from interest expense for each reportable
segment unless a majority of the segments revenues are from interest and the CODM
relies primarily on net interest revenue to assess the performance of the segment and make
decisions about resources to be allocated to the segment. In that situation, an entity may
report that segments interest revenue net of its interest expense and disclose that it has
done so.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reportable segment
IFRS 8.23(e)
IFRS 8.21(b)
IFRS 8.23(i)
Investment in associates
Capital expenditure
IFRS 8.21(b)
IFRS 8.24(a)
IFRS 8.24(b)
IFRS 8.21(b)
assets
Impairment on intangible
IFRS 8.23(g)
Interest expense
IFRS 8.23(d)
Interest income
IFRS 8.23(c)
Inter-segment revenue
IFRS 8.23(b)
IFRS 8.23(a), 32
(546)
2006
(462)
46
317
(362)
29
323
27,311 22,060
2007
3,039
1,664
1,558
1,136
9,456
2,025
9,697
9,099
7,556
6,365
8,316
296
(1,408)
587
467
493
4,106
5,227
(567)
76
76
67,092
63,718
2006
2006
2,835
(353)
48
2,681
3,967
2007
(466)
(116)
1,212
979
(696)
(308)
32
2,676
3,646
2006
2,959
127
5,769
1,158
7,097
722
(162)
Forestry
940
7,543 23,193
2007
(Discontinued)
2007
Papers
Papers
Packaging
Recycled
Standard
Operating segments
Information about reportable segments1
In thousands of euro
Reference
3,100
2007
1,236
545
4,521
1,137
(233)
(76)
10
1,456
369
3,664
1,280
(201)
(63)
1,923
2,985
2006
Products
Timber
1,845
169
1,203
2,323
101
(189)
875
2007
158
123
1,946
67
(165)
994
2006
Development
Research and
237
560
7,378
751
(231)
(15)
17
891
1,714
2007
Total
2007
2006
197
7,549
151
9,516
587
493
(116) (1,408)
467
7,825
2,025
2,923
1,558
454 24,066 29,896
150 19,528
195 11,305
765
2006
All others
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
173
174
Reference
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and
other material items
In thousands of euro
2007
IFRS 8.28(a)
Revenues
Total revenue for reportable segments
Other revenue
Elimination of inter-segment revenue
Elimination of discontinued operations
Consolidated revenue
IFRS 8.28(b)
IFRS 8.28(c)
IFRS 8.28(d)
2006
112,297 127,727
2,605
1,618
(7,549)
(9,516)
(7,543) (23,193)
99,810 96,636
Profit or loss
Total profit or loss for reportable segments
Other profit or loss
Elimination of inter-segment profits
Elimination of discontinued operations
Unallocated amounts:
Other corporate expenses
Share of profit of equity accounted investees
Consolidated profit before income tax
10,554
751
(1,695)
162
7,630
195
(1,175)
466
(1,886)
467
8,353
(1,525)
587
6,178
Assets
Total assets for reportable segments
Other assets
Investments in associates
Other unallocated amounts
Consolidated total assets
78,028
7,378
2,025
6,042
93,473
75,621
3,683
1,558
7,641
88,503
Liabilities
Total liabilities for reportable segments
Other liabilities
Other unallocated amounts
Consolidated total liabilities
23,829
237
28,010
52,076
29,442
454
25,260
55,156
IFRS 8.28(e)
In thousands of euro
Reportable
Consolidated
totals
Interest revenue
Interest expense
180
(1,458)
17
(15)
197
(1,473)
Capital expenditure
Depreciation and amortisation
Impairment of intangible assets
Impairment losses reversed
18,968
(5,550)
(116)
493
560
(231)
-
19,528
(5,781)
(116)
493
IFRS 8.28(e)
In thousands of euro
Reportable
Consolidated
totals
Interest revenue
Interest expense
144
(1,279)
7
(20)
151
(1,299)
Capital expenditure
Depreciation and amortisation
Impairment of intangible assets
Impairment losses reversed
2,773
(5,718)
(1,408)
-
150
(199)
-
2,923
(5,917)
(1,408)
-
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
Reference
IFRS 8.33(a), (b)
175
Geographical segments
The Standard Papers, Recycled Papers and Forestry segments are managed on a worldwide
basis, but operate manufacturing facilities and sales offices in France, The Netherlands,
Germany, Canada and the United States of America.
In presenting information on the basis of geographical segments, segment revenue is based
on the geographical location of customers. Segment assets are based on the geographical
location of the assets.
Geographical information
31 December 2007
Non-
current
In thousands of euro
Revenues
assets
29,140
21,654
22,556
5,338
26,644
2,021
23,295
14,366
20,369
6,555
19,273
1,548
2,025
6,042
93,473
France
The Netherlands
Germany
Canada
United States of America
Other countries
Investments in associates
Unallocated assets
Packaging (discontinued)
Consolidated total
IFRS 8.34
(7,543)
99,810
Major customer
Revenues from one customer of the Groups Standard Papers and Recycled Papers segments
represents approximately e19,000 thousand of the Groups total revenues.
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
176
Appendix IV
Currently effective requirements
Below is a list of standards and interpretations in issue at 1 August 2007 that are effective for annual reporting
periods beginning on 1 January 2007. The list highlights the most recent changes to the relevant IFRS.
IFRS 1
IFRS 2
Share-based Payment
Issue date: February 2004
Effective date: 1 January 2005
IFRS 3
Business Combinations
Issue date: March 2004
Effective date: 1 January 2005
IFRS 4
Insurance Contracts
Issue date: March 2004
Most recently amended: in August 2005 by the Amendments to IAS 39 and IFRS 4: Financial
Guarantee Contracts
Effective date of latest amendment: 1 January 2006
Not covered; see About this publication
IFRS 5
IFRS 6
IFRS 7
IAS 1
IAS 2
Inventories
Issue date: revised in December 2003
Effective date: 1 January 2005
IAS 7
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
177
IAS 8
IAS 10
IAS 11
Construction Contracts
Issue date: revised in December 1993
Effective date: 1 January 1995
IAS 12
Income Taxes
Issue date: revised in October 2000
Most recently amended: in March 2004 by IFRS 3
Effective date of latest amendment: 1 January 2005
IAS 14
Segment Reporting
Issue date: revised in August 1997
Most recently amended: in March 2004 by IFRS 3 and IFRS 5
Effective date of latest amendment: 1 January 2005
IAS 16
IAS 17
Leases
Issue date: revised in December 2003
Most recently amended: in August 2005 by IFRS 7
Effective date of latest amendment: 1 January 2007
IAS 18
Revenue
Issue date: revised in 1993
Most recently amended: in March 2004 by IFRS 4
Effective date of latest amendment: 1 January 2005
IAS 19
Employee Benefits
Issue date: revised in 2000
Most recently amended: in December 2004 by the Amendment to IAS 19 Employee Benefits
Actuarial Gains and Losses, Group Plans and Disclosures
Effective date of latest amendment: 1 January 2006
IAS 20
IAS 21
178
IAS 23
Borrowing Costs
Issue date: revised in December 1993
Most recently amended: in December 2003 by IAS 8
Effective date of latest amendment: 1 January 2005
IAS 24
IAS 26
IAS 27
IAS 28
Investments in Associates
Issue date: revised in December 2003
Most recently amended: in March 2004 by IFRS 3 and IFRS 5
Effective date of latest amendment: 1 January 2005
IAS 29
IAS 31
IAS 32
IAS 33
IAS 34
IAS 36
Impairment of Assets
Issue date: revised in March 2004
Most recently amended: in March 2004 by IFRS 5
Effective date of latest amendment: 1 January 2005
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
179
IAS 37
IAS 38
Intangible Assets
Issue date: revised in March 2004
Most recently amended: in December 2004 by IFRS 6
Effective date of latest amendment: 1 January 2006
IAS 39
IAS 40
Investment Property
Issue date: revised in December 2003
Most recently amended: in March 2004 by IFRS 4 and IFRS 5
Effective date of latest amendment: 1 January 2005
IAS 41
Agriculture
Issue date: February 2001
Most recently amended: in March 2004 by IFRS 5
Effective date of latest amendment: 1 January 2005
IFRIC 1
IFRIC 2
IFRIC 4
IFRIC 5
IFRIC 6
Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic
Equipment
Issue date: September 2005
Effective date: 1 December 2005
IFRIC 7
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
180
IFRIC 8
Scope of IFRS 2
Issue date: January 2006
Effective date: 1 May 2006
IFRIC 9
IFRIC 10
SIC7
SIC10
SIC12
SIC13
SIC15
SIC21
SIC25
SIC27
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
SIC29
SIC31
SIC32
2007 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
181
182
Appendix V
Forthcoming requirements
Below is a list of standards and interpretations in issue at 1 August 2007 that are effective for annual reporting
dates beginning after 1 January 2007. The list highlights the effective date of the requirements.
IFRS 8
Operating Segments
Issue date: November 2006
Effective date: 1 January 2009
Revised
IAS 23
Borrowing Costs
Issue date: March 2007
Effective date: 1 January 2009
IFRIC 11
IFRIC 12
IFRIC 13
IFRIC 14
IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction
Issue date: July 2007
Effective date: 1 January 2008
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