Illustrative Condensed Interim Financial Statemenst

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Illustrative condensed interimfinancial statementsInternational Financial Reporting StandardsMarch 2006


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2006 KPMG IFRG Limited, a U.K. company, limited by guarantee. All rights reserved.

About this publication

These illustrative condensed interim financial statements have been produced by the KPMG International

Financial Reporting Group (part of KPMG IFRG Limited), and the views expressed herein are those of the KPMGInternational Financial Reporting Group.

ContentThe purpose of this publication is to assist you in preparing condensed interim financial statements in accordance

with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting. It illustrates one possible

format for condensed interim financial statements, based on a fictitious multinational corporation involved in

general business; the corporation is not a first-time adopter of IFRSs (see Technical guide).

This publication focuses on compliance with IAS 34, but does not repeat all of that standards requirements. In

addition, IFRSs other than IAS 34 are not discussed in this publication except in the context of disclosure in

condensed interim financial statements. While this publication is up to date at the time of printing, IFRSs and their

interpretation change over time. Accordingly, these illustrative condensed interim financial statements should not

be used as a substitute for referring to the standards and interpretations themselves.

When preparing interim financial statements in accordance with IAS 34, an entity should have regard to its local

legal and regulatory requirements, which are not considered in this publication, but which may require additional

disclosures to be made in interim financial statements. For example, IFRSs do not require the presentation of

separate financial statements for the parent entity, and these illustrative condensed interim financial statements

include only consolidated financial statements. However, in some jurisdictions parent entity financial information

also may be required.

IAS 34 deals only with the financial statement component of an interim financial report, and this publication

illustrates only that component. However, typically an interim report will include at least some additionalcommentary by management, either in accordance with local laws and regulations or at the election of the entity.

ReferencesThe illustrative condensed interim financial statements are contained on the odd-numbered pages of this publication.

The even-numbered pages contain explanatory comments and notes. As noted above, these explanatory comments

are not intended to be an exhaustive commentary. To the left of each item disclosed, a reference to the relevant

paragraph in IAS 34 or related standard is provided; generally the references relate only to disclosure requirements.

Other ways KPMG professionals can helpWe have a range of publications that can assist you further, including Insights into IFRS,Financial instruments

accounting, and illustrative financial statements for annual reporting. 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

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Technical guide

IFRSs do not require entities to publish interim financial reports; generally local laws and regulations determine

such requirements. IAS 34 applies to entities that are either required to or elect to publish an interim financialreport in accordance with IFRSs, and encourages such entities that are publicly traded to make their interim report

available within 60 days of the reporting date.

The principles of preparing interim financial statementsIAS 34 defines the minimum content of interim financial statements, including disclosures, and identifies the

recognition and measurement principles that should be applied in preparing interim financial statements. For the

most part, the recognition and measurement principles are consistent with IFRSs used in the preparation of annual

financial statements, though differences do exist, e.g., in the measurement of income tax expense. In addition, a

greater use of estimation may be required than in the preparation of annual financial statements.

IAS 34 permits the disclosure requirements for annual financial statements to be condensed on the assumption

that users of the interim financial report have access to the most recent annual financial statements. Accordingly,

a key requirement of IAS 34 is to disclose information material to an understanding of the current interim period.

This is an area where significant judgement is required by management; some items, such as related party

transactions, may be considered significant because of their nature rather than their size.

Form and content of interim financial statementsIAS 34 permits the presentation of either condensed or a complete set of interim financial statements. If an entity

chooses to publish a complete set of financial statements, then their form and content must conform to the

requirements of IAS 1 Presentation of Financial Statementsin addition to the measurement and any

supplementary disclosure requirements of IAS 34.

If an entity publishes a set of condensed interim financial statements, then these financial statements mustcontain at least each of the headings and subtotals that were included in its most recent annual financial

statements, together with the selected note disclosures required by IAS 34. Additional line items or notes are

required if their omission would make the condensed interim financial statements misleading.

These illustrative condensed interim financial statements assume that the entity prepares a half-year interim

report, but does not produce quarterly interim reports. If the entity illustrated in these condensed interim financial

statements had also published interim financial statements as at and for the quarter ended 31 March 2006, then

an additional income statement for the period from 1 April to 30 June 2006 (and comparatives for the period from

1 April to 30 June 2005) would have been presented in these illustrative condensed interim financial statements.

Measurement and recognitionIAS 34 sets out general recognition and measurement principles and provides examples of applying these

principles. In preparing interim financial statements an entity applies the same accounting policies as in its most

recent annual financial statements, with the exception of changes to accounting policies made after the most

recent annual financial statements. Of course, if applicable IFRSs are amended between the preparation of interim

financial statements and the following annual financial statements, changes to previous policies may be necessary.

An interim period is not a stand-alone reporting period but rather is part of a larger financial year. The principles for

recognising assets, liabilities, income and expenses in interim periods generally are the same as in the preparation

of annual financial statements. As the preparation of interim financial statements often will require an entity to make

greater use of estimates than for annual financial statements, IAS 34 includes examples to illustrate the use of

estimates. An entity should have regard to both the measurement and recognition requirements of IAS 34, as well

as the standards illustrative examples, when preparing its interim financial statements.


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Disclosure in condensed interim financial statementsAs a minimum, information that is material and is not disclosed elsewhere in the interim financial report should be

disclosed in the condensed interim financial statements. Normally the disclosures should be reported on a

financial year-to-date basis.

With the exception of certain disclosures required by IFRS 3 Business Combinations, the disclosure requirements

of other IFRSs are not required in condensed interim financial statements. However, the annual disclosure

requirements provide helpful guidance in considering appropriate disclosures in respect of events and transactions

that are material to an understanding of the current interim period, and IAS 34 acknowledges the role of individual

standards and interpretations in determining the extent of disclosure. In these illustrative condensed interim

financial statements a number of additional disclosures are provided on the basis that the information might be

material to an understanding of the current interim period.

First-time adopters of IFRSsThese illustrative condensed interim financial statements assume that the entity is not a first-time adopter of

IFRSs, and therefore that the interim financial statements are an update from the most recent previous annual

IFRS financial statements. Since a first-time adopter of IFRSs does not have any previous annual IFRS financialstatements, any interim financial statements cannot be seen as simply an update. In our view, an entity may

publish condensed interim financial statements in accordance with IAS 34 even if it has not published IFRS annual

financial statements for the prior period; however, the minimum disclosures prescribed by IAS 34 would be

insufficient to provide an understanding of the interim period and therefore further disclosure is required.

In our view, a first-time adopter of IFRSs should include a complete set of significant accounting policies in its

condensed interim financial statements. Significant judgement then is required in determining other areas that

may require additional disclosure; these may include, but are not limited to:

significant judgements made in applying accounting policies and key sources of estimation uncertainty

segment reporting

non-current assets held for sale and discontinued operations

income tax expense

earnings per share

employee benefits

financial instruments.

Our illustrative interim financial statements published in April 2005 illustrate a set of condensed interim financial

statements for a first-time adopter of IFRSs. While IFRSs have changed from a year ago, the publication may be

useful in assessing the extent of additional disclosures for a first-time adopter of IFRSs.

Insights into IFRS

Our publication Insights into IFRSprovides interpretations of the KPMG International Financial Reporting Group inapplying IFRSs. That publication includes a chapter on interim financial reporting. The views expressed in that

publication are not repeated in their entirety in this publication; rather, the two publications should be used together.


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Note Reference Explanatory note

1. IAS 34.19, 20 The statements must include comparative information; otherwise interim financial statements

cannot claim to be in compliance with IFRSs, and IAS 34 in particular for condensed interim

financial statements. This is particularly important for entities that did not produce interim

financial statements in the year of IFRS adoption, but do produce such statements in the

following year.


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Contents

Reference Page

IAS 34.8 Condensed consolidated interim financial statements

Condensed consolidated interim income statement1 3

Condensed consolidated interim statement of recognised income and expense1 5

Condensed consolidated interim balance sheet1 7

Condensed consolidated interim statement of cash flows1 9

Notes to the condensed consolidated interim financial statements 13

Independent report on review of condensed consolidated interim financial information 35


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2 IFRS Illustrative Condensed Interim Financial Statements

March 2006



1. When interim financial statements are unaudited, generally they are labelled as such in

practice. This is a requirement in some jurisdictions.

2. IAS 34.10 Condensed interim financial statements must include the headings and subtotals that were

included in the most recent annual financial statements. Additional line items are included if

their omission would make the financial statements misleading.

IAS 34 is unclear as to what constitutes headings and subtotals. In these illustrative

condensed interim financial statements we have included all line items that were included in

the most recent annual financial statements.

3. IAS 34.33, Revenues are recognised in interim financial statements when earned. Revenues that are

37, 38 received seasonally, cyclically or occasionally within a financial year are not anticipated or

deferred at the interim reporting date unless this treatment would be appropriate at an annual

reporting date.This issue is discussed in our publication Insights into IFRS.

4. IAS 34.30(b), Expenses are recognised in interim financial statements when an obligation has been incurred.

33, 39 Costs incurred unevenly within a financial year are not anticipated or deferred at the interim

reporting date unless this treatment would be appropriate at an annual reporting date. This issue

is discussed in our publication Insights into IFRS.

5. IAS 34.30(c), The general principle established in IAS 34 is that the interim income tax expense is based on

B12-22 the weighted average annual income tax rate expected for the full year, applied to the pre-tax

interim income. However, a number of issues remain unclear in IAS 34, including the treatment

of permanent differences and the use of a consolidated effective tax rate. These issues are

discussed in our publication Insights into IFRS.

6. The presentation of discontinued operations in these illustrative condensed interim financial

statements differs from the presentation in our most recent illustrative annual financial

statements. This change has been made to illustrate a different approach that is equally

acceptable, and is not intended as a deviation from the general principle that the presentation in

interim financial statements should match that in the most recent annual financial statements

(see footnote 2 above).

7. Although not required explicitly by IAS 34, earnings per share for continuing operations may be

material to an understanding of the current interim period, in which case it would be disclosed.


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Reference Condensedconsolidated interim income statement2

IAS 34.8(b), 20(b) For the six months ended 30 June

In thousands of euro Note 2006 2005

Restated*

Continuing operations

Revenue3

45,980 47,593

Cost of sales 12, 14, 15 (27,460) (27,920)

Gross profit 18,520 19,673

Other income 11, 14 620 190

Distribution expenses (8,108) (8,208)

Administrative expenses (7,803) (8,129)

Other expenses 11 (1,686) (578)

Results from operating activities4

1,543 2,948

Finance income 456 345

Finance expenses (880) (1,004)

Net finance costs (424) (659)

Share of profit of equity accounted investees 233 278

Profit before income tax 1,352 2,567

Income tax expense5

13 (304) (744)

Profit from continuing operations 1,048 1,823

Discontinued operation6

Profit from discontinued operation (net of tax) 8 489 288

Profit for the period 1,537 2,111

Attributable to:

Shareholders of the Company 1,444 2,023

Minority interest 93 88


Earnings per share

IAS 34.11 Basic earnings per share (euro) 0.33 0.53IAS 34.11 Diluted earnings per share (euro) 0.33 0.52

Continuing operations7

Basic earnings per share (euro) 0.17 0.43

Diluted earnings per share (euro) 0.17 0.43

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

IFRS Illustrative Condensed Interim Financial Statements 3

March 2006

These condensed consolidated interim financial statements are unaudited1


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March 2006



1. IAS 34.13 Interim financial statements should include either an interim statement of recognised income

and expense or an interim statement of changes in equity, consistent with the choice of

statement presented in the most recent annual financial statements.

See footnote 4 on page 12 for a discussion on the choice of statement presented when an entity

changes its accounting policy to recognise actuarial gains and losses immediately in equity.

See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented.


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Reference Condensed consolidated interim statement of recognised incomeand expense1

IAS 34.8(c)(ii), 20(c) For the six months ended 30 June


Restated*

Foreign exchange translation differences 511 133

Net gain (loss) on hedge of net investment in foreign subsidiary 5 (8)

Effective portion of changes in fair value of cash flow hedges (93) -

Change in fair value of securities available for sale 235 -

Defined benefit plan actuarial gains and losses 3 - (10)

Income and expense recognised directly in equity 658 115


Total recognised income and expense for the period 2,195 2,226

Attributable to:

Shareholders of the Company 2,072 2,126


Total recognised income and expense for the period 2,195 2,226

Impact of change in accounting policy on retained earnings

at beginning of period 3 (38) -

* See change in accounting policy note 3.


March 2006

These condensed consolidated interim financial statements are unaudited


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March 2006



1. See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented.

2. IAS 34.41, The carrying amount of assets that are measured based on fair value should be determined at

C7 the interim reporting date, including property, plant and equipment accounted for in accordance

with the revaluation model. The fair value assessment at the interim reporting date may involve

a higher degree of estimation than is used for the annual financial statements. When there are

significant changes to market conditions during the interim period, we would expect the

valuation to be updated at the interim reporting date; otherwise, in our view extrapolations

based upon the previous annual reporting date may be appropriate for interim financial

statements. These issues are discussed in our publication Insights into IFRS.

IAS 34.B35, Reviews for indicators of impairment and any resulting impairment tests are performed at

B36 the interim reporting date in the same manner as at an annual reporting date.

3. IAS 34.30(a), Inventory write-downs and interim period manufacturing variances at the interim reporting dateB23, B25-28 are recognised using the same procedures as at an annual reporting date. Therefore they are

recognised even if they are expected to be restored or absorbed by the end of the financial

year. Discretionary purchase rebates and discounts are not anticipated. Contractual rebates are

recognised based upon the best estimate of the amount that will be received. These issues are


4. IAS 34.B9, For defined benefit plans the interim balance sheet position generally is determined by adjusting

C4 the opening balance sheet for the current service cost, interest cost, expected return on

assets, amortisation of actuarial gains and losses (if any), and contributions to the plan.

Generally it does not involve obtaining an updated actuarial valuation. When there are

significant changes to the plan or market conditions during the interim period, we would expect

the actuarial valuation to be updated at the interim reporting date. In our view, when it is

necessary to update the actuarial valuation at the interim reporting date and internal expertise

is not available to do so, an actuary should perform the updated valuation. These issues are



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Reference Condensedconsolidated interim balance sheet1

IAS 34.8(a), 20(a) As at 30 June 2006

30 June 31 Dec


Restated*

Assets

Property, plant and equipment2

14 20,555 31,049

Intangible assets 15 5,986 4,661

Biological assets2

7,629 8,716

Investment property2

5,085 1,050

Investments in equity accounted investees 1,791 1,558

Other investments2

3,767 3,499

Deferred tax assets 13 1,568 1,230

Total non-current assets 46,381 51,763

Inventories3 12 14,005 14,119

Biological assets2

156 140

Other investments2

267 568

Income tax receivable 634 228

Trade and other receivables 17,854 19,689

Cash and cash equivalents 2,356 1,850

Assets classified as held for sale2

9 12,891 -

Total current assets 48,163 36,594

Total assets 94,544 88,357

Equity

Issued capital 15,015 14,550

Share premium 4,722 3,500

Reserves 1,006 356

Retained earnings 15,155 14,121

Total equity attributable to shareholders of the Company 35,898 32,527


Total equity 16 36,841 33,347

Liabilities

Loans and borrowings 17 19,218 17,116

Employee benefits

4

2,306 2,110Deferred government grants 1,462 1,500

Provisions 1,000 400

Deferred tax liabilities 2,587 1,421

Total non-current liabilities 26,573 22,547

Bank overdraft 120 282

Loans and borrowings 17 6,559 6,476

Income tax payable 1,893 -

Trade and other payables 18,658 24,505

Provisions 19 250 1,200

Liabilities classified as held for sale 9 3,650 -

Total current liabilities 31,130 32,463Total liabilities 57,703 55,010

Total equity and liabilities 94,544 88,357

* See change in accounting policy note 3.


March 2006



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March 2006



1. See footnote 2 on page 2 for a discussion on the headings and subtotals to be presented.

The presentation of the cash flow statement following the indirect method for operating

activities in these illustrative condensed interim financial statements differs from the

presentation in our most recent illustrative annual financial statements, where the direct

method was used for operating activities. This change has been made to illustrate a different

approach that is equally acceptable, and is not intended as a deviation from the general

principle that the presentation in interim financial statements should match that in the most

recent annual financial statements (see footnote 2 on page 2).


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Reference Condensed consolidated interim statement of cash flows1

IAS 34.8(d), 20(d) For the six months ended 30 June


Restated*

Cash flows from operating activities continuing operations


Adjustments for:

Depreciation 6,596 5,850

Amortisation 290 355

(Reversal of) impairment losses on property, plant and equipment 14 (393) 512

Impairment losses on goodwill 15 116 131

Impairment losses on assets classified as held for sale 9 25 -

Write-down of inventory 12 258 -

Change in value of biological assets 144 (65)

Change in value of investment property 55 (100)Net finance costs 424 659

Share of profit of equity accounted investees (233) (278)

Gain on sale of property, plant and equipment 14 (108) (25)

Share-based payments 1,147 955

Income tax expense 304 744

10,162 10,849

Change in inventories (4,069) 2,695

Change in trade and other receivables (5,745) (435)

Change in trade and other payables 1,212 (703)

Change in provisions and employee benefits (154) 132

Change in deferred government grant (38) -

1,368 12,538

Interest paid (800) (720)

Income taxes paid (1,030) (950)

Net cash (used in) from operating activities

continuing operations (462) 10,868

Cash flows from investing activities continuing operations

Interest received 680 85

Dividends received 62 100

Proceeds from sale of property, plant and equipment 14 4,217 406

Proceeds from sale of investments 3,900 849

Acquisition of subsidiary, net of cash acquired 10 (2,125) -Acquisition of property, plant and equipment 14 (10,226) (2,315)

Acquisition of investment property (4,090) -

Acquisition of other investments (3,077) -

Development expenditure (1,581) (350)

Net cash used in investing activities continuing operations (12,240) (1,225)

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


March 2006



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March 2006


This page has been left blank intentionally.


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Condensed consolidated interim statement of cash flows (continued)

For the six months ended 30 June


Restated*

Cash flows from financing activities continuing operations

Proceeds from the issue of share capital 16 1,570 -

Proceeds from the issue of convertible notes 17 5,000 -

Proceeds from the issue of redeemable preference shares 17 2,000 -

Proceeds from the sale of own shares 16 30 -

Payment of transaction costs 17 (302) -

Repurchase of own shares - (280)

Repayment of borrowings 17 (4,811) (1,492)

Payment of finance lease liabilities 17 (130) (123)

Dividends paid 16 (1,243) (520)

Net cash from (used in) financing activitiescontinuing operations 2,114 (2,415)

Discontinued operation

Net cash from operating activities 356 948

Net cash from investing activities 10,890 852

Net cash from financing activities - -

Net cash from discontinued operation 11,246 1,800

Net increase in cash and cash equivalents 658 9,028

Cash and cash equivalents at 1 January 1,568 966

Effect of exchange rate fluctuations on cash held 10 7

Cash and cash equivalents at 30 June 2,236 10,001

Cash and cash equivalents for the purpose of the cash flow statement includes bank overdrafts.

* See discontinued operation note 8.


March 2006



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March 2006



1. IAS 34.14 The interim financial statements are prepared on a consolidated basis if the most recent

annual financial statements were prepared on a consolidated basis. If the most recent annual

report included separate financial statements of the parent, an entity is neither required to

include nor prohibited from including separate financial statements of the parent in its interim

financial report.

2. IAS 34.3, 19 In order to state compliance with IAS 34, condensed interim financial statements must comply

with all of the requirements of the standard.

3. IAS 34.16(a), Interim financial statements should reflect the same accounting policies as in the most recent

28 annual financial statements, except for changes in accounting policy that will be reflected in

the next annual financial statements. Therefore new standards and interpretations are applied in

the first interim period within the annual period to which they apply.

These illustrative condensed interim financial statements illustrate one possible change inaccounting policy. The following standards and interpretations, which are mandatory for annual

periods beginning on or after a specified date in late 2005 or 2006 (see below in brackets), also

may be relevant for interim reporting dates in 2006:

IFRS 6 Exploration for and Evaluation of Mineral Resources(1 January 2006)

Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates Net Investment

in a Foreign Operation(1 January 2006)

Amendments to IAS 39 Financial Instruments: Recognition and Measurement Cash Flow

Hedge Accounting of Forecast Intragroup Transactions(1 January 2006)

Amendments to IAS 39 Financial Instruments: Recognition and Measurement The Fair

Value Option(1 January 2006)

Amendments to IAS 39 and IFRS 4 Financial Guarantee Contracts(1 January 2006) IFRIC 4 Determining whether an Arrangement contains a Lease(1 January 2006)

IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental

Rehabilitation Funds(1 January 2006)

IFRIC 6 Liabilities arising from Participating in a Specific Market Waste Electrical and

Electronic Equipment(1 December 2005)

IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in

Hyperinflationary Economies(1 March 2006)

IFRIC 8 Scope of IFRS 2 Share-based Payment(1 May 2006)

IFRIC 9 Reassessment of Embedded Derivatives(1 June 2006).

IAS 34.17(g) These condensed interim financial statements do not illustrate the correction of an error, which

is an example of the kinds of disclosures required by IAS 34.

4. IAS 19.93B If an entity chooses to recognise all actuarial gains and losses immediately in equity, then

the entity must present a statement of recognised income and expense as a primary

statement; it cannot present recognised income and expense as an element of a statement

of changes in equity.

5. IAS 34.16(a) IAS 34 requires disclosure of the nature and effect of any change in accounting policy. In these

condensed interim financial statements we have illustrated all of the disclosures that would be

required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errorsin a

complete set of IFRS financial statements.


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Reference Notes to the condensed consolidated interim financial statements

1. Reporting entity1

[Name] (the Company) is a company domiciled in [country]. The condensed consolidated

interim financial statements of the Company as at and for the six months ended 30 June 2006

comprise the Company and its subsidiaries (together referred to as the Group) and the Groups

interests in associates and jointly controlled entities.

The consolidated financial statements of the Group as at and for the year ended 31 December 2005

are available upon request from the Companys registered office at [address] or at [Web site address].

2. Statement of compliance2

IAS 34.19 These condensed consolidated interim financial statements have been prepared in accordance

with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting. They do

not include all of the information required for full annual financial statements, and should be read

in conjunction with the consolidated financial statements of the Group as at and for the year

ended 31 December 2005.

These condensed consolidated interim financial statements were approved by the Board of

Directors on [date].

3. Significant accounting policies3

IAS 34.16(a) Except as described below, the accounting policies applied by the Group in these condensed

consolidated financial statements are the same as those applied by the Group in its

consolidated financial statements as at and for the year ended 31 December 2005.

The Group adopted an amendment to IAS 19 Employee Benefits Actuarial Gains and Losses,

Group Plans and Disclosuresas at 1 January 2006. The Group now recognises all actuarial gains

and losses arising from defined benefit plans immediately in equity. Previously the Group applied

the corridor method to recognise actuarial gains and losses over the expected average remaining

working lives of employees in the plan, and recognised such gains and losses in profit or loss.4

IAS 34.43(a) The change in accounting policy was recognised retrospectively in accordance with the transitional

provisions of the amendment, and comparatives have been restated. The change in accounting

policy had the following impact on these condensed consolidated interim financial statements:5

In thousands of euro 2006 2005

Income statement for the six months ended 30 June

Decrease in cost of sales - 5Decrease in distribution expenses - 3

Increase in income tax expense - (2)

Increase in results from operating activities (continuing operations) - 6

Recognised income and expense for the six months ended 30 June

Decrease in net income recognised directly in equity - (10)

Increase in profit for the period - 6

Decrease in total recognised income and expense for the period - (4)

Balance sheet at 30 June 2006 (31 December 2005)

Cumulative increase in liability for employee benefits (51) (51)

Cumulative increase in deferred tax asset 13 13

Cumulative decrease in retained earnings (38) (38)

The change in accounting policy had no material impact on earnings per share.


March 2006



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March 2006



1. See footnote 4 on page 6 for a discussion on obtaining an actuarial valuation at an interim

reporting date.

2. IAS 34.35, 36 Revisions to accounting estimates are recognised in the interim period in which the estimate is

revised if the revision affects only that period, or in the period of the revision and future periods

if the revision affects both current and future periods. Prior interim periods are not restated.

IAS 34.26 If an estimate of an amount reported in an interim period is changed significantly during the

final interim period, but a separate financial report is not published for that interim period,

then the nature and amount of that change in estimate is disclosed in a note to the annual

financial statements.

The International Financial Reporting Interpretations Committees (IFRIC) Exposure Draft D18

Interim Financial Reporting and Impairmentproposes that an entity should not reverse an

impairment loss recognised in a previous interim period in respect of goodwill, an investment inan equity instrument or a financial asset carried at cost (not amortised cost). The IFRIC has

invited comments on this draft interpretation by 31 March 2006, and a final interpretation is

expected later in 2006.

3. IAS 34.16(d) An entity should disclose the nature and amount of material changes in estimates of

amounts reported in prior interim periods or in prior financial years.

4. Although not required explicitly by IAS 34, any changes in an entitys financial risk

management objectives and policies may be material to an understanding of the current interim

period, in which case such changes would be disclosed.


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3. Significant accounting policies(continued)The change in accounting policy did not result in the recognition of any actuarial gains and losses

during the six months ended 30 June 2006 because the Group did not update its actuarial

valuation during this period; there were no changes to the plan, and no significant changes in

market conditions, during this period.1

4. Estimates2

IAS 34.41 The preparation of interim financial statements requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets and liabilities, income and expense. Actual results may differ from

these estimates.

Except as described below, in preparing these condensed consolidated interim financial

statements, the significant judgements made by management in applying the Groups

accounting policies and the key sources of estimation uncertainty were the same as those thatapplied to the consolidated financial statements as at and for the year ended 31 December 2005.3

IAS 34.16(d) During the six months ended 30 June 2006 management reassessed its estimates in respect of:

previously unrecognised deferred tax assets related to the carryforward of unused tax losses

(see note 13)

the recoverable amount of certain property, plant and equipment (see note 14)

the recoverable amount of goodwill (see note 15).

5. Financial risk management4

During the six months ended 30 June 2006 the Group changed its policy in respect of the

hedging of foreign currency denominated items. The Group now hedges at least 90 percent

(2005: 80 percent) of all trade receivables and trade payables denominated in a foreign currency,

and at any point in time the Group hedges 90 percent (2005: 80 percent) of its estimated foreign

currency exposure in respect of forecasted sales and purchases over the following six months.

Other aspects of the Groups financial risk management objectives and policies are consistent

with that disclosed in the consolidated financial statements as at and for the year ended

31 December 2005.


March 2006



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March 2006



1. IAS 34.16(g) If IAS 14 Segment Reportingrequires an entity to disclose segment information in its annual

financial statements, an entity should disclose segment revenue and segment results in its

interim financial statements for either business or geographical segments, whichever is the

entitys primary basis of segment reporting.

The disclosure in these illustrative condensed interim financial statements goes beyond the

strict requirements of IAS 34 by reconciling the segment result to the condensed interim

income statement.

2. IAS 34.21 An entity whose business is highly seasonal is encouraged to provide, as additional disclosure,

financial information for the 12 months ending on the interim reporting date and comparative

information for the comparable 12-month period. These condensed interim financial statements

illustrate such information consistent with the level of disclosure provided for segment reporting.


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2006KPMGIFRGLimited,aU.K.

company,limitedbyguarantee.Allrightsreserved.


IAS 34.16(g) 6. Segment reporting1


Packaging Other

Paper Forestry (Discontinued) operations

In thousands of euro 2006 2005 2006 2005 2006 2005 2006 2005

Restated Restated Restated

IAS 34.16(g) Segment revenue 42,918 45,863 4,524 4,381 8,893 13,836 1,218 834

IAS 34.16(g) Segment result 1,923 2,487 813 1,004 338 436 89 167

Unallocated expenses

Results from operating activities

Less results from operating activities (discontinued operation)

Results from operating activities (continuing operations)

IAS 14.81 The Group comprises the following main business segments:

Paper the manufacture and sale of paper used in the printing industry, as well as research and develop

Forestry the cultivation of pine trees and the sale of wood, as well as related services.

Packaging the design and manufacture of packaging materials; this segment was sold in May 2006 (se

7. Seasonality of operations

IAS 34.16(b) The Groups Forestry segment is subject to seasonal fluctuations as a result of weather conditions. In particu

the provision of related services in key geographical areas are impacted negatively by winter weather condit

January to March. The Group attempts to minimise the seasonal impact through the management of invento

period; however, the first half-year typically results in lower revenues and results for this segment.

IAS 34.21 For the 12 months ended 30 June 2006 the Forestry segment had segment revenue of 11,601 thousand (12

10,588 thousand) and a segment result of 2,311 thousand (12 months ended 30 June 2005: 2,169 thous


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March 2006



1. IAS 34.16(i) An entity should disclose the effects of changes in the composition of an entity during the interim

period, including business combinations, acquisitions and disposals of subsidiaries and long-term

investments, restructurings and discontinued operations. In respect of business combinations

effected during the period, or after the reporting date but before the interim financial statements

are authorised for issue, an entity is required to disclose in its interim financial statements the

information required by paragraphs 66-73 of IFRS 3 Business Combinations.

2. IAS 34.16(i) IAS 34 requires disclosure of changes in the composition of the entity as a result of

discontinued operations. In these condensed interim financial statements we have illustrated

all of the disclosures that would be required by IFRS 5 Non-current Assets Held for Sale and

Discontinued Operationsin a complete set of IFRS financial statements.

3. Although not required explicitly by IAS 34, details of non-current assets held for sale may be

material to an understanding of the current interim period, in which case such details would

be disclosed.

4. IAS 34.17(b) Impairment losses are an example of the kinds of disclosures required by IAS 34.

5. IAS 34.16(i) Where relevant, the disclosures required by IFRS 3.69, 72 and 73 in respect of provisional

accounting for a business combination and adjustments relating to business combinations

effected in the current or in previous periods should be given.


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8. Discontinued operation1, 2

IAS 34.16(i) In May 2006 the Group sold its entire Packaging segment (see note 6); the segment was not a

discontinued operation or classified as held for sale as at 31 December 2005 and the

comparative income statement and statement of cash flows have been restated to show the

discontinued operation separately from continuing operations. The effect of the disposal was a

decrease in the net assets of the Group of 10,154 thousand, excluding cash consideration

received of 11,000 thousand. The net cash inflow on disposal after deducting cash disposed of

was 10,890 thousand.

Profits attributable to the discontinued operation for the six months ended 30 June were as follows:


Results of discontinued operation

Revenue 8,043 12,418Expenses (7,705) (11,982)

Results from operating activities 338 436

Income tax expense (365) (148)

Profit after tax but before gain on sale of discontinued operation (27) 288

Gain on sale of discontinued operation 846 -

Tax on gain on sale of discontinued operation (330) -

Profit for the period 489 288

9. Assets held for sale3

Part of a manufacturing facility within the Paper segment is presented as a disposal group held

for sale following the commitment of the Groups management, on 15 June 2006, to a plan to

sell facilities due to a regional economic downturn. Efforts to sell the disposal group have

commenced, and a sale is expected by January 2007. As at 30 June 2006 the disposal group

comprised assets of 12,891 thousand less liabilities of 3,650 thousand:

In thousands of euro

Property, plant and equipment 8,756

Inventory 2,750

Trade and other receivables 1,385

Trade and other payables (3,650)

9,241

IAS 34.17(b) An impairment loss of 25 thousand on the remeasurement of the disposal group to the lower

of its carrying amount and its fair value less costs to sell has been recognised in other expenses.4

IAS 34.16(i) 10. Acquisition of subsidiary1, 5

IFRS 3.66(a), On 31 March 2006 the Group acquired all of the shares in Papyrus Pty Limited for 2,500 thousand

67(a)-(d), in cash. The company manufactures and distributes recycled paper. In the three months to

67(i), 70 30 June 2006 the subsidiary contributed profit of120 thousand. If the acquisition had occurred

on 1 January 2006, management estimates that consolidated revenue would have been

56,916 thousand and consolidated profit for the period would have been 1,657 thousand for

the six months ended 30 June 2006.


March 2006



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March 2006



1. IAS 34.16(c) An entity should disclose the nature and amount of items affecting assets, liabilities, equity, net

income or cash flows that are unusual because of their nature, size or incidence.

2. IAS 34.17(a) Inventory write-downs and their reversal are examples of the kinds of disclosures required by

IAS 34.


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10. Acquisition of subsidiary (continued)

The acquisition had the following effect on the Groups assets and liabilities:

Pre-

Recognised acquisition

values on Fair value carrying

IFRS 3.67(f) In thousands of euro acquisition adjustments amounts

Property, plant and equipment 1,955 90 1,865

Intangible assets 250 125 125

Inventories 375 10 365

Trade and other receivables 404 - 404

Cash and cash equivalents 375 - 375

Loans and borrowings (500) 30 (530)

Deferred tax liabilities (79) (77) (2)Trade and other payables (430) - (430)

Net identifiable assets and liabilities 2,350 178 2,172

Goodwill on acquisition 150

IFRS 3.67(d) Consideration paid, satisfied in cash* 2,500

Cash acquired (375)

Net cash outflow 2,125

IFRS 3.67(d) * Includes legal fees of25 thousand.

IFRS 3.67(h) The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent

of the acquired businesss workforce and the synergies expected to be achieved from integrating

the company into the Groups existing paper business.

11. Earthquake related expenses1

IAS 34.16(c) During the six months ended 30 June 2006 expenses of 856 thousand were incurred due to an

earthquake near production facilities in [country] and are included in other expenses. The

expenses relate to the survey of production facilities and the removal of damaged items.

Related insurance recoveries of 250 thousand are included in other income.

IAS 34.17(a) 12. Write-down of inventory2

During the six months ended 30 June 2006 the Group recognised a write-down of finished goods

inventory of 258 thousand related to paper purchased for a specific customer who

subsequently declared bankruptcy, which is included in cost of sales. There were no inventorywrite-downs recognised during the six months ended 30 June 2005.


March 2006



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March 2006



1. Although not required explicitly by IAS 34, any changes in an entitys effective tax rate may be

material to an understanding of the current interim period, in which case information in respect

of such changes would be disclosed.

2. IAS 34.17(b), Impairment losses, acquisitions and disposals of property, plant and equipment, and

(d), (e) commitments for the purchase of property, plant and equipment are examples of the kinds of

disclosures required by IAS 34.


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13. Income tax expense1

The Groups consolidated effective tax rate in respect of continuing operations for the six months

ended 30 June 2006 was 23 percent (for the year ended 31 December 2005: 33 percent; for the

six months ended 30 June 2005: 29 percent). This change in effective tax rate was caused

mainly by two factors:

A decrease in the income tax rate in [country] was enacted in April 2006, effective from

1 January 2007.

Previously unrecognised tax losses were recognised in the current period as management

now considers it probable that future taxable profits will be available against which they can

be utilised. Management revised its estimates following the pilot of a new type of paper in

[country], which is proving popular with customers and is increasing the subsidiarys results

from operating activities.

14. Property, plant and equipment2IAS 34.17(d) Acquisitions and disposals

During the six months ended 30 June 2006 the Group acquired assets with a cost of 12,156

thousand (six months ended 30 June 2005: 2,315 thousand), including assets acquired through

business combinations (see note 10) of 1,930 thousand (six months ended 30 June 2005: nil).

Assets with a carrying amount of 3,877 thousand were disposed of as part of the discontinued

operation (see note 8). Other assets with a carrying amount of 4,109 thousand were disposed

of during the six months ended 30 June 2006 (six months ended 30 June 2005: 381 thousand),

resulting in a gain on disposal of 108 thousand (six months ended 30 June 2005: gain of

25 thousand), which is included in other income.

IAS 34.17(b) Reversal of impairment loss

In 2005 export restrictions were enacted for a particular product of the Papersegment that

caused the Group to assess the recoverable amount of a number of specialised machines

dedicated to that product. Based on this assessment, the carrying amount of those machines

was written down by 512 thousand.

IAS 34.16(d) During the six months ended 30 June 2006, following modifications to those restrictions, the Group

reassessed its estimates and 393 thousand of the impairment loss was reversed (included in

cost of sales). The estimate of recoverable amount was based on the value in use of the

machines, calculated using a pre-tax discount rate of seven percent (2005: eight percent).

IAS 34.17(e) Capital commitmentsDuring the six months ended 30 June 2006 the Group entered into a contract to purchase

property, plant and equipment for 1,465 thousand (six months ended 30 June 2005: nil);

delivery is expected in March 2008.


March 2006



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March 2006



1. IAS 34.16(d), IAS 34 requires disclosure of the nature and amount of changes in estimates, and identifies

17(b) impairment losses as an example of the kinds of disclosures required by the standard. In these

condensed interim financial statements we have illustrated all of the disclosures that would be

required by IAS 36 Impairment of Assetsin respect of the annual impairment testing of

goodwill in a complete set of IFRS financial statements.


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15. Goodwill1

IAS 34.16(d), The Group performed its annual impairment testing of goodwill during the six months ended

17(b) 30 June 2006. As a result of this testing, the carrying amount of the European forestry cash-

generating unit, which comprises operations of the Forestry segment (see note 6), was

determined to be higher than its recoverable amount and an impairment loss of 116 thousand

(six months ended 30 June 2005: 131 thousand) was recognised. The impairment loss was

allocated fully to goodwill, and is included in cost of sales. The impairment resulted from an

increase in the expected future environmental costs due to regulatory developments in several

European countries where the Group cultivates and sells wood.

Goodwill is allocated to cash-generating units as follows as at 30 June 2006 (31 December 2005):


European paper manufacturing and distribution 2,470 2,320

European forestry 1,213 1,329

3,683 3,649

Multiple units without significant goodwill 157 157

Total goodwill 3,840 3,806

The European paper manufacturing and distribution units impairment test was based on fair

value less costs to sell. In the past year competing businesses in the same sector and of

generally similar size have been bought and sold by companies in the industry as part of the

ongoing consolidation in the industry. The sales prices for these units were used to derive a

price / earnings ratio, which was applied to the earnings of the unit to determine recoverable

amount. This recoverable amount significantly exceeds the carrying amount of the unit includinggoodwill; management considers that it is not reasonably possible for the assumed price /

earnings ratio to change by such a significant amount so as to eliminate this excess.

The recoverable amount of the European forestry cash-generating unit was based on value in

use calculations. Those calculations use cash flow projections based on actual operating

results and the five-year business plan. Cash flows for a further 20-year period were

extrapolated using a two percent growth rate, which was consistent with the long-term

average growth rate for the industry. A pre-tax discount rate of eight percent was used in

discounting the projected cash flows.

The key assumptions and the approach to determining their value were:

Assumption How determined

Timber price growth Statistical analysis of long-term market price

trends adjusted annually for actual experience.

Environmental cost growth Prediction of change in government regulation.

New regulations are being discussed and have

been reflected in increased costs from 2007.

The timber price growth was assumed to be one percent per annum above inflation in the first

five years. Environmental cost growth was considered to be 25 percent in 2007 and in line with

inflation thereafter. This represents an increase over the 20 percent estimate used in theimpairment testing in 2005, and reflects various regulatory developments in a number of

European countries where the unit operates.


March 2006



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March 2006



1. IAS 34.16(e) IAS 34 requires the disclosure of issues and repurchases of equity securities.

IAS 34.8, 13 IAS 34 is unclear as to whether an entity that presents a statement of recognised income and

expense in its condensed interim financial statements should disclose details of other changes

in equity in the notes thereto. In these condensed interim financial statements we have

illustrated the disclosure of all movements in equity, which includes disclosure about the issue

and repurchase of equity securities.


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2006KPMGIFRGLimited,aU.K.

company,limitedbyguarantee.Allrightsreserved.


IAS 34.16(e) 16. Capital and reserves1

Reconciliation of movements in equity

Attributable to shareholders of the Company

Reserve

Share Share Translation Hedging Fair value for own Ret

In thousands of euro capital premium reserve reserve reserve shares ear

Balance at 1 January 2005 14,550 3,500 (129) 478 80 - 10

Total recognised income and expense - - 125 - - - 2

52 thousand own shares acquired - - - - - (280)

Share-based payments (net of tax) - - - - - -

Dividends to shareholders - - - - - -

Balance at 30 June 2005 14,550 3,500 (4) 478 80 (280) 12

Balance at 1 January 2006 14,550 3,500 78 423 135 (280) 14

Total recognised income and expense - - 486 (93) 235 - 1Issue of 165 thousand ordinary shares 465 1,105 - - - -

Issue of convertible notes (net of tax) - 109 - - - -

4 thousand own shares sold - 8 - - - 22

Dividends to shareholders - - - - - - (1

Share-based payments (net of tax) - - - - - -

Balance at 30 June 2006 15,015 4,722 564 330 370 (258) 15

Dividends

IAS 34.16(f) The following dividends were declared and paid by the Group:



0.27 per qualifying ordinary share (2005: 0.03) 823 100

0.24 per non-redeemable preference share (2005:0.24) 420 420

1,243 520


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March 2006



1. IAS 34.16(e) IAS 34 requires the disclosure of issues and repayments of debt securities. The disclosure in

these illustrative condensed interim financial statements goes beyond the strict requirements

of IAS 34 by reconciling the opening and closing balance of total loans and borrowings.

2. IAS 34.17(i) These condensed interim financial statements do not illustrate any loan default or breach of a

loan agreement that has not been remedied on or before the interim reporting date; these are

examples of the kinds of disclosures required by IAS 34.


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IAS 34.16(e) 17. Loans and borrowings1, 2

The following loans and borrowings (non-current and current) were issued and repaid during the

six months ended 30 June 2006:

Interest rate Face Carrying Year of

In thousands of euro Currency nominal* effective* value amount maturity

Balance at 1 January 2006 23,592

New issues

Convertible notes euro 3.25% 3.50% 5,000 4,678 2009

Redeemable preference

shares euro 4.40% 4.51% 2,000 1,948 2011

Loan acquired

(see note 10) USD 3.80% 3.65% 530 500 2009

RepaymentsLoan from associate euro 4.80% - (1,000) (1,000) -

Secured bank loan euro LIBOR+% - (3,811) (3,811) -

Finance lease liabilities euro 7.25% - (130) (130) -

Balance at 30 June 2006 25,777

* Dividend rate for redeemable preference shares.

Convertible notes


Proceeds from issue of convertible notes 5,000

Transaction costs (250)

Net proceeds 4,750

Amount classified as equity (163)

Accreted interest 91

Carrying amount at 30 June 2006 4,678

The notes are convertible into 250 thousand ordinary shares in June 2009 at the option of the

holder, which is a rate of one share for every five convertible notes; unconverted notes become

repayable on demand. The notes are subject to interest rate swaps that ensure the appropriate

mix of fixed and floating rate exposure consistent with the Groups policy.

Redeemable preference shares


Proceeds from issue of redeemable preference shares 2,000

Transaction costs (52)

Carrying amount at 30 June 2006 1,948

The redeemable preference shares do not carry the right to vote, and participate with regard to

the Companys residual assets only to the extent of the face value of the shares adjusted for any

dividends in arrears. Redeemable shares are subject to interest rate swaps that ensure the

appropriate mix of fixed and floating rate exposure consistent with the Groups policy.


March 2006



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1. Although not required explicitly by IAS 34, details of share-based payment transactions may

be material to an understanding of the current interim period, in which case such details

would be disclosed.

2. IAS 34.17(c) The reversal of a restructuring provision is an example of the kinds of disclosures required by

IAS 34.

3. IAS 34.17(f) Litigation settlements are an example of the kinds of disclosures required by IAS 34.


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18. Share-based payments1

In 2005 the Group established a share option programme that entitles key management

personnel and senior employees to purchase shares in the entity. The terms and conditions of the

share option programme are disclosed in the consolidated financial statements as at and for the

year ended 31 December 2005. In January 2006 a further grant on similar terms was made to

key management personnel.

The terms and conditions of the grants made during the six months ended 30 June 2006 are

as follows:

Number of Contractual

Grant date instruments Vesting conditions life of options

Option grant at 1 January 2006 100,000 Three years of service 10 years

Fair value of share options and assumptions for the six months ended 30 June 2006:

Fair value at grant date 4.2

Share price 12.0

Exercise price 12.0

Expected volatility (expressed as weighted average

volatility used in the modelling under binomial

lattice model) 40.3 - 42.5%

Option life (expressed as weighted average life

used in the modelling under binomial lattice model) 5.4 - 8.6 years

Expected dividends 3.2%

Risk-free interest rate (based on government bonds) 3.8% - 3.9%

The basis of measuring fair value is consistent with that disclosed in the consolidated financial

statements as at and for the year ended 31 December 2005.

IAS 34.17(c) 19. Restructuring provision2

A provision of 200 thousand was reversed during the six months ended 30 June 2006 in

respect of the Groups exit from the French market, which was disclosed in the consolidated

financial statements as at and for the year ended 31 December 2005. The Groups exit was

completed in May 2006.

IAS 34.16(j) 20. ContingenciesIn January 2005 an environmental agency brought an action against a wholly-owned subsidiary.

As at 31 December 2005 no provision was recorded as the probability of outflow of economic

resources related to the action was assessed as being remote. During the six months ended

IAS 34.17(f) 30 June 2006 the action was dismissed with no settlement amount being paid by the subsidiary.3


March 2006



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March 2006



1. IAS 34.17(j) Related party transactions are an example of the kinds of disclosures required by IAS 34.

Given the increasing importance of corporate governance issues, in our view it is preferable

that related party transactions be disclosed in condensed interim financial statements in all

circumstances, except when clearly immaterial. Even if related party transactions are not

material by virtue of their size, we encourage highlighting their existence, together with a

reference to the relevant disclosure in the most recent annual financial statements. If related

party transactions also are material in terms of size, then more extensive disclosure may

be required. This issue is discussed in our publication Insights into IFRS.


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IAS 34.17(j) 21. Related parties1

Parent and ultimate controlling party

During the six months ended 30 June 2006 a majority of the Companys shares were acquired

by [name of new parent] from [name of old parent]. As a result the new ultimate controlling

party of the Group is [name].

Transactions with key management personnel

Unsecured loans to directors during the six months ended 30 June 2006 amounted to 65 thousand

(six months ended 30 June 2005: 32 thousand). No interest is payable by the directors. As at

30 June 2006 the balance outstanding was15 thousand (31 December 2005: 12 thousand).

Key management personnel receive compensation in the form of short-term employee

benefits, post-employment benefits and share-based payments (see note 18). Key

management personnel received total compensation of 750 thousand for the six months

ended 30 June 2006 (six months ended 30 June 2005: 725 thousand).

Other related party transactions

Transaction value Balance outstanding

Six months ended

In thousands of euro 30 June 30 June 30 June 31 December

2006 2005 2006 2005

Sale of goods

Parent of the Group 3,400 2,890 2,300 1,690

Associate 725 400 560 350

Expenses

Associate administrative services 133 45 120 68

Associate interest expense 16 - 48 12

Company controlled by a director

lease of property 34 - - -

All outstanding balances with these related parties are to be settled in cash within six months of

the balance sheet date. None of the balances is secured.

In addition, during the six months ended 30 June 2006 the Group repaid a loan of 1,000 thousand

received from one of its associates see note 17.

IAS 34.16(h) 22. Subsequent event

Subsequent to the interim balance sheet date, one of the Groups major trade debtors went

into liquidation following a number of environmental protests staged at its operating plant.

The environmental campaign against the company commenced after 30 June 2006. Of the

100 thousand owed by the debtor as at 30 June 2006, the Group expects to recover less than

10 thousand. No impairment loss has been recognised in these interim financial statements.


March 2006



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March 2006



1. The review report illustrated in these condensed interim financial statements is based on the

International Standard on Review Engagements (ISRE) 2410 Review of Interim Financial

Information Performed by the Independent Auditor of the Entity, which is effective for reviews of

interim financial information for periods beginning on or after 15 December 2006; earlier

adoption of the standard (in its entirety) is permissible.

If a review of interim financial information is carried out under local laws and standards, then

the form of the report will conform to those laws and standards.


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Independent report on review of condensed consolidated interim financial information1

[Appropriate Addressee]

[Name of entity]

Introduction

We have reviewed the accompanying condensed consolidated balance sheet of [name of entity] as at 30 June

2006 and the related condensed consolidated statements of income, recognised income and expense and cash

flows for the six-month period then ended (interim financial information). Management is responsible for the

preparation and presentation of this interim financial information in accordance with International Financial

Reporting Standard IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this interim

financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410 Review ofInterim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial

information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and

applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in

accordance with International Standards on Auditing and consequently does not enable us to obtain assurance

that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not

express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim

financial information is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.

[Name of firm signing]

[Date]

[Address]


March 2006


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KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent firmsoperating under the KPMG name. KPMG International provides no audit or other client services. Such services areprovided solely by member firms of KPMG International (including sublicensees and subsidiaries) in their respectivegeographic areas. KPMG International and its member firms are legally distinct and separate entities. They are notand nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries,agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obli-gate or bind KPMG International or any other member firm, nor does KPMG International have any such authority toobligate or bind any member firm, in any manner whatsoever.

The information contained herein is of a general nature and is not intended to address the circumstances of any par-ticular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guar-antee that such information is accurate as of the date it is received or that it will continue to be accurate in thefuture. No one should act upon such information without appropriate professional advice after a thorough examina-tion of the particular situation.

2006 KPMG IFRG Limited, a UK company, limitedby guarantee. All rights reserved. Printed in the UK.

KPMG and the KPMG logo are registered trademarksof KPMG International, a Swiss cooperative.

Cover design: Mytton Williams LtdPublication no: 300848

Publication name: Illustrative condensed interimfinancial statements

Publication date: March 2006


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