LACPA – Roger Nasr July 6, 2006

1. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations LACPA – Roger Nasr July 6, 2006

2. Main Content of IFRS 5 Definition of a discontinued operation Very much the same as the definition in IAS 35 Timing of classification as a discontinued operation When the discontinued operation is disposed of or meets “held for sale” criteria Non-current assets / disposal groups held for sale Write down to fair value less costs to sell Depreciation not permitted. Presented separately in the balance sheet Results and cash flows of discontinued operations Presented separately in the income and cash flow statements

3. Held for sale classification .

4. Scope • The classification and presentation requirements apply to all recognised non-current assets and to all disposal groups Disposal group– • A group of assets and associated liabilities to be disposed of, by sale or otherwise, as a group in a single transaction • Includes goodwill acquired in a business combination if the group is a CGU to which goodwill was assigned (IAS 36)

5. Held for Sale Classification • “Held for sale” criteria (para 7,8) Management is committed to a plan to sell Available for immediate sale in present condition Active program to locate a buyer initiated AND Sale generally expected within 12 months The sale is highly probable Actively marketed at a reasonable price Requirements to complete indicate plan won’t alter

6. Selected cases

7. Selected cases

8. Presentation andDisclosure .

9. Discontinued Operations • Discontinued operation represents a separate major line of business or geographical area of operations, or Component ** of an entity that has been disposed of part of single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or AND OR Classified as held for sale is a subsidiary acquired exclusively with a view to resale **Operations & cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from rest of entity

10. Presentation and Disclosure – Discontinued Operations • A single amount on face of the income statement comprising total of • Post-tax profit or loss of the discontinued operation and • Post-tax gain or loss recognised on the measurement to fair value less costs to sell or on disposal • An analysis of that amount on face or in the notes into • Revenue, expenses and pre-tax profit or loss of discontinued operations and the related income tax expense • Gain or loss recognised on measurement to fair value less costs to sell or on disposal of the assets or disposal group(s) constituting the discontinued operation and the related income tax expense

11. Income Statement - Function Continuing Operations20052004 Revenue X X Cost of sales (X)(X) Gross profit X X Other operating income X X Distribution costs (X) (X) Administrative expenses (X) (X) Other operating expenses (X) (X) Finance costs (X) (X) Share of profit of associate X X _____ _____ Profit before tax X X Income tax expense (X) (X) _____ _____ Profit for the period from continuing operations X X Discontinued Operations Profit/ (loss) for the period from discontinued operations X (X) _____ _____ Profit for the period A B __________ Attributable to : Equity holders of the parent a c Minority interest b d _____ _____ A B __________

12. Presentation and Disclosure – Discontinued Operations • As a result of this disclosure requirement, income statement is divided into two sections • Continuing operations • Discontinuing operations

13. Presentation and Disclosure – Discontinued Operations • Various standards require disclosure of totals for entity as a whole for components of income and expense • The disclosures pre-date IFRS 5 • IFRS 5 splits the income statement and detail presented on the face relates to continuing operations • One solution - present analyses of these items between continuing and discontinuing operations in notes, and a total for the entity as a whole

14. Income Tax Disclosure

15. Presentation and Disclosure – Held for Sale • Non-current assets (or the assets of a disposal group) are shown separately from other assets • The liabilities of the disposal group shall be presented separately from other liabilities • Assets and liabilities shall not be offset • Major classes of assets and liabilities disclosed separately either on balance sheet or notes • Exemption for newly acquired subsidiaries • Prior periods are not reclassified

16. Balance Sheet - Assets Non-current assets20052004 Goodwill X X Other intangible assets X X Property, plant and equipment X X Available for sale investments X X Finance lease receivables X X _____ _____ X X Current assets _____ _____ Inventories X X Finance lease receivables X X Trade and other receivables X X Cash and cash equivalents X X _____ _____ X X Non-current assets classified as held for saleX X _____ _____ X X _____ _____ Total assets X X __________

17. Balance Sheet - Liabilities Current liabilities20052004 Trade and other payables X X Retirement benefit obligation X X Tax liabilities X X Bank overdrafts and loans X X _____ _____ X X Non-current liabilities _____ _____ Bank loans X X Retirement benefit obligation X X Deferred tax liabilities X X Long-term provisions X X _____ _____ X X Liabilities directly associated with non-current assets classified as held for saleX X _____ _____ X X _____ _____ Total liabilitiesX X __________ Net assetsX X __________

18. Presentation and Disclosure – Held for Sale • Ensure IFRS 5 does not adversely affect compliance with disclosure requirements in other standards • Eg IAS 1 requires the disclosure of total inventory on face of balance sheet • When inventory is reclassified as held for sale and presented with other assets in a disposal group on the face, this requirement cannot be met • Suggestion - to meet this requirement and IAS 2.36(b), the following analysis could be provided in the notes

19. Presentation and Disclosure – Inventories

20. Questions