Industries

Forest, paper & packaging

IFRS in FPP*
Applying International Financial Reporting Standards in the
forest, paper and packaging (FPP) industry

*connectedthinking pwc
#
Contents

Welcome 1
Favourable regulations and the market driving the use of IFRS in the industry 2
Two years with IFRS – Beyond “number crunching” 3
Non-IFRS preparers – Embedding IFRS in your organisation: people, processes and systems 5
About www.pwc.com/fpp/ifrs 7
Introduction to the first set of IFRS solutions for forest, paper and packaging industry 8
PricewaterhouseCoopers IFRS expertise and resources 23
Dedicated to the industry 24

#
Welcome

We are currently witnessing a major step forward in the This publication and the related website
drive towards a single financial reporting language in the www.pwc.com/fpp/ifrs are part of our efforts to help
industry. Listed forest, paper and packaging companies the forest, paper and packaging industry implement,
in the European Union are now required to comply with embed or interpret IFRS – by bridging the gap
International Financial Reporting Standards (“IFRS”) for between the significant number of publications and
their group financial statements. Many forest, paper and array of information, which readily exists regarding
packaging companies around the world, particularly the implementation of IFRS, and the specific issues
those in emerging markets, are joining this process affecting players in the forest, paper and packaging
– because they are required to do so by current or industry. This publication and related website are
pending legislation, as a result of the requirements of the designed to complement Applying IFRS, PwC’s
international capital markets, or simply because of their interactive guidance on the interpretation and
need to be transparent in their commercial and trading application of IFRS (available at www.pwc.com/ifrs),
activities. which contains many solutions relevant to companies
seeking to apply IFRS, as well as a number of other
Adopting IFRS is a complex challenge. Our global PwC IFRS tools available to our clients.
survey International Financial Reporting Standards.
Ready for take-off? indicated generally that the extent At the time of the release, 21 specific forest, paper and
of effort required to implement IFRS tended to be packaging solutions are included in this publication
significantly underestimated and that many companies and available online. This is only the beginning of the
did not implement IFRS in a holistic manner. With process and our website will be expanded as new IFRS
today’s increasing focus on robust financial reporting solutions are developed. Our solutions will be extended
by both regulators and the markets – Section 404 of the based on our own research and experience and in
Sarbanes-Oxley Act in the US is an excellent example response to your questions. As part of this process,
of this – management of forest, paper and packaging we would very much like to hear from you either by
companies seeking to implement IFRS must do so contacting one of the names listed in the IFRS expertise
in a thorough way, paying full attention to the control section at the back of this publication or by providing us
environment surrounding the preparation of the IFRS your thoughts via our website www.pwc.com/fpp/ifrs.
financial statements. Particular focus should be paid
to industry specific issues and indeed industry unique We believe you will find this publication helpful in
issues such as fair value accounting of growing trees, understanding the implications of IFRS on the forest,
long-term supply arrangements, barter transactions, etc. paper and packaging industry.

Robert Barnden Bo Lagerström

Global Forest, Paper & Packaging Global Forest, Paper & Packaging
Leader Accounting Group Leader
PricewaterhouseCoopers PricewaterhouseCoopers

1
Favourable regulations and the
market driving the use of IFRS in
the industry

Our experience shows that IFRS is becoming increasingly more important

in the forest, paper and packaging industry. Other than to comply with
in-force or expected regulatory changes, this is driven by two key factors:
• The rise of key industry players in emerging markets where local
accounting standards are not generally accepted in international
markets. This is the case, for example, in Russia, China and South
America where there are a number of forest, paper and packaging
companies operating globally. Many have chosen IFRS as their external
reporting framework.
• The broad acceptance of IFRS in international capital markets, as
indicated in the following summary table:

Acceptability of
Market IFRS Comments

NYSE Yes Reconciliation of the net profit and total equity from
IFRS to US GAAP is required.
Additional disclosures under US GAAP (e.g. pensions,
acquisitions).

LSE Yes No need to restate or reconcile to UK, US GAAP or

other standard.

Frankfurt Yes No need to restate or reconcile to German GAAP or

other standard.

Hong Kong Yes For primary listings only IFRS registrants are required:
aTo disclose and explain differences of accounting
practice between IFRS and HKFRS (Hong Kong
Financial Reporting Standards), which have a
significant effect on their financial statements; and
aTo compile a statement of the financial effect of
any such material differences.
Above disclosures are not required for secondary
listings.

Luxembourg Yes No need to restate or reconcile to Luxembourg GAAP

or other standard.

Stockholm Yes No need to restate or reconcile to Swedish GAAP or

other standard, except for the parent company stand
alone financial statements.

Tokyo Possible The possibility of IFRS reporting is decided

individually for each foreign applicant. The applicant
is recommended to contact the Financial Service
Agency (FSA).

Toronto Yes No need to restate or reconcile to Canadian or US

GAAP or other reporting framework.

2
Two years with IFRS
– Beyond “number crunching”

Two years with IFRS…

• Before the transition to IFRS in 2005, PwC conducted a global survey:
International Financial Reporting Standards. Ready for take-off?
The survey showed that few companies had put new processes and
appropriate internal controls in place to ensure that their IFRS data
was robust. Today, two years after the transition and with the second
year financial statements prepared in accordance with IFRS soon to be
published, we have been able to conclude that the processes appear to
have worked quite well.

The numbers are important…

• As expected, the fundamental driver of the industries process to adopt
IFRS was changing the financial data. This process generally required
little alteration of the underlying data systems. However, significant effort
was needed with regard to, for example i) valuation of timberland with
growing trees, ii) identification of components within property, plant and
equipment, iii) financial instruments with issues relating to embedded
derivatives and hedging strategies.

…but so are disclosures

A follow-up of the industry’s compliance with the disclosure requirements in
IFRS indicates that the industry is not better or worse than other industries.
Specific disclosure requirements with possibilities for improvement refer to
areas such as i) impairment test of goodwill and intangibles with indefinite
useful life such as certain trademarks, ii) business combinations, and iii)
discussions on key sources of estimation uncertainty and judgements that
management has made in the process of applying the entity’s accounting
policies.

Previously, it was not uncommon for companies to produce IFRS “off line”
by adding IFRS reporting functions at the end of the financial reporting
value chain. Such an approach is not only inefficient but can also lead to
surprises when the accounting effects of management’s decisions were not
understood at the time of making the decision. In the worst case this can
lead to an unfavourable reaction from the capital markets or management
having to go to great length to explain why a particular transaction was
undertaken the way it was. In our experience, it is also lengthening the
financial reporting cycle.

We believe that the industry has come a long way in the process of
embedding change in the numbers. The industry seems to have acquired
a good understanding of the standards, and the impact they have on the
accounting and management of the business. However, management’s
focus on the financial reporting process does not end with the successful

3
 transition to IFRS. New standards and additional interpretations keep
coming from the IASB as a result of the continuing harmonisation project.
Hence, management need to stay alert to be able to resolve any problems
– and cementing the new accounting approach within all reporting levels
of the organisation. A recent example of the development’s fundamental
consequences is the publication of IFRS 8 Operating Segments – a
standard that may force parts of the industry to reconsider its internal
reporting structure.
Our experience has shown us that companies that have adopted IFRS did
get the most value from doing so in a holistic way, embedding IFRS in the
organisation as the primary means of internal and external reporting and
supporting decision making.
IFRS needs to be adopted in a holistic manner. This may be intuitively
obvious but many companies are not doing so today…

…but why?
In our experience there are a number of contributing factors:

• Treated simply as an accounting issue – the transition to IFRS is treated

simply as an accounting issue: the broader analysis of its impact on
market information and necessary modifications to match internal
performance metrics to external reporting are often not carried out.
• Underestimating the complexity of IFRS – companies that are already
preparing financial statements on a robust basis of accounting such as
US GAAP tend to underestimate the extent of differences with IFRS,
particularly given the significant progress made the last three years
in the development of IFRS. For example, in 2004 there were 22 new
or significantly revised standards to consider, including very complex
standards, such as IAS 39 on financial instruments, IAS 41 on agriculture
and IFRS 3 on business combinations. In 2005, there were two new
standards and seven new interpretations. Applying IFRS requires
significant technical skills to be able to apply the standards in a way
which is appropriate and sustainable.
• Resource constraints – insufficient resources (qualified personnel and
funds for training) have been devoted to this issue particularly when
the change to IFRS comes at a time when many companies are very
focused on driving costs out or their businesses. Management is facing
other expensive activities, financially, but also, more importantly, in
terms of resources, such as compliance with the Sarbanes-Oxley act for
US registrants.

4
Non-IFRS preparers –
Embedding IFRS in your
organisation: people, processes
and systems
Are you thinking about a transition to IFRS - what does it take
to embed IFRS?
Our experience tells us that forest, paper and packaging companies need
to address this issue from a number of angles – people, processes and
systems.
The challenge is to ensure
that everyone affected by Embedding change in people
the changes understands The accounting changes that conversion to IFRS produces will affect many
the consequences of more people than might at first seem the case, and they are likely to be
located at all levels of the organisation.
converting to IFRS and
Executive management needs to understand the implications of IFRS
the technical accounting in order to explain the company’s performance and long-term strategy.
implications of the new Initially, it may also have to explain the impact of the conversion on
the company’s results. Moreover, IFRS accounting may have strategic
standards. Recognising implications for the way in which the company structures partnerships
those who will be affected and other forms of collaborative working – both current and future
at an early stage in the arrangements, such as long-term supply agreements and business
combinations, may be affected.
process helps to make
The central finance team – which is at the very heart of managing the
sure they are committed business on an IFRS basis – needs to respond on all matters relating to the
to the project. It is also application of IFRS and offer support as required throughout the business.
In our experience, it is not unusual that the central finance team will be
important to adopt a required to develop and carry out training programmes and perform field
progressive approach visits to help finance staff at the operational level to be able to perform at an
in which information is acceptable level.
delivered on time and in a Finance staff at the operational level – those who provide the interface
between the accounting policies created by central finance and the
way that makes it as easy operational employees – need to understand the impact of IFRS on the
as possible to absorb and accounting treatment applied at operational units.
to explain the context for Management through out the organisation needs to understand the
the changes. It is far easier changes in the key performance indicators and the management
information that will result from converting the accounts to IFRS. It will also
to win staff over when need to prepare budgets and financial plans on an IFRS basis.
they understand how they Management compensation arrangements based upon externally-reported
can contribute, as well financial results will need to be adjusted to ensure they continue to provide
the intended incentive and remuneration objectives.
as the overall goals. Our
experience shows that
the most effective form of
communication is a mixture
of workshops, training
events and more structured
forms of learning.
5
 Embedding change in processes and systems
The changes most often associated with converting to IFRS are those
that must be incorporated in a company’s core computer systems. Many
organisations, indeed, perceive these changes to be backbone of the
project. However, the danger of focusing too heavily on the implications for
a company’s IT systems is that it can distract attention from the underlying
technical accounting factors. Our experience shows that technical aspects
of conversion must come before the detail of the changes to the supporting
IT systems, although there may be some scope for developing these
elements in parallel.
The key to system changes
• Review the existing systems for both IFRS capability/capacity and other
requirements that may be in the pipeline.
• Develop tactical solutions to achieve the first year’s reporting obligations.
These will be a combination of temporary manual solutions and simple
system changes that may represent a prototype of the final solution.
• Develop the final strategic system solution that will incorporate the
changes to support the adoption of IFRS across the business.
• Ensure that processes supporting system change do not create
information bottlenecks.
In fact, the process of going through the technical conversion often
results in the development of a tactical systems solution evolving into a
long-term, strategic solution, which the company can implement after its
No conversation can be initial assessment of the impact of applying IFRS. Some companies might
even want to make other improvements – the ultimate change being the
regarded as concluded introduction of an entirely new financial system.
until both process
Figure: IFRS embedding process – the seven key steps
and results have been
accepted by a company’s
financial auditors. It
makes sense to involve
1 2 3 4 5 6 7
them at an early stage Assess the Decide on Identify
high-level accounting new data
Adapt
systems
Put Enhance
processes internal
Implement
IFRS for
in the project, both to business policies in place controls internal
impact management
ensure that they are reporting
comfortable with the Source: PricewaterhouseCoopers. International Financial Reporting Standards. Ready for take-off?

results and to learn

from their experience
of supporting other
organisations through
the process.
6
About www.pwc.com/fpp/ifrs

Our current views on typical IFRS issues in the forest, paper and packaging
sector, which require an IFRS solution, are posted on our website
www.pwc.com/fpp/ifrs
At the time of release, 21 specific forest, paper and packaging IFRS
solutions are included in this publication and available on the website.

What is www.pwc.com/fpp/ifrs
• an interactive electronic publication
• developed by PricewaterhouseCoopers’ IFRS and forest, paper and
packaging experts
• updated on an ongoing basis
• guidance on the application of IFRS for forest, paper and packaging
companies

Easy to use
• based on components of IFRS financial statements
• solutions taken from real life situations to illustrate best practice
• written in clear, easy to understand English

Future development of www.pwc.com/fpp/ifrs

PwC’s IFRS solutions for forest, paper and packaging will be regularly
updated and improved with additional solutions and guidance as we
encounter new accounting issues in the sector, as new IFRS standards and
interpretations develop and, just as importantly, as we address the issues
which you raise.

7
Introduction to the first set of
IFRS solutions for forest, paper
and packaging industry

Setting the scene

The forest, paper and packaging industry spans players from small and
mid-sized family owned businesses, operating locally and supplying local or
regional customers, to wholly integrated multinational businesses, operating
globally supplying all types of customers. Players in the industry operate
based on a variety of strategies spanning from niche-product to broad and
global cross-segment product and customer strategies.
The industry, especially at the upstream end of the paper value-chain, is
highly capital-intensive and typically invests within the following segments
and in related types of assets:
• owned or leased forest land with growing trees, together with harvest-
machines, loaders and log transporters

• saw mills, engineered wood, planing and joinery manufacturing facilities

• pulp and paper mills, including energy generating equipment, ranging

from hydro electrical to CHP to even nuclear plants

• waste handling, processing and recovery facilities

• paper and board making, coating, converting and printing machines

• land and sea transportation fleets, harbours, logistics centres etc

The industry is also characterised as highly fragmented. For example, on

a global level the top ten forest and paper companies currently represent
only about 25% of total primary paper output, but the profile of the
industry is changing toward both consolidation of the industry and further
specialisation.1

Key factors challenging the industry’s accounting and

financial reporting champions
The industry is facing many other significant accounting and financial
reporting issues, which are covered in this first set of solutions for the
forest, paper and packaging industry. Other key factors representing
industry challenges from both an accounting and financial reporting
perspective, as well as an audit perspective, include for example:
• The industry is both capital-intensive and fragmented; something that
implies that growth through acquisition could be on the agenda of many
players in the industry.2

1. PricewaterhouseCoopers Global Forest & Paper Industry Survey, 2006 Edition – Survey of 2005 Results
2. Branching out – Global deal activity in the forest, paper & packaging industry.

8
 • Capital-intensive production and complex logistic processes usually
comprise significant lease transactions and long-term supply
agreements.
• Vertical integration can make it difficult to define cash generating units.
• Regionalisation and globalisation have introduced the need for more
advanced approaches to financing, including centralised treasury
functions with responsibility for the application of complex financial risk
management strategies.
• The capital-intensive nature of the industry generates specific accounting
issues related to maintenance and major overhauls and impairment of
assets.
• Capital-intensive processes which may include investments in machine
components with significantly different useful lives.
• The industry is a major consumer of energy and a vast variety of raw
materials, which calls for cost efficient supply of energy and a balanced
flow of input materials. This implies take-or-pay agreements with energy
companies and utilisation of financial instruments, such as energy, raw
material, and pulp/paper derivatives. Frequently paper mills are the sole
consumers of particular power plants.
• Emission rights represent a quite recently implemented regulatory
system in Europe with several effects on the business. It typically
involves cooperation between the central finance team, the treasury
function, and individual reporting/production units.
• Special purpose entities are not an uncommon issue in the industry.
Typical areas include asset leasing, and supply arrangements.
• Biological assets, i.e. growing trees, sometimes represent very significant
balance sheet items with complex issues related to fair value accounting
including re-plantation costs and treatment of biological growth.
• Swaps between producers are common with regard to both (produced)
raw materials and finished goods and also forest land – with resulting
difficulties distinguishing between sales and barter transactions.
• At the consumer end the industry is often reliant on brands.
Consequently this includes issues on impairment of brands and fair
values in business combinations.
• Volatility of price and market could lead to discussions on impairment of
assets and related discussions on the definition of cash generating.
• The industry frequently uses various forms of rebate systems for large
customers.

9
 Summary of the first set of IFRS solutions for forest, paper
and packaging
Component

Commitments
contingencies
Impairment
recognition

Reporting
Revenue

segments

Inventory
of assets
Solution

Leasing

PP&E
Issue

&
1 Recognition of revenue from excess energy produced by own
power stations •
2 Segment reporting and recognition of revenue from excess energy
produced by own power stations •
3 Leasing of distribution terminals under SIC-12
•
4 Economic dependence and consolidation according to SIC-12
•
5 Impairment of Cash-Generating Units - Vertical integration
•
6 Test of impairment due to a plan to abandon PP&E
•
7 Estimate of the recoverable amount in an impairment test due to a
plan to abandon PP&E •
8 Accounting for asset retirement obligations
•
9 Contaminated soil at a saw mill
•
10 Accounting for maintenance activities and the concept of components
•
11 Dismantling and site restoration
•
12 Treatment of site preparation costs
•
13 Accounting for logging roads
•
14 Incidental operations in construction of logging roads
• •
15 Logging road – cost component includes obligation to restore land
•
16 Accounting for PP&E maintenance costs in interim financial
statements •
17 Delivery and Acceptance
•
18 Should by-products be treated as revenue generating activity?
•
18 Exchange of forest assets of similar nature
•
20 Exchange of forest assets of dissimilar nature
•
21 Should exchange of inventories be treated as revenues?
•

10
Solution 1 Background
Component: Recognition of revenue from Paper producer A owns a power station that produces
excess energy produced by own power electricity for their production facility. The excess power
stations that the station produces is sold to the local power
distributor in the region. The sales of power amounts
Revenue arises in the course of the ordinary activities of to about 15% of the total external revenue of entity A.
an entity [IAS 18.7] and income should be recognised in Management and the board of directors monitor and
the income statement when an increase in an asset or a control the energy production operation as a separate
decrease of a liability that can be measured reliably has line of business.
arisen [IAS 18.14, 20 and 29].
Solution
How should management classify revenue from sales of
excess energy from their production related power station? The sale of energy amounts to 15% of the entity’s total
revenue, which indicates that it qualifies as a reportable
Background segment according to IAS 14.35. The entity’s internal
management and organisational structure and its
Paper producer A owns a power station that produces internal financial reporting to management and board of
electricity for their production facility. The excess power directors also indicate that the energy operation should
that the station produces is sold to the local power be treated as a reportable segment.
distributor in the region. The sales of power amounts
to about 15% of the total external revenue of entity A.
Management and the board of directors monitor and
control the energy production operation as a separate Solution 3
line of business. Component: Leasing
Leasing of distribution terminals under SIC-12
Solution
An entity should consolidate an SPE when, in
The company should recognize the sales of excess substance, the activities of the SPE are conducted on
power as revenue and present energy as a separate behalf of the entity according to its specific business
segment. As the company sells a product that is part needs, so that the entity obtains benefits from the SPE’s
of the total production process the income should be operations [SIC-12.10(a)].
presented as revenue. The energy revenue could be
reported separately on the face of the income statement Should an entity consolidate an SPE that is established
or in the footnotes to the income statement. to allow access to benefits that are not financial?

Background
Solution 2 Company S is a transport and logistics company and is
Component: Segment reporting and a wholly owned subsidiary of Group X. Company S has
recognition of revenue from excess energy terminals at strategic locations in Europe, where they
produced by own power stations can offer stevedoring, warehousing, shipping agency
and other related services. Company S has entered into
Revenue arises in the course of the ordinary activities of a sale and leaseback arrangement for one terminal with
an entity [IAS 18.7] and income should be recognised in a property company to be able to keep the property off
the income statement when an increase in an asset or a balance sheet.
decrease of a liability that can be measured reliably has
arisen [IAS 18.14, 20 and 29]. Should Group X consolidate the property company in
accordance with SIC-12?
Should management treat the energy operation as a
separate reportable segment in the financial statements?

11
The most important terms of the arrangements in Should an entity consolidate an SPE based on a
summary: position of significant dependence, such as vital and
long-term financial and operational arrangements with
1. Company S is the original tenant under a principal
the reporting entity?
lease granted from a leasing company expiring in
2030 (25 years, equal to a major part of its economic
Background
lifetime).
Entity A (the reporting entity) is the owner of all forest
2. Company S grants a lease back to the leasing
assets that are situated in a particular region of the
company for a rent equal to the principal lease.
country. Entity B is a small forest harvesting company
3. The bank provides a loan to the Property Company that is established to conduct its business in that
to finance the property purchase from Company S. region. Entity A enters into an agreement with Entity B
The loan is for a maximum of 25 years with options to let Entity B harvest portions of their forest assets.
to terminate at 5-year intervals. The bank’s loan is The arrangement means that Entity B will be allowed
guaranteed by a wholly owned subsidiary of Group to harvest on behalf of Entity A on terms stipulated in
X, whose obligations are in turn guaranteed by Group such a way that Entity B, for practical reasons, cannot
X’s Parent company. harvest for anyone but Entity A.
4. A mortgage of the leased property has been granted
Solution
by the Property Company to the bank.
No, Entity A should not consolidate Entity B. Entity
5. Company S assigns its principal tenancy to the
A does not control Entity B according to SIC-12.
Property Company who grants an over-riding lease
Economic dependency cannot by itself lead to control.
back to Company S for a term of 25 years (remaining
Although Entity A receives most of the physical benefits
period until 2030).
of the arrangements (all the services produced by Entity
6. The Property Company’s shares are 90% owned by B are taken by Entity A), Entity A is not able to directly
a wholly owned subsidiary of Group X and 100% control the operations as it has no decision making
controlled by a Trust at Jersey, Channel Islands. power in Entity B. Entity A has no rights to gain any
benefits from the financial performance of Entity B, such
Solution
as distributions, future net cash flows, earnings, net
assets or any residual interests. Nor is it exposed to risk
Yes. Group X retains all the significant risks and rewards
as it is not an investor and its debt is secured.
in this transaction. The Trust in Jersey controls 100% of
the votes but retains only 10% of the risks and rewards,
which indicates that the owners of the trust will receive Solution 5
a lenders return only. The Parent Company’s only
purpose is to obtain a loan from the bank to purchase
Component: Impairment of Assets
the property and to lease it back to Group X. Group X is Impairment of Cash-Generating Units -
also guaranteeing the loan. Vertical integration
A cash-generating unit is defined as the smallest
identifiable group of assets that generates cash inflows
Solution 4 from continuing use that are largely independent of the
Component: Leasing Economic dependence cash inflows from other assets or groups of assets [IAS
and consolidation according to SIC-12 36.6]. If an active market exists for the output produced
by an asset or group of assets, that asset or group of
An entity may control an SPE and should consolidate assets shall be identified as a cash-generating unit, even
it when in substance the SPE’s activities are being if some or all of the output is used internally [IAS 36.70].
conducted on behalf of the entity according to its
specific business needs, so that the enterprise obtains How should cash-generating units be identified within
benefits from the SPE’s operations [SIC-12.10(a)] entities that operate vertically integrated pulp and
paper mills?
12
Background the future, in the extent to which an asset is expected to
be used [IAS 36.12 (f)-(g) and IAS 36.13].
Company A operates several paper mills across
Europe. These mills are producing pulp and paper Could a plan to restructure, which does not qualify for
materials such as publication paper and raw materials recognition as a restructuring liability in the balance
for corrugated paper and containerboard. Company A sheet according to the requirements in IAS 37 or IAS 19,
has identified an impairment indicator related to one trigger an impairment test according to IAS 36?
of its integrated mills producing pulp and publication
paper. The pulp produced is 100% consumed internally Background
by the paper production line and the produced volume
of pulp is determined by the estimated production of Company A is experiencing long-term decreasing profit
publication paper. There is an active market for pulp margins in one of its segments and is now preparing its
with readily available market prices at each balance third quarter interim financial statement as at September
sheet date. 30, 2006. The decrease has continued for three quarters
and management is not expecting a turn around
Management is operating the mill as one integrated over a foreseeable period of time. As a consequence
production unit and it intends to perform the impairment management has decided to launch a significant
test as if the mill was one single production unit. restructuring program next year in an effort to decrease
the overcapacity in this segment. The restructuring
Solution program will not be communicated to the employees
Management should treat the mill as two separate CGUs and the market until after the publication of the third
for impairment testing purposes. quarter financial statements.
There is an active market with available and relevant The restructuring program includes the closure of one
prices for the output coming from the first step (pulp) of its paper mills in Europe. Management expects the
in the entire production process. Management should closure to start no later than by the end of June 2007.
use this external market data when establishing the The operations will be completely shut down by the
forecasted cash flows for the pulp CGU for impairment end of June 2011 when the demolition work begins.
testing purposes. The facility consists of both land and other depreciable
According to IAS 36.70, the market based price, used tangible assets.
to calculate the discounted forecasted cash inflows for Should management perform an impairment test for the
the first production phase(pulp’s value in use), should be mill that will be closed over 4 years before publishing its
used as the price for the input in the second production interim financial statements as at September 30, 2006?
phase (publication paper’s value in use). This means that
management, when estimating the value in use for the Solution
paper production phase, should use the same market
based price on pulp that where used in estimating the Yes, management’s plan to close down and abandon
value in use for the pulp production phase. In estimating the mill in Europe is an impairment indicator according to
the discounted cash inflows for the paper production IAS 36 paragraphs 12-13, although the plan has not been
phase, management should use the expected market communicated to anyone outside the Board of Directors.
based prices for the produced publication paper. According to IAS 36 12 impairment tests should be
performed whenever an indicator of impairment has been
identified. Both external and internal indicators should be
Solution 6 considered. An internal indicator of impairment is plans
Component: Test of impairment due to a plan that might have a negative effect on the business. A plan
to abandon PP&E to close down and abandon a mill does qualify as such
an impairment indicator.
In assessing whether there is any indication that an
asset may be impaired, an entity shall consider both If the mill represents a vertically integrated production
external and internal sources of information [IAS unit, the impairment test should be performed for each
36.12]. Internal information may originate from known cash-generating unit whose outputs have determinable
significant changes with adverse effects on the entity in market prices. See IAS 36.70.
13
Solution 7 to IAS 36 paragraphs 12-13, although the plan has
Component: Estimate of the recoverable not been communicated to anyone outside the Board
amount in an impairment test due to a plan to of Directors. According to IAS 36.12 impairment
tests should be performed whenever an indicator of
abandon PP&E impairment has been identified. Both external and
In assessing whether there is any indication that an internal indicators should be considered. An internal
asset may be impaired, an entity shall consider both indicator of impairment is plans that might have a
external and internal sources of information [IAS negative effect on the business. A plan to close down
36.12]. Internal information may originate from known and abandon a mill does qualify as such an impairment
significant changes with adverse effects on the entity in indicator.
the future, in the extent to which an asset is expected to If the mill represents a vertically integrated production
be used [IAS 36.12 (f)-(g) and IAS 36.13]. unit, the impairment test should be performed for each
Could a plan to restructure, which does not qualify for cash-generating unit whose outputs have determinable
recognition as a restructuring liability in the balance market prices. See IAS 36.70.
sheet according to the requirements in IAS 37 or IAS 19, In situations like these it is unlikely that management will
trigger an impairment test according to IAS 36? be able to establish a reliable estimate of the fair value
less cost to sell for anything except the land (IAS 36.20).
Background It could in fact be argued that since the PP&E will be
Company A is experiencing long-term decreasing profit abandoned with the purpose of eliminating overcapacity
margins in one of its segments and is now preparing its it is not relevant to look for a fair value less cost to sell.
third quarter interim financial statement as at September Management should therefore perform a value in use
30, 2006. The decrease has continued for three quarters calculation for those parts of PP&E for which no reliable
and management is not expecting a turn around fair value less cost to sell can be established. The value
over a foreseeable period of time. As a consequence in use calculation should be based on the discounted
management has decided to launch a significant forecasted cash flows expected to be received during
restructuring program next year in an effort to decrease the expected remaining useful life of the mill, i.e. 4
the overcapacity in this segment. The restructuring years and three quarters as calculated from October 1,
program will not be communicated to the employees 2006 until June 30, 2011, including cash flows from the
and the market until after the publication of the third closing such as scraping etc. For land it is likely that fair
quarter financial statements. value less cost to sell might be possible to establish,
e.g. by the assistance of a third party valuation expert.
The restructuring program includes the closure of one
of its paper mills in Europe. Management expects the
closure to start no later than by the end of June 2007.
The operations will be completely shut down by the Solution 8
end of June 2011 when the demolition work begins. Component: Commitments and Contingencies
The facility consists of both land and other depreciable Accounting for asset retirement obligations
tangible assets.
The cost of an item of property, plant and equipment
Should management perform an impairment test for the should include the initial estimate of the costs of
mill that will be closed over 4 years before publishing its dismantling and removing the asset and restoring the
interim financial statements as at September 30, 2006, site on which it is located [IAS 16.16(c)].
and, if the answer is yes, how should the recoverable
A provision should be recognised when:
amount be estimated?
a. an entity has a present obligation as a result of a past
Solution event;
Yes, management’s plan to close down and abandon
the mill in Europe is an impairment indicator according

14
b. it is probable that an outflow of resources embodying Solution 9
economic benefits will be required to settle the Component: Commitments and Contingencies
obligation; and
Contaminated soil at a saw mill
c. a reliable estimate can be made of the amount of the
A provision should be recognised when:
obligation. IAS 37.14
a. an entity has a present obligation as a result of a past
Should waste site clean up costs be recognised if event;
permission for a site can be refused at land owners’ or
local authority’s notice? b. it is probable that an outflow of resources embodying
economic benefits will be required to settle the
Background obligation; and

Waste sites may be used for production waste such as c. a reliable estimate can be made of the amount of the
ink from de-inking plants, excess coatings, barks etc. obligation. IAS 37.14
Use of waste sites are often subject to land owners/ At what stage should remediation costs be recognised?
local authority permission and usage rights may cease
to be granted. Entity W has received permission by the Background
local authority to use a specified piece of land during a
Ground contamination at sawmill sites is a common
limited period of time to construct and operate a paper issue due to certain chemicals used for wood
mill and a waste site. At the end of the limited period impregnation. The reporting entity has operated an
Entity W has to remediate the site. The permission impregnation plant for some time and local legislation
period may be extended. will force the entity to remediate and clean up the site
when the operations are closed.
How should the waste site clean up costs be recognised
At what stage should management recognise the cost
by the Entity W if permission for a site can be refused at
land owners’ or local authority’s notice? of remediation?

Solution Solution

The asset retirement obligation arises due to the signing The entity has an obligation to clean up and to restore.
of the agreement to use the site and by constructing The obligating event will be the construction of the
the plant and equipment. Entity W should include in sawmill site.
the cost of the plant and equipment an estimate of the The obligation to take care of the contaminated site can
costs to remove it at the end of the permission period be separated into two parts:
(present value of obligation should be debited to the Part 1. The portion of remediation costs that relate to
asset and credit to the provision to remediate the land). the establishment of a production unit with production
If Entity W intends to apply a depreciation period that using certain chemicals for wood impregnation; and
exceeds the initially agreed period of time Entity W must Part 2. The portion of remediation costs that relate
be reasonably certain that the permission period will the volume of the production during the estimated
be extended (this is also important with regards to the production period.
calculation of the provision). For Part 1 the entity should recognise a provision at the
The costs for handling ink, excess coatings, bark etc time the production unit (sawmill site) is constructed
arise from the production process. For the obligation to with a corresponding entry to the acquisition value of
take care of these waste products the company should the mill.
accrue a liability during the production of the F&P For Part 2 the company should accrue a liability
products over the permission period. during the estimated production period taking into
consideration the produced volume in each period.
Subsequent changes to the estimate (Part 1) should be
treated in accordance with IFRIC 1 Changes in Existing
Decommissioning, Restoration and Similar Liabilities.

15
Solution 10 Solution 11
Component: Property, Plant & Equipment Component: Property, Plant & Equipment
Accounting for maintenance activities and the Dismantling and site restoration
concept of components The cost of an item of property, plant and equipment
Parts of some items of property, plant and equipment should include the initial estimate of the costs of
may require replacement at regular intervals. The cost of dismantling and removing the asset and restoring the
replacing part of such an item should be recognised in site on which it is located [IAS 16.16(c)].
the carrying amount of PPE when that cost is incurred if Should management recognise the estimated cost of
the recognition criteria are met. Any remaining carrying dismantling and removing the asset and restoring the site?
amount of the replaced item is derecognised [IAS 16.13].
How should a reporting entity treat own labour costs Background
related to a major maintenance and overhaul project? A Company has constructed a paper factory on leased
land. At the end of the lease it is required to dismantle
Background the paper factory and return the site to its original state.
A company undertakes major maintenance on a paper The lease term is for 25 years and expires in 2030.
machine The maintenance involves the replacement Management believe that they will continue to operate
of certain major components in the paper machine on the site for a period in excess of 25 years, although
and does not represent general day-to-day servicing the Company has no legal right to extend the lease term.
procedures. The present value of the estimated cost of dismantling
The work takes a considerable amount of time and the paper factory and restoring the site using a relevant
skilled resources. Accordingly own labour costs pre-tax discount rate amounts to €30 million. These
represent a significant element of the major maintenance costs include estimated costs of relocating assets and
costs. The company intends to capitalise the costs as business interruption costs of €20 million.
part of the carrying value of the paper machine.
Solution
Solution The Company should recognise €10 million as an
The own labour costs are directly attributable to the element of cost of the paper factory, being the initial
bringing the paper machine back to a condition in estimate of the costs of dismantling, removing assets
which it is capable of continuing to operate. Provided from the site and restoring the site on which the paper
that the major maintenance work meets the recognition factory is located.
criteria set out in the standard (IAS 16.7), the direct Recognition of costs in the carrying amount of an item
labour hours related to the installation of major new of property, plant and equipment ceases when the
components should be allocated to the carrying values item is in the location and condition necessary for it
of those major components (IAS 16.13 and 14). to be capable of operating in the manner intended by
Internal costs capitalised should include directly management (IAS 16.20). Any associated business
attributable overhead costs where applicable [IAS 16.22] interruption costs are to be expensed as incurred.
[IAS 2.12]. Overhead costs relating to unproductive
or inefficient use of resources should be expensed as
incurred [IAS 16.22].

Capitalised costs should be recognised as a separate

component and depreciated over the period to the next
major maintenance programme.

16
Solution 12 Solution
Component: Property, Plant & Equipment The residential land and property should be recognised
Treatment of site preparation costs as assets at the date of completion of the transaction
The cost of an item of property, plant and equipment and measured at their acquisition cost. Since the land
shall be recognised as an asset if, and only if it is and buildings are not owner occupied, but instead
probable that future economic benefits associated with leased to third parties, they should be accounted for as
the item will flow to the entity; and the cost of the tem investment properties in accordance with IAS 40 using
can be measured reliably [IAS 16.7]. Elements of cost either the fair value or cost model.
may include cost of site preparation necessary to bring On cessation of the short-term lease contracts the
the asset to the location and condition necessary for it land and buildings the investment property is not
to be capable of operating in the manner intended by immediately transferred to owner-occupied property.
management [IAS 16.16-17]. The transfer occurs only once a change of use occurs.
How should the present buildings be accounted for This occurs when the site is reclassified for commercial
before site preparation activities begin? How should the use and the management are able to commence
subsequent removal of the buildings on a site subject to demolition action. In the event that the Company
preparation activities be accounted for? applied the fair value model the properties’ deemed
cost for subsequent accounting is its fair value at the
Background date of change of use (IAS 40.60). In the event that
the Company applied the cost model there will be no
A Company acquired land on which it intends to build change in the carrying value arising from the change in
a paper factory. The Company is expected to carry use (IAS 40.59).
out significant site preparation including the removal
of present buildings on the site. The Company intends The change of use from residential to commercial is,
to include the costs related to site preparation as a however, considered an indication of impairment (IAS
component of the cost of the paper factory asset. 36.12 (f)). When management received notification
that the local government agency had approved the
Land and
change of use rights from residential to commercial, the
Site Land
residential reclassified prepared Company should have undertaken an impairment test
buildings as for on the affected land and properties.
acquired commercial construction
Land and buildings are separable assets and are
TIME accounted for separately. Since the residential houses
are expected to be demolished they have no value and
Residential Old Construction
buildings buildings of plant their carrying amount should be reduced to zero. Since
let demolished commenced the value of the land may also be impaired due to the
change of use from residential to commercial, a second
impairment calculation should consider the value of the
The acquired land was historically in partial residential whole commercial land compared to the sum of the
use. A number of residential properties are still located acquisition costs of the residential and commercial land.
on part of the site, however, the Company successfully
applied to the local government agency and the site is The planned demolition of properties on the land in
now fully available for commercial use. connection with the construction of the paper factory
is necessary to bring the factory into use and operating
In the intervening period between when the residential in a manner intended by management. Such costs
land and buildings were acquired and when the site represent site preparation costs and should be included
was reclassified for commercial use, the buildings were as a component of the factory cost (IAS 16.16(b).
let to third parties under short term lease contracts.
All residential houses have been vacated and are to
be demolished. The whole site prepared ready for the
construction of the paper factory.
17
Solution 13 Solution 14
Component: Property, Plant & Equipment Component: Property, Plant & Equipment
Accounting for logging roads Incidental operations in construction of
Expenditure for property, plant and equipment is logging roads
recorded as an asset when [IAS 16.7]: Agricultural produce is the harvested product of the
a. it is probable that future economic benefits will flow entity’s biological assets [IAS 41.5].
to the entity; and Agricultural produce harvested from an entity’s
b. cost can be reliably measured. biological assets shall be measured at fair value less
estimated point-of-sale costs at the point of harvest.
Major spare parts and stand-by equipment qualify as Such measurement is the cost at that date when
PPE when an entity expects to use them during more applying IAS 2 or another applicable standard.
than one period [IAS 16.8].
How are harvested trees accounted for when
PPE may be acquired for safety or environmental constructing logging roads?
reasons. Such PPE may not increase the future
economic benefits of existing items of PPE. However, Background
it may be necessary for an entity to obtain the future
economic benefits from its other assets. This type of PPE A Company is constructing two logging roads. In
can be recognised as an asset because the entity can constructing the roads the Company is required to carry
derive economic benefits from related assets [IAS 16.11]. out incidental operations. These incidental operations
relate to the felling of trees in the path of the proposed
Can management capitalise expenditure on construction road and to make way for construction machinery
of logging roads to access forest areas to be harvested? access.

Background Solution
A Company is constructing two logging roads. One is The incidental operations result in a harvesting event
for temporary use and one is expected to be used for of trees which reduces the carrying value of biological
a longer period. The Company intends to capitalise the assets and increases the inventories of agricultural
cost of both roads in accordance with IAS 16. products by the trees’ fair value less estimated point-of-
Logging Road 1 is being constructed for temporary use sale costs at the date of harvesting [IAS 2.20].
only and will be discarded once the forest area to which
it will provide access is clear cut.
Solution 15
Logging Road 2 is expected to provide future access to Component: Property, Plant & Equipment
the Company’s forest holdings. It is expected that the Logging road – cost component includes
road will be used for at least the next ten years.
obligation to restore land
Solution The cost of an item of property, plant and equipment
should include the initial estimate of the costs of
The costs incurred in constructing Logging Road 1
dismantling and removing the asset and restoring the
should be expensed as incurred as the Company does
site on which it is located [IAS 16.16(c)].
not expect to use the asset during more than one period
(IAS 16.7-8). Should management recognise the estimated cost of
dismantling and removing the asset and restoring the site
Logging Road 2 should be recognised as an asset and
when constructing logging roads on leasehold land areas?
initially measured at the costs incurred by the Company
to construct the road. The asset should be depreciated
Background
over a ten year period.
A Company is constructing logging roads on leasehold

18
land. It intends to capitalise the initial cost of building the Background
road and depreciate the cost over the term of the lease.
The Company is required to carry out scheduled major
Under the terms of the lease the land should be returned maintenance on its paper machines every five years and
to its original condition as at the commencement of the the next maintenance work is scheduled to be carried
lease term. Accordingly the Company has a contractual out in the first quarter of FY07. The Company expects to
obligation to remove the logging road and restore the recognise the full cost of the maintenance in profit and
land to its original condition at the end of the lease term. loss for FY07 but intends to spread out the cost over
its four interim accounting periods for the purpose of
Solution reporting its interim results to the market.
The Company has a legal obligation derived from the
Solution
lease contract. A provision for the dismantling and
removal of the road should be made in accordance with The maintenance work will result in the consumption
IAS 37.14. The provision should be measured at the of spare parts and servicing equipment which in
present value of the estimated cost of removing the road accordance with IAS 16.8 should be recognised in profit
and restoring the site at the end of the lease term, using and loss as consumed.
a pre-tax discount rate (IAS 37.45-47).
Costs that are incurred unevenly during an entity’s
Simultaneously, in accordance with IAS 16.16(c) the financial year shall be anticipated or deferred for interim
Company should include an initial estimate of the costs reporting purposes if, and only if, it is
of dismantling and removing the road and restoring the also appropriate to anticipate or defer that type of cost
site on which it is located. This should equate to the at the end of the financial year.
same amount as the related provision referred to above.
Had the Company carried out the maintenance costs
Each year the provision should be reassessed. in the last quarter of FY07 it would not have been
Increases in the provision each year reflecting the acceptable to defer part of those costs to FY08
passage of time are recognised as borrowing costs. since IAS 16.8 recognises that such maintenance
Increases or decreases in the provision that result costs should be recognised in the profit and loss as
from changes in the estimated timing or amount of the consumed.
outflow of resources embodying economic benefits
The Company must recognise the full cost of the major
required to settle the obligation, or a change in the
maintenance work in its profit and loss for the first
discount rate, are adjusted against the carrying value of
quarter of FY07.
the asset in accordance with IFRIC 1.5.

Solution 17
Solution 16 Component: Revenue Recognition
Component: Property, Plant & Equipment Delivery and Acceptance
Accounting for PP&E maintenance costs in A condition to be satisfied before revenue can be
interim financial statements recognised from the sale of goods is that the seller
Spare parts and servicing equipment are usually carried has transferred the significant risks and rewards of
as inventory and recognised in profit and loss as ownership of the goods to the buyer [IAS 18.14(a)]. The
consumed [IAS 16.8] transfer of significant risks and rewards of ownership
requires an examination of the circumstances of the
When should the full cost of the spare parts and transaction [IAS 18.15].
servicing equipment consumed in one isolated interim Should the paper company recognise the revenue
accounting period be recognised in profit and loss? evenly over the period of the agreement?

19
Background Solution
A Paper Company has a sale agreement with a buyer By-products usually are joint products of relatively
to supply X tonnes of a certain grade over a 6-month insignificant value. Accounting for them as joint
period. The paper is delivered every 2 months at the products is not appropriate. The sale of by-products
beginning of the month. Invoicing occurs when the should therefore not be treated as revenue.
paper is shipped and the Incoterms are DDP (Delivery
Costs should be assigned to the by-products equal to
Duty Paid). The sale agreement provides for quality
their net sales value and by deducting their net sales
control before the buyer accepts the goods. The
value from the main product, i.e. deduct from cost of
Incoterms are stated on the invoice however they are
sales (IAS 2.14). As a result, the carrying amount of the
not incorporated into the contract of sale.
main product is not materially different from its cost.
Solution However, if by-products are of relatively significant
value it is not appropriate to apply this accounting
No. The revenue should not be recognised evenly over
treatment. Instead an allocation of costs of conversion
the period of the sale agreement. Revenue should only
between the products should be made on a rational and
be recognised when all of the conditions as set out in
consistent basis.
IAS 18.14 have been satisfied. Although the Incoterms
(DDP) state that the risk is transferred from the seller to
the buyer when the goods are placed at the disposal
of the buyer, the sales contract provides for a quality Solution 19
control before the goods are accepted. Component: Revenue Recognition
The revenue should be recognised only when the buyer Exchange of forest assets of similar nature
has completed its quality control and has officially Paper companies with large forest holdings regularly
accepted the goods. exchange land and biological assets to ensure that they
have the correct tree species at appropriate maturity in
the right location.
Solution 18
Component: Revenue Recognition How should exchange of assets be treated when the
goods exchanged are similar in nature and value?
Should by-products be treated as revenue
generating activity? Background
A production process may result in more than one Forestry company A exchanges 1 000 hectares of
product being produced simultaneously, for example forestland with standing trees of species A with another
when joint products are produced or when there is a forestry company in a different location for 1 100
main product and a by-product [IAS 2.14]. hectares of forestland of similar species. There is no
other compensation since both companies have agreed
Saw milling, pulp, paper & packaging production results that the assets are of a similar value.
in numerous by-products. Should the sale of by-
products be treated as revenue? Solution
Background The transaction needs to be split between the forestland
and the standing trees since the forestland is accounted
The production of sawn timber and production of wood for in accordance with IAS 16 and the standing trees in
pulp results in bark and saw dust etc., which is often accordance with IAS 41.
sold to power stations, garden centres and stables.
Should entities recognise the sale of by-products as Carrying Value Fair Value
revenue?
Forest Land A 100 120
Biological Assets 1 000 1 000

20
The carrying value of the new forestland in Forestry Solution
Company (A)’s financial statements is measured at the
carrying amount of the asset given up (Forest Land Carrying Value Fair Value
A) i.e. 100. The exchange transaction does not have Forest Land A 100 120
commercial substance since the future cash flows are
Biological Assets 1 000 1 000
not expected to change as a result of the transaction
i.e. the two forestlands would have produced the same Harvested Trees 900
cash flows.
The entries recorded would be as follows The transaction needs to be split between the forestland
and the standing trees since the forestland is accounted
Dr Forestlands (new) 100 for in accordance with IAS 16 and the standing trees
Cr Forestlands (A) 100 in accordance with IAS 41. The assets exchanged
are dissimilar and the future cash flows are expected
IAS 41 does not prescribe the accounting for the to change as a result of this exchange transaction,
exchange of biological assets; however the accounting therefore the transaction has commercial substance and
will be the same as that for land above, since the nature should be accounted for at fair value.
and value of the goods exchanged are similar. The
carrying value of the trees should be their fair value. Dr Receivables 900
Dr Cash 300
The entries recorded would be as follows
Cr Forestland 100
Dr Biological Assets (new) 1 000 Cr Biological Assets 1 000
Cr Biological Assets (A) 1 000 Cr Gain on disposal of property,
plant and equipment 20
Cr Fair value gain on re-measurement
Solution 20 of Biological Assets 80
Component: Revenue Recognition
Exchange of forest assets of dissimilar nature Solution 21
Paper companies with large forest holdings regularly Component: Revenue Recognition
swap land and biological assets to ensure that they Should exchange of inventories be treated as
have the correct tree species at appropriate maturity in
the right location.
revenues?
Transactions involving goods exchanged for goods
How should exchange of assets be treated when the
which are of a dissimilar nature and value are regarded
goods swapped are dissimilar in nature and value? as transactions which generate revenue and the
revenue should be measured at the fair value of the
Background goods received, adjusted by the amount of any cash
Forestry company A transfers 1 000 hectares of transferred (IAS 18.12).
forestland with standing trees to another forestry Should exchange of inventories be treated as a revenue
company, B, in exchange for harvested trees and cash generating transaction?
consideration of 300. The trees will be delivered over a
3-year period. Background
How should forestry company A account for the Company A exchanges 10 000 tonnes of short-
transaction? fibre birch hardwood kraft pulp (BHKP) with another
company for same tonnage of long-fibre northern
bleached softwood kraft pulp (NBSK) and cash
consideration of €50 000.
How should Company A account for the transaction?
21
Solution
The pulp exchanged is dissimilar in nature and value
so the exchange is regarded as a transaction which
generates revenue. The revenue is measured at the fair
value of the pulp received adjusted by the amount of
cash transferred. According to a leading index BHKP
is quoted at €470/t and NBSK at €465/t at the date of
exchange. The carrying value of the BHKP on the books
of Company A is €410/t.

The entries recorded in Company A are as follows:

Dr Inventory (NBSK) 4 650 000
Dr Cash 50 000
Dr Cost of Sales 4 100 000
Cr Inventory (BHKP) 4 100 000
Cr Revenue 4 700 000

22
PricewaterhouseCoopers IFRS
expertise and resources

IFRS in forest, paper & packaging, who to contact:

Bo Lagerström (Global & Sweden)

Phone: +46 (8) 5553 3041
Email: bo.lagerstroem@se.pwc.com

Alexei Ivanov (Russia) Kevin Bromley (Canada)

Phone: +7 (812) 326 6969 Phone: +1 (604) 484 3484
Email: alexei.ivanov@ru.pwc.com Email: kevin.bromley@ca.pwc.com

Andrew McPherson (Australia) Marcelo Orlando (Brazil)

Phone: +61 (2) 6271 9350 Phone: +55 (11) 3674 3875
Email: andrew.mcpherson@au.pwc.com Email: marcelo.orlando@br.pwc.com

Dick Quimby (US) Tomi Seppälä (Finland)

Phone: +1 (513) 768 4518 Phone: +358 (9) 2280 1365
Email: dick.quimby@us.pwc.com Email: tomi.seppala@fi.pwc.com

PwC has a wide range of tools, publications and industry experience to

help companies apply IFRS:
Applying IFRS – PwC’s authoritative guidance on the interpretation and
application of IFRS. The interactive tool includes links to over 1,000 real-life
solutions, as well as direct links to applicable text in the IFRS standards and
interpretations. Applying IFRS is available on our electronic research tool,
Comperio IFRS.
To order a copy visit www.pwc.com/ifrs
P2P IFRS – from principle to practice – PwC’s interactive electronic
learning solution. Users build their knowledge easily and conveniently with
19 hours of learning in 36 interactive modules.
For further information, please contact: marilise.devilliers@uk.pwc.com
TransitionIFRS e-Platform – an integral part of the PwC TransitionIFRS
service offering. It is a web-based communication platform from which
you can control your IFRS conversion project. It enables you to work
collaboratively with your advisers, access support and guidance and
transfer knowledge within your organisation.
For further information, please contact: sarah.troughton@uk.pwc.com
IFRS News – a monthly newsletter focusing on the business implications
of IASB proposals and new standards. Available free to download at
www.pwc.com/ifrs
For further information, please contact: joanna.c.malvern@uk.pwc.com
World Watch magazine contains opinion articles, case studies and
worldwide news on IFRS, governance and other initiatives to improve
corporate reporting. Available free to download at www.pwc.com/ifrs
For hard copies and further information, please contact:
sarah.grey@uk.pwc.com
23
Dedicated to the industry

PricewaterhouseCoopers Global Forest, Paper & Packaging practice is

comprised of a network of industry professionals located in over 30
countries around the world.

Publications for the forest, paper and packaging industry

Branching out - Global deals activity in the forest, paper & China Risks & Rewards – Paper & Packaging Industry
packaging industry Presents an overview of the impact of China on the paper and packaging
This publication reviews the recent deals activity in the forestry, paper sectors including an in-depth look at some key issues of particular
and fibre packaging sectors, examines the last twelve months’ activity importance to companies operating – or looking to invest - in the Chinese
in detail. It explores the key drivers behind transactions in the industry, marketplace.
including the key role of non-traditional investors, in particular, private
equity. The publication also focuses on deal activity by key regions, the Risks & Rewards - Forest, Paper & Packaging in Russia
success of deals and considers the future transactions outlook. Addresses the state of the industry in Russia and reflects on the key
considerations anyone thinking of investing in the sector there should
CEO Perspectives - Viewpoints of CEOs in Forest, Paper & make. Sets the scene on the background of the Russian marketplace,
Packaging Companies Worldwide the regulatory environment and its “forest wars”; provides analysis sector
by sector (forestry and logging; processed wood products; pulp, paper,
The publication summarises the thoughts of 17 leading CEOs in the
and paperboard; paper/non-paper packaging); and explores the risks and
forest, paper & paper-based packaging sectors around the global on
rewards of doing business in Russia.
key issues facing the industry. The thoughts of the CEOs, from North
America, South America, Europe, Russia, China, India and South Africa,
are drawn from face-to-face and telephone interviews.

Global Forest, Paper & Packaging Industry Survey

Comprises an analysis of the financial results of the PwC Top 100 – the
100 largest forest, paper and paper-based packaging companies in the Download our publications free of charge or join our
world, ranked by sales revenue. mailing list at www.pwc.com/fpp

24
Key contacts around the world

Global Leader Global Director

Robert Barnden Clive Suckling
Phone: +46 (8) 5553 3016 Phone: +44 (20) 7213 4887

Argentina IndIA Singapore

Mariano Tomatis Ashwani Puri Teck Soon Chew
Phone:+54 (11) 4850 4716 Phone: + 91 (11) 4125 0513 Phone: +65 6236 3328
Australia Indonesia Slovakia
Andrew McPherson Jusuf Wibisana Maria Fruhwaldova
Phone: +61 (2) 6271 9350 Phone: +62 (21) 52 12901 Phone: +421 2 5935 0400
Austria Ireland South Africa
Ian Murdoch Neil Murphy Heinz Zastrau
Phone:+43 (1) 5018 81420 Phone: +353 (1) 704 8556 Phone: +27 (11) 797 4431
Brazil Italy SOUTH KOREA
Marcelo Orlando Maria Teresa Bernelli Kwang-Oh Kim
Phone: +55 (11) 3674 3875 Phone: +39 (461) 237 004 Phone: +82 (0) 2 709 0690
Canada Malaysia Spain
Bruce McIntyre Daryl Sim Mar Gallardo
Phone: +1 (604) 806 7595 Phone: +60 (82) 413957 Phone: +34 (91) 568 4456
Chile Mexico Sweden
Ricardo Arrano Javier Monroy Robert Barnden
Phone: +56 (2) 940 0000 Phone: +52 (55) 5263 6000 Phone: +46 (8) 5553 3016
China Netherlands Bo Lagerström
Kenny CH Yeung Frans Vestergaard Phone: +46 (8) 5553 3041
Phone: +86 (20) 3819 2033 Phone: +31 (10) 4076 458
SWITZERLAND
ColOmbia New Zealand Arno Frieser
Gustavo Dreispiel David Randell Phone: +41 (58) 792 26 56
Phone: +57 (1) 635 4802 Phone: +64 (9) 355 8042
UK
EcUADOR Norway Clive Suckling
Roberto Tugendhatl Erling Elsrud Phone: +44 (20) 7213 4887
Phone: +593 (04) 2288 199 Phone: +47 95 260 005
US
Finland Poland Marc Silverman
Johan Weckman Antoni Tyminski Phone: +1 (203) 539 5604
Phone: +358 (0) 9 228 01353 Phone: +48 (061) 850 5103
Uruguay
France Portugal Daniel Garcia
Benoît Pinoche António Correia Phone: +598 (2) 916 0463
Phone: +33 (0) 2 5184 3636 Phone: +351 225 433 114
Venezuela
Germany Russia Victor Nieto
Manfred Krawietz Alexei Ivanov Phone: +58 (281) 418 7935
Phone: +49 (0) 89 5790 5823 Phone: +7 (812) 326 6969
25
pwc.com/fpp

The firms of the PricewaterhouseCoopers global network (www.pwc.com) provide industry-focused assurance, tax and advisory services to build public trust and enhance value for clients and their
stakeholders. More than 130,000 people in 148 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
© 2007 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and
independent legal entity.
#