Correction for analytical use

The value creating economic activities in a company can be divided into two parts, operating and financial activities. The international and the Danish accounting regulation do not have clear guidelines regarding the division of respectively operating- and financial activities. This means that it is up to the individual external analyst to make a reclassification of the public annual report into both operating and financial activities so that it can be used for further analysis on both operating and financial activities.

A company´s capability to create return on assets in the long run will in most cases be driven by its operating activities or the so called main activities. Therefore it is very important to analyze this specific value driver to measure the company´s existence in the long run and that’s why it must be

“cleaned” for financial activities.

On behalf of the above mentioned it is clear that one must make reclassification of a company’s annual reports before an accounting analysis can be made. The classification must be made for the balance sheet, the movement in equity, income statement and the cash flow statement.

A company can besides the actual distribution of operating and financial activities make entries direct on the equity regarding both the national- and international regulations and standards. It is therefore possible to recognize as a part of the value creation in the movement of equity. Entries made direct on the equity will be reclassified so it will make it possible to distinguish between the transaction with the owners from the comprehensive income. In connection with the visibility of the total value creation a reclassification of the statement of change in equity must be made so that the item concerning the comprehensive income is included.

The official annual report is in lack of complete information and adequate toward the external investor therefore some of the reclassification and corrections have been made by us based on some estimates.

The estimates mostly concern distribution circumstances and in those circumstances where it has not been possible to find any information in the annual statement.

In the appendix is the official balance sheet, movement in equity, income statement and cash flow shown. Furthermore is the reformulated balance sheet, movement in equity, income statement and cash flow shown in the appendix.

The whole procedure regarding the reformulation of the above mentioned is treated in the appendix where each reclassified items have been reviewed. This review consist of both a reclassification of financial and operating items and take a stand to make correction on some items as accurate as possible so that the analytical motive has been fulfilled.

4.3.1 Important points concerning the balance sheet Other provisions

In the year 03/04, 04/05 and 05/06 IC Company has made provisions on “Rent for loss generating stores to be closed”, ”provisions for rent” and restructuring of acquired enterprise”. Taking the analysis into account we have moved these items from the balance sheet to the accounting period they concern.

From IC Companys point of view the reason is that these provisions are an estimate for a prudence concept. In an analysis point of view these items have no eligibility in the provision.

In an accounting point of view one must expect that these costs must have been devoted on behalf of a justified expectation to the forthcoming cost. But taking the analysis perspective into account these cost should be recognized to the periods they concern. That is why we have made an adjustment to this

according to the appendix. The reclassification (reversal of these costs) will appear within the appendix.

We refer to appendix 1.1 where the treatment of the balance sheet has been made in detail.

Other payables:

In the annual report other payables are typically not “closely” specified. In this case though there have been some specification on some of the main items but there is still some items as “other cost payable”

that have remained unspecified.

It is necessary to comment on classification of these items.

Accrued interest has been classified as an interest-bearing liability why it must be assumed that these must be related to financial liability.

We have classified unrealized loss on financial contracts as an operating liability. This we have done by looking at the accounting policies. We believe that the cash flow hedging must be referred to sales of goods and purchased supplies. It is mentioned in IC Companys accounting policies that forward exchange contract is only used regarding the hedging of sales of goods and purchased supplies. It is however possible that unrealized capital loss on interest rate swaps, etc. is included in this amount. But because neither the accounting policies nor the company do specify this item it has not been possible to comment any further on this topic.

4.3.2 Important points concerning movement in the income statement

Concerning the correction and reformulation of the income statement the items have been divided into two main groups, which are operating and financial relating components. By doing this we will be able to recognize whether IC Companys gets their earnings from operating activities or financial relating activities. Operating related items have furthermore been divided into “operating profit from sale” and

“other operating profit”. The purpose of this division is to make it easier for the reader(analyst) to identify whether the company gets its earnings from its main activities that can be considered as recurrent(operating profit from sale) or is it from some secondary, one-off items or from other profit components that cannot be considered as being recurring(other operating profit).

Unusual items:

In the accounting year 03/04 some items such as “provision for loss on account receivable”,

“impairment of inventory” and “correction of goodwill” with the amount 20 mill DKK, 57 mill DKK and 58 mill DKK respectively, have been reclassified from “operating profit from sale” to “other operating sale”. The same has been the case for the accounting year 07/08 where the reclassification concern “Provision for loss on account receivable” with 7 mill DKK and “provisions for severance pay to the Group’s Chief Executive Officer” with 13 mill DKK.

Distributing the tax costs:

We have distributed the tax costs for all the accounting years on the operating result and the financial results. This allocation has been made on behalf of the published annual reports. There will though be some part of it that has been made by using estimate. But we do not believe that this will have an effect on the fair presentation or the analysis.

Determination of the comprehensive income has also led to correction of some items that has been recognized directly on the equity regarding the published annual report. The reason for the change is that we want to express IC Companys total value creation with the comprehensive income.

We refer to the appendix where the income statement has been looked into.

The official and reformulated annual statements are given in the appendix.