Illustrative IFRS/HKFRS Consolidated Financial Statements 31 December 2012

International/ Hong Kong Financial Reporting Standards

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Illustrative IFRS/HKFRS Consolidated Financial Statements

Specimen Holdings Limited

i

Introduction

This publication provides an illustrative set of consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS)/ Hong Kong Financial Reporting Standards (HKFRS), for a fictional manufacturing, wholesale and retail group (Specimen Holdings Limited).

Specimen Holdings Limited is an existing preparer of IFRS/HKFRS consolidated financial statements; IFRS/HKFRS 1, First-time adoption of International/Hong Kong Financial Reporting Standards, is not applicable. This publication is based on the requirements of IFRS/HKFRS standards and interpretations for financial years beginning on or after 1 January 2012. This publication includes the disclosures required by the Hong Kong Companies Ordinance and the Rules Governing the Listing Securities on The Stock Exchange of Hong Kong Limited and the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the “Listing Rules”) published up to and including October 2012. Their related disclosures are marked in red and orange respectively. This publication has not included all the disclosures required by the Listing Rules. For example, the disclosure of corporate governance has not been included as it is expected to vary significantly from one company to another company and should be tailored to suit the particular circumstances of the company. Please refer to Appendix 23 of Main Board Listing rules / Appendix 16 of GEM Listing rules for detailed disclosure requirements of corporate governance report. PricewaterhouseCoopers’ commentary has been provided, in boxes, to explain the detail behind the presentation of a number of challenging areas. These commentary boxes relate to the presentation in: the consolidated balance sheet, the balance sheet, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows, the summary of significant accounting policies, and financial risk management. Areas in which presentation has changed significantly since 2011 have been highlighted in grey. We have attempted to create a realistic set of financial statements for a corporate entity. Certain types of transaction have been excluded, as they are not relevant to the group’s operations. The example disclosures for some of these additional items have been included in Appendices V to VI. The new and amended standards and interpretations, which are effective for financial year ended 31 December 2012, are summarised in the below section. The example disclosures for the early adoption of IFRS/HKFRS 9, IFRS/HKFRS 10 and IFRS/HKFRS 11, IFRS/HKFRS 13, Amendment to IAS/HKAS 1 and IAS/HKAS 19 (revised) have been included in Appendices VII to XI respectively. The forthcoming IFRS/HKFRS requirements are outlined in a table in Appendix XII. The example disclosures should not be considered the only acceptable form of presentation. The form and content of each reporting entity’s financial statements are the responsibility of the entity’s management. Alternative presentations to those proposed in this publication may be equally acceptable if they comply with the specific disclosure requirements prescribed in IFRS/HKFRS. These illustrative financial statements are not a substitute for reading the standards and interpretations, the Hong Kong Companies Ordinance and the Listing Rules themselves, or for professional judgement as to the fairness of presentation. They do not cover all possible disclosures that IFRS/HKFRS, the Hong Kong Companies Ordinance and the Listing Rules require. Further specific information may be required in order to ensure fair presentation under IFRS/HKFRS depending on the circumstances. Additional disclosures may be required in order to comply with local laws and/or stock exchange regulations if the subject company is incorporated overseas and/or listed in an overseas stock exchange. Please refer to Disclosure Checklist 2012 for IFRS/HKFRS, the Hong Kong Companies Ordinance and the Listing Rules for detailed disclosure requirements. Readers should refer to PricewaterhouseCoopers’ industry illustrative financial statements for industry specific transactions and presentations, including:  Illustrative financial statements : Investment funds  Illustrative financial statements : Investment property  Illustrative financial statements : Private equity  Illustrative financial statements : Insurance  Illustrative financial statements for authorised institutions in Hong Kong We have also produced a set of illustrative financials statements prepared under IFRS for small and medium entities: “IFRS for SMEs – Illustrative consolidated financial statements 2010”.

Illustrative IFRS/HKFRS Consolidated Financial Statements

Specimen Holdings Limited

ii

New and amended standards that have been issued and are effective for periods commencing on 1 January 2012

Standards Key requirements Effective date

Amendment to

IFRS/HKFRS 7, ‘Financial

instruments: Disclosures’,

on transfer of financial

assets

These amendments are as part the IASBs comprehensive review of

off balance sheet activities. The amendments promote

transparency in the reporting of transfer transactions and improve

users' understanding of the risk exposures relating to transfers of

financial assets and the effect of those risks on an entity’s financial

position, particularly those involving securitisation of financial

asset.

1 July 2011

Amendment to

IFRS/HKFRS 1, ‘First time

adoption’, on

hyperinflation and fixed

dates

The first amendment replaces references to a fixed date of ‘1

January 2004’ with ‘the date of transition to IFRSs/HKFRSs’, thus

eliminating the need for companies adopting IFRSs/HKFRSs for

the first time to restate derecognition transactions that occurred

before the date of transition to IFRSs/HKFRSs. The second

amendment provides guidance on how an entity should resume

presenting financial statements in accordance with IFRSs/HKFRSs

after a period when the entity was unable to comply with

IFRSs/HKFRSs because its functional currency was subject to

severe hyperinflation.

1 July 2011

Amendment to IAS/HKAS

12, ‘Income taxes’, on

deferred tax

Currently IAS/HKAS 12, 'Income taxes', requires an entity to

measure the deferred tax relating to an asset depending on whether

the entity expects to recover the carrying amount of the asset

through use or sale. It can be difficult and subjective to assess

whether recovery will be through use or thro