Accounting principles (unaudited)

1 Basis for financial accounting

The interim financial reporting has been prepared in accordance with the International Financial Reporting Standards (IFRS) and complies with the requirements of IAS 34 (Interim Financial Reporting). The same accounting principles have been applied as for the consolidated financial statement per 31 December 2011. The unaudited interim financial reporting should be read together with the audited 2011 consolidated financial statement.

Numerous new standards, amendments and interpretations of existing standards were published, which are to become effective for financial years commencing on 1 January 2012 or later. The following new or amended IFRS standards or interpretations are of importance for the LLB Group:

  • IAS 12, «Income taxes» (effective from 1 January 2012); the amendment applies to the investment properties, which are recognised at fair value, whereby the deferred tax is to be calculated on the basis of an expected sale or use of the property. These amendments have no significant influence on the interim financial statement.
  • IAS 19, «Employee Benefits» (effective from 1 January 2013); the amendments announced by the IASB improve the accounting requirements for pensions and other forms of post-employment benefits. They provide a better picture of a company's current and future obligations arising from the provision of defined benefit plans, and how these obligations affect the financial position, performance and cash flow of a company. In the past, the LLB Group always reported actuarial profits and losses directly in equity capital. Due to this procedure, the amendments will have no significant influence on the financial reporting of the LLB Group. It was decided not to implement these amendments at an earlier date.
  • IAS 27 «Consolidated and Separate Financial Statements according to IFRS» and IAS 28 «Investments in Associates and Joint Ventures» in conjunction with the introduction of IFRS 10 «Consolidated Financial Statements», IFRS 11 «Joint Arrangements» and IFRS 12 «Disclosure of Interests in Other Entities» (effective from 1 January 2013); the new IFRS standards supersede or complement the accounting and disclosure requirements for consolidated and separate financial statements. Further individual definitions in the standards are reinterpreted, supplemented or replaced. The effects of these amendments on the financial reporting of the LLB Group are currently being analyzed. It was decided not to implement these amendments at an earlier date.
  • IFRS 9, «Financial Instruments» (effective from 1 January 2015); the amended IFRS 9, which also includes the revised classification and measurement guidelines for financial assets, contains guidelines covering financial liabilities and the derecognition of financial instruments. The standard foresees two measurement categories for financial assets: amortised costs and fair value. IFRS 9 requires that all financial assets are classified on the basis of the entity's business model for managing the financial assets, and the contractual cash flow characteristics of the financial assets. Non-traded equity instruments can be accounted for at fair value through other comprehensive income. There is no subsequent recycling of realized gains or losses from other comprehensive income to profit or loss. All other financial assets are measured at fair value through profit and loss. This designation is made separately for each financial instrument upon first being specified and is irrevocable. The requirements in IAS 39 regarding the classification and measurement of financial liabilities were retained, including the related application and implementation guidelines. For financial liabilities designated at fair value through profit or loss, changes in fair value due to changes in an entity's own credit risk are directly recognized in other comprehensive income instead of in profit and loss. The effects of these amendments on the financial reporting of the LLB Group are currently being analyzed. It was decided not to implement these amendments at an earlier date.

This consolidated interim financial reporting was approved and released for publication by the Board of Directors at its meeting on 28 August 2012.

2 Changes to the scope of consolidation

swisspartners Investment Network AG has sold swisspartners AG with registered office in Zurich. swisspartners AG was removed from the scope of consolidation with effect from 30 June 2012.

3 Foreign currency translation

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Average rate

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4 Risk management

In the course of its operative activity, the LLB Group is exposed to financial risks such as market risk, liquidity and refinancing risk, credit risk and operational risk. The interim financial statement contains no risk management information. We therefore refer to the risk management information provided in the 2011 annual report. There were no significant changes as per 30 June 2012.

5 Important changes since the balance sheet date

There have been no material effects after the balance sheetdate which would require disclosure or adjustment of theconsolidated financial statement for the first half of 2012.

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