IFRS

Memorandum about the impact of applying IFRS

In accordance with the European regulation 1606/2002 of 19 July 2002, Duvel Moortgat is obliged, as are all European companies whose securities have been accepted for dealing in a regulated market, to draw up consolidated annual accounts with application of the European approved IFRS standards and the interpretations of these with effect from the financial year that begins on 1/1/2005.

As a member of the Next Prime segment and as provided for in article 7203/3 of section 7 of the Euronext Rule Book, the interim report on the 2004 financial year should contain an explanation with a description of the most important consequences of the transition from the previously applied Belgian accounting standards to the IFRS standards on the commencing balance sheet as at 1/1/2004 and on the income statement for the first six months.

The adjustments quantified and described below can still be subject to change. Presentation issues of the financial statements are outside the scope of this note.

Most important consequences of applying IFRS to the commencing balance sheet as at 1/1/2004

In accordance with IFRS 3 (business combinations), goodwill is not written down. Instead, there must be an annual test on whether any write-downs should be posted (impairment test). Existing goodwill was written down on 1/1/04 for € 494,000.

In accordance with IAS 16, tangible fixed assets are written down systematically over their useful life. Applying this will increase the net book value of the tangible fixed assets by € 467,000.

The choice of the depreciation method must be made based on the expected pattern of the inflow of economic benefits as a consequence of use. From the 2002 financial year onwards, Duvel Moortgat has therefore taken the decision to transfer from diminishing balance depreciation to straight-line depreciation. This transition was already reflected in the shareholders’ equity as at 1/1/2004.

The group’s hotel and catering properties (brought together under Moortgat Immo Services) are regarded as a real estate investment (IAS 40). Duvel Moortgat opts for a valuation based on the market value (fair value model) in which no depreciations take place but in which the changes in the real value are reflected in the income statement. Due to this modification, the net book value of the tangible fixed assets has increased by € 8,197,000.

Work in progress and finished products are valued at full production cost in accordance with IAS 2. This encompasses all costs of production departments, including depreciations but without costs of sales, marketing and the administrative overheads. Application of these principles will result in an increase in stock by € 1,408,000.

Under IAS 37, a provision can only be made if an obligation arises as a consequence of an event that took place in the past and that will more than likely provide cause for an outgoing cash flow, the size of which can be reliably estimated. The provisions at Duvel Moortgat were consequently increased by € 363,000.

The different movements gave cause to modify deferred taxes by € 2,693,000.

In accordance with the IFRS standards (IAS 10), Duvel Moortgat’s 2003 dividend (€ 2,814,000) shall be retained in the shareholders’ equity and will not be posted under "Other Debts”, as is the case in accordance with Belgian accounting standards.

Summary of the effect of the items mentioned above on the shareholders’ equity as at 1/1/2004:

Summary of the effect of the items mentioned above on the shareholders’ equity as at 1/1/2004:

Most important consequences of applying IFRS to the results as at 30/06/2004.