SUB TOTAL US $ 165,600

Associates are interests held over which the group has significant influence (not being subsidiaries over which the group may exercise decision-making control). In general the interest held is 20% to 50% of the voting rights. Associates are recognised using the equity method. They are initially recognised at cost in the financial statements. Changes in valuation as a result of attributable results from the associates are recognised in the income statement.

2.10. Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest method (often nominal value) less impairment for doubtful receivables. Reasons for recognising a provision doubtful receivables include major financial problems on the part of the debtor or the passing of more than 365 days after the payment due date. Experience shows that if a receivable has not been collected more than 365 days after the agreed payment date, it is unlikely that it will be collected. The amount of the provision is the difference between the carrying amount of the receivable and the present value of expected future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced by the amount of the provision doubtful receivables and the associated expenses are included in selling expenses in the income statement. If a trade receivable or other receivable is uncollectible, it is charged to the provision doubtful

receivables. Collection of any amounts previously written off goes towards reducing the amount of selling expenses in the income statement.

Services supplied but not yet billed to the client are also recognised as trade receivables.

Trade receivables are not recognised in the balance sheet if they are sold to a factoring company and the contractual rights to these receivables have been transferred. The criterion applicable in this context is the substantial transfer of risks and rewards. Factoring fees are recognised as selling expenses.

2.11. Derivative financial instruments

Derivative financial instruments are initially recognised in the financial statements at fair value on the date the contract is concluded and are subsequently recognised at fair value at each reporting date. Changes in the fair value of derivative financial instruments are recognised directly in the income statement, unless hedge accounting is applied.

In the event the group applies hedge acounting, its effectiveness is documented when hedging. The effectiveness of the hedge is then determined at regular intervals, either by comparing the critical features of the hedging instrument with the hedged position, or by comparing the fair value change of the hedging instrument and the hedged position.

The group applies cash flow hedge accounting to interest rate derivatives entered into to hedge future cash flows from interest on its non-current borrowings.

When applying cash flow hedging the effective portion of the revaluation of the hedging instrument is directly recognised in equity. At such time as the results of the hedged position are recognised in the income statement, the associated result is transferred from equity to the income statement and recognised in the same item in the income statement.

The fair value of the derivative instrument is classified as a fixed asset or a non-current liability if the derivative instrument has a remaining maturity of more than 12 months, or as a current asset or liability if the remaining maturity is less than 12 months. To be able to recognise the ineffective part of the revaluation in the correct period in the income statement the group at each balance sheet date recognises the lowest absolute amount of either of the following two valuations changes in equity: • the cumulative revaluation of the hedging instrument since

the hedge relationship was indicated; and

• the cumulative change in the value of future hedged cash flows insofar as it can be attributed to hedged risk.

The cash flow hedge accounting is terminated when:

• the hedging instrument is sold, ended or exercised. The cumulative result on the hedging instrument that was recognised directly in equity when it was still deemed to be an effective hedge continues to be recognised in equity until the initially hedged future transaction takes place;

• the hedge relationship no longer complies with the criteria for hedge accounting. If the hedged future transaction has yet to take place, the associated cumulative result on the hedging instrument is recognised in equity. If the transaction will no longer take place the cumulative result recognised in equity is recognised in the income statement.

2.12. Cash and cash equivalents

Cash and cash equivalents, including cash in hand, bank balances and readily available deposits, are recognised at nominal value. Bank overdrafts are classified as borrowings on the balance sheet under current liabilities.

2.13. Share capital

Share capital is defined as equity attributable to equity holders of the company. Costs directly connected to the issuance of new shares or option rights are deducted from the proceeds recognised in equity. If any entity belonging to the group purchases USG People N.V. shares, the amount paid, including any associated costs (after income tax), is charged to equity attributable to equity holders of the company until such time as the shares are cancelled or reissued. The amount received on the issue of shares previously purchased, less any associated costs (after income tax), is added to the equity attributable to equity holders of the company.

2.14. Dividend

Dividend is recognised as a liability for the period in which the distribution is approved by the shareholders. If shareholders are offered the option between a stock dividend or a cash dividend, the stock dividend is recognised as the amount in cash which the shareholders did not elect to receive.

2.15. Non-current interest-bearing borrowings

Borrowings are initially recognised in the financial statements at fair value, net of transaction costs incurred, and are subsequently recognised at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method. Borrowings are classified as current liabilities unless the group has the intention and an unconditional right to postpone settlement of the liability for at least 12 months after the balance sheet date.

2.16. Lease

Lease contracts whereby the risks and rewards associated with ownership lie wholly or primarily with the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement for the duration of the lease using the straight-line method.

Lease contracts whereby the risks and rewards associated with ownership actually lie with the group are classified as finance leases. Assets acquired via a finance lease are carried at the lower of fair value and the present value of the minimum required lease payments at the start of the lease. The lease payments are recognised partly as settlement of the outstanding liability and partly as finance costs. The interest expense is charged to each period in the entire lease period in such a way that it results in a constant periodical interest rate on the outstanding balance of the liability. Property, plant and equipment acquired via a finance lease are depreciated over the shorter of the useful life and the duration of the lease contract.

2.17. Current and deferred income tax assets and liabilities

Income-based tax on the income for the financial year comprises current and deferred income taxes for the period under review. Income-based tax is recognised in the income statement except where it relates to items booked in comprehensive income or directly in equity. In the latter case, the associated tax is also recognised in comprehensive income or equity.

Current income tax consists of income-based tax on the taxable income, calculated on the basis of tax rates and legislation that has been enacted or substantially enacted at the balance sheet date. Management periodically monitors the positions taken when filing tax returns, taking into account various legal interpretations. If necessary, liabilities are recognised based on expected tax liabilities.

Deferred income tax is recognised in the consolidated financial statements for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. However, deferred income tax liabilities are not carried when initially recognising goodwill. Deferred income tax is calculated using tax rates and legislation that has been enacted or substantially enacted at the balance sheet date and are expected to apply when the deferred income tax asset concerned is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised insofar as it is probable that future taxable profit will be available to offset the temporary differences and available tax losses.

Deferred income tax assets and liabilities are offset if there is a legally enforceable right to do so and if the taxes are levied by the same authority.

2.18. Pension-related liabilities