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1. Basis of presentation, consolidation and accounting policies

Basis of presentation

The unaudited interim condensed consolidated financial statements of Precious Woods Group (hereinafter „interim financial statements”) for the six months ended 30 June 2021, have been prepared in accordance with IAS 34 Interim Financial Reporting and were authorized for issue by the Board of Directors on 18 August 2021. The interim financial statements do not include all information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 December 2020. They mainly focus on new activities, events and circumstances and do not duplicate information previously reported.

The reporting currency is Euro (EUR). Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount.

Accounting policies

These statements have been prepared according to the same accounting policies as those followed for the Group’s annual financial statements 2020. The effects of changes to International Financial Reporting Standards are explained in Note 2.

Change in scope of consolidation

There was one change in the scope of consolidation in the first half-year of 2021:

On 31 May 2021 MIL Madeiras Preciosas Ltda., already owning 40 % of BK Energia Itacoatiara Ltda., acquired the remaining 60 % of the ordinary shares outstanding, and with this transaction, obtained 100 % ownership of the renewable power plant. BK Energia Itacoatiara Ltda. was renamed MIL Energia Renovável Ltda. afterwards. The plant generates renewable energy from biomass and meets the requirements of the Kyoto Protocol and the UNFCCC, resulting in tradable certified emission reductions. As a result of the acquisition, the Group expects to improve its own knowledge about renewable power plant and to be prepared for the extension of the energy business in combination with additional forest activities. The details of this acquisition are further explained in Note 5.