1. JOHANNSEN · BASEDOW + PARTNER AG 4 th North European Conference St. Petersburg May 2008

2. Kreston 4th North European Conference St. Petersburg 2 JOHANNSEN · BASEDOW + PARTNER AG Location –we have our offices in the Northern Part of Germany in –Hamburg (center) –Hamburg Finkenwerder –Schwerin –Rostock

3. Kreston 4th North European Conference St. Petersburg 3 JOHANNSEN · BASEDOW + PARTNER AG locations

4. Kreston 4th North European Conference St. Petersburg 4 JOHANNSEN · BASEDOW + PARTNER AG Hamburg Gänsemarkt 50

5. Kreston 4th North European Conference St. Petersburg 5 JOHANNSEN · BASEDOW + PARTNER AG Group –Johannsen. Basedow +Partner AG Tax consultancy –Johannsen. Basedow +Partner GmbH Audit company –Heuer, Finck & Kollegen Tax consultancy –Johannsen. Basedow – Külper + Röhlig GmbH Tax consultancy

6. Kreston 4th North European Conference St. Petersburg 6 JOHANNSEN · BASEDOW + PARTNER AG Personell –5 senior-partners –total staff about 35 –qualifications 1 Wirtschaftsprüfer (cpa) 8 Steuerberater (tax consultant) 1 Rechtsanwalt (attorney at law) qualified personnel with special training

7. Kreston 4th North European Conference St. Petersburg 7 JOHANNSEN · BASEDOW + PARTNER AG language –German –English –Russian

8. Kreston 4th North European Conference St. Petersburg 8 JOHANNSEN · BASEDOW + PARTNER AG Services provided –auditing annual statements consolidated statements other: –broker –disposal of packing material –prospectus

9. Kreston 4th North European Conference St. Petersburg 9 JOHANNSEN · BASEDOW + PARTNER AG Services provided (cont.) –accountancy bookkeeping departmental costing pay roll accounts preparation of annual financial statements preparation of consolidated financial statements

10. Kreston 4th North European Conference St. Petersburg 10 JOHANNSEN · BASEDOW + PARTNER AG Services provided (cont.) –taxation for –Individuals –companies and other corporate bodies –non profit organisation tax returns tax consulting and planning legal remedy at tax court

11. Kreston 4th North European Conference St. Petersburg 11 JOHANNSEN · BASEDOW + PARTNER AG Services provided (cont.) –consulting financing and investment advices merger & acquisition reorganisation, restructuring Business planning real estate real estate investment trust

12. Kreston 4th North European Conference St. Petersburg 12 JOHANNSEN · BASEDOW + PARTNER AG Kreston –member since 1993 –received referrals from Austria Denmark/Sweden Netherlands United Kingdom USA

13. Kreston 4th North European Conference St. Petersburg 13 JOHANNSEN · BASEDOW + PARTNER AG Kreston –our service for Kreston clients tax advice lookkeeping pay roll accounts annual audit preparation of annual accounts financial planning merger & acquisition

14. Kreston 4th North European Conference St. Petersburg 14 JOHANNSEN · BASEDOW + PARTNER AG Services for east-european clients –Hamburgische Gesellschaft für Wirtschaftsförderung mbH, Hamburg –Our assistance Establishing of subsidiaries Establishing of branches Bookkeeping and tax consultancy Business plans

15. Kreston 4th North European Conference St. Petersburg 15 Changes in taxation in Germany Corporations 2007 –Gewerbesteuer ca. 20 % deductible –Körperschaftsteuer + Solidaritätszuschlag ca. 26,4 % not deductible –total tax on profit ca. 40% in Hamburg Corporations 2008 –Gewerbesteuer ca. 14 % not deductible –Körperschaftsteuer + Solidaritätszuschlag ca. 15,8 % not deductible –total tax on profit ca. 30% in Hamburg

16. Kreston 4th North European Conference St. Petersburg 16 Changes in taxation in Germany shareholder of corporations 2008 –Corporations ca. 5 % –Business individuals 50-%-income-method –Private individuals 50-%-income-method shareholder of corporations 2009 –Corporations ca. 5 % –Business individuals 60-%-income-method –Private individuals 25-%-withhold-tax No income related expenses deductible

17. Kreston 4th North European Conference St. Petersburg 17 Changes in taxation in Germany partnerships 2008 –Special taxation for reserved earnings No more degressive depreciation Only straight-line method Interest expenses –Exemption limit 1 Mio. € –Deductible are only 30 % of ebita

18. Kreston 4th North European Conference St. Petersburg 18 Changes in HGB in Germany HGB = German Commercial Code –Includes the legal regulations for accounting and auditing draft of the „Bilanzrechtsmodernisierungsgesetz" (German code to bring up to date the accounting law) –eighth EU-guideline (auditors-guideline)

19. Kreston 4th North European Conference St. Petersburg 19 Changes in HGB in Germany Requirements for the license as auditors, independence, establishment of ISA as standard for statutory audits, quality assurance, analysis of audit fees and regulations for corporations wich public interest

20. Kreston 4th North European Conference St. Petersburg 20 Independence - § 319 (2) German public auditors may not audit financial statements if there are grounds that indicate that their independence may be impaired, in particular –Business relationships –Financial relationships –Personal relationships

21. Kreston 4th North European Conference St. Petersburg 21 Independence - § 319 (3) Specifically, German auditor are excluded from auditing financial statements if they, or a person with whom they jointly practise their profession: –Hold shares or some other more than merely insignificant financial interest in the corporation to be audited

22. Kreston 4th North European Conference St. Petersburg 22 Independence - § 319 (3) excluded from auditing if they…cont. –Hold an financial interest in a company that is affiliated with the corporation to be audited or that holds more than 20 % of the shares of the corporation to be audited

23. Kreston 4th North European Conference St. Petersburg 23 Independence - § 319 (3) excluded from auditing if they…cont. –are a legal representative, a member of the supervisory board or employee of the corporation to be audited or of a company –that is affiliated with the corporation to be audited or –that holds more than 20 % of the shares of the corporation to be audited

24. Kreston 4th North European Conference St. Petersburg 24 Independence - § 319 (3) excluded from auditing if they…cont. –over or above the audit activities at or for the corporation to be audited have been involved in keeping the accounting records or preparing the annual financial statements to be audited have been involved in the performance of internal audit functions in a position of responsibility

25. Kreston 4th North European Conference St. Petersburg 25 Independence - § 319 (3) excluded from auditing if they…cont. –over or above the audit activities … cont. have rendered corporate management or financial services, have rendered independent actuarial or valuation services that have material bearing on the financial statements to be audited this shall also apply if one of these activities is performed by a company in which the auditor is shareholder, employee or legal representative

26. Kreston 4th North European Conference St. Petersburg 26 Independence - § 319 (3) excluded from auditing if they…cont. –employ a person on the audit who may not act as an auditor in accordance with nos. 1 to 3 above –have in each of the last 5 years generated more than 30 % of their total income from professional activities from the corporation to be audited or from companies in which the corporation to be audited holds more than 20 % of the shares where this is also expected in the current year

27. Kreston 4th North European Conference St. Petersburg 27 Independence - § 319 (3) excluded from auditing if they…cont. –This shall also apply if the spouse or civil partner satisfies a reason for exclusion under sentence 1 nos. 1,2 or 3 above

28. Kreston 4th North European Conference St. Petersburg 28 Independence - § 319 (4) German public auditing firms may not audit financial statements if –they –one of their legal representatives –a shareholder owning more than 20 % –An affiliated company –a shareholder or another person employed by it involved in the audit are excluded under subsections (2) or (3) above

29. Kreston 4th North European Conference St. Petersburg 29 Independence - § 319a In addition to the grounds listed above German public auditors may not audit financial statements of listed companies if –They have in each of the last 5 years generated more than 15 % of their total income from professional activities –In addition to the audit activities they have provided legal or tax advisory service … –In addition to the audit activities they have been involved in the development, establishment … of accounting information systems –They have already signed an auditors report in 7 or more cases

30. Kreston 4th North European Conference St. Petersburg 30 Independence - § 319b Draft an auditor is excluded from auditing financial statements if a member of his network –Fulfils grounds that indicate that their independence may be impaired, in particular Business relationships Financial relationships Personal relationships –Hold shares in the corporation to be audited –Is legal representative of the corporation if the member of the network an influence the results of the audit

31. Kreston 4th North European Conference St. Petersburg 31 Independence - § 319b Draft an auditor is excluded from auditing financial statements if a member of his network have been involved in keeping the accounting records or preparing the annual financial statements to be audited have been involved in the performance of internal audit functions in a position of responsibility have rendered corporate management or financial services, have rendered independent actuarial or valuation services that have material bearing on the financial statements to be audited this shall also apply if one of these activities is performed by a company in which the member is shareholder, employee or legal representative always

32. Kreston 4th North European Conference St. Petersburg 32 Independence - § 319b Draft an auditor is excluded from auditing financial statements if a member of his network … –This shall also apply if the spouse or civil partner of the member satisfies a reason for exclusion under sentence 1 nos. 1,2 or 3 above –following example: The wife of a Chinese Kreston member owns shares of the client to be audited. As far that woman is not involved in the audit, the corresponding German Kreston partner may exculpate himself and accept that audit engagement.

33. Kreston 4th North European Conference St. Petersburg 33 Independence - § 319b Draft A reason for exclusion as statutory auditor is given as far as a partner of the network has exercised one of the following areas of responsibilities as far as the audit client is concerned: –Accounting, –actuarial services, –legal or tax consultancy (sec. 319a par. 1 no. 2 HGB), –financial services or –implementation of accounting- and IT systems.

34. Kreston 4th North European Conference St. Petersburg 34 Independence - § 319b Draft Legal definition of a Network –There is a network if persons act in combination at their professional practice in following of common economic interests for a certain duration

35. Kreston 4th North European Conference St. Petersburg 35 Independence - § 319b Draft criteria of a Network –Sharing of profit or costs –Common property –Common control or management –Use of a common brand –Common quality control system or proceeding –Use of common professional resources

36. Kreston 4th North European Conference St. Petersburg 36 Independence - § 319b Draft Demand on a Network –Data pool with all the necessary information about the business activities the members the business partners, spouses and civil partners of the members Companies of the members –or a email system with the need of a 100% response rate

37. Kreston 4th North European Conference St. Petersburg 37 EURAFNE Conference 2008 18th September – 20th September 2008 Steigenberger Hotel, Hamburg, Germany Hosted by Johannsen · Basedow + Partner AG