19 Oct 2006

Provisions and write downs in the accounts for Q3 2006 in Norske Skog

In course of the third quarter of 2006 a valuation has been undertaken both of operational fixed assets that are depreciated (impairment testing), and of goodwill. Comparing to earlier valuations new assumptions for newsprint prices in China and for the cost development of certain raw materials have been made.
As a preliminary result of the valuations a write down of NOK 2.8 billion has been made. This is related to the operations in China, coated magazine paper (LWC) in Europe, goodwill relating to the acquisition of Fletcher in 2000 and certain other write downs. In addition and as previously announced, a write down of approximately NOK 400 million for PM 1 and 4 at Norske Skog Jeonju in Korea, and provision for NOK 600 million connected to the de-manning process in the group, has been made. Most of this provision will be paid during 2007 while the other amounts mentioned above have no cash effect.
Write downs and provisions in Q 3 amounts to NOK 3.8 billion in total, with a net effect on earnings after tax of  NOK 3.2 billion. NOK 1.7 billion part of the total write down is related to goodwill. Following this the goodwill in the Norske Skog consolidated accounts will amount to NOK 2.8 billion, mainly related to the Australasian region.
The valuation has been done according to generally accepted methods and in accordance with IAS 36. The write downs and provisions mentioned above are included in the operating earnings under IFRS.
Oxenøen 19 October 2006
Norske Skog
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