Annual report 2012 - Peab

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These loans are recognized at the translated rate on balance sheet
day. The effective part of the period’s exchange rate changes in relation
to hedge instruments is recognized in and the accumulated
changes in a separate component of equity (the translation reserve),
in order to meet and partly match the translation differences that
affect other comprehensive income concerning net assets in the
hedged operations abroad. In the cases where the hedge is not
effective, the ineffective part is recognized directly in profit for the
year as a financial item.
Holdings of convertible certificates of claim
Convertible certificates of claim may be converted to shares through
the exercise of the option to convert the claim to shares. The option to
convert a convertible certificate of claim to shares is not closely related
to the claim right and therefore it is separated as an “embedded
derivative” belonging to the valuation category financial assets held
for trading. Therefore the derivative part is initially valued and subsequently
on an ongoing basis according to a valuation model at fair
value. Value changes are recognized in profit for the year as financial
income and expenses. The claim part is ascribed to the loan and
accounts receivable category and initially valued as the difference
between the acquisition value of the convertible and the initial fair
value of the option. Subsequently the claim part is valued at accrued
acquisition value based on the derived implicit interest rate which
gives an even return over the contractual life of the claim.
Issued convertible promissory notes
Convertible promissory notes can be converted to shares if the counterparty
exercises the option to convert the claim to shares and are
recognized as a compound financial instrument divided into a liability
part and an equity part. The fair value of the liability at the time of
issue is calculated by discounting future payment flows at the current
market rate for similar liabilities without conversion rights. The value of
the equity capital instrument is calculated as the difference between
the issuing funds when the convertible promissory note was issued
and the fair value of the financial liability at the time of issue. Deferred
tax attributable to liabilities at the issue date is deducted from the
recognized value of the equity instrument. Interest expenses are recognized
in profit for the year and are calculated applying the effective
interest rate method.
Tangible fixed assets
Owned assets
Tangible fixed assets are recognized in consolidated accounts at
acquisition value minus accumulated depreciation and amortization
and any write-downs. The acquisition value consists of the purchase
price and costs directly attributable to putting the asset in place in the
condition required for utilisation in accordance with the purpose of
the acquisition. Borrowing costs are included in the acquisition value
of internally produced fixed assets according to IAS 23. The accounting
principles applying to impairment loss are listed below.
The value of a tangible fixed asset is derecognized from the balance
sheet upon scrapping or divestment or when no future financial
benefits are expected from the use or scrapping/divestment of the
asset. Gains and losses arising from divestment or scrapping of an
asset consist of the difference between the sale price and the asset’s
booked value minus direct costs of sale.
Leased assets
Leasing is classified in the consolidated accounts either as financial
or operating leasing. Financial leasing applies in circumstances
where the financial risks and benefits associated with ownership are
substantially transferred to the lessee. Where such is not the case,
operating leasing applies.
Assets which are rented under financial leasing agreements are
recognized as assets in the consolidated balance sheet. Payment
obligations associated with future leasing charges have been recognized
as long-term current liabilities. The leased assets are depreciated
according to plan while leasing payments are entered under interest
and amortisation of liabilities.
Assets which are rented under operational leasing agreements have
not been recognized as assets in the consolidated balance sheet.
Leasing charges for operational leasing agreements are charged to
income in a straight line over the life of the lease.
Assets which are rented out under financial leasing agreements are
50 PEAB ANNUAL REPORT 2012
not recognized as tangible fixed assets since the risks and opportunities
connected to ownership of the assets are transferred to the lessee.
A financial receivable referring to future minimum leasing fees is
reported instead.
Future expenses
Future expenses are only added to the acquisition value if it is likely
that the future financial benefits associated with the asset will benefit
the company and the acquisition value can be reliably estimated. All
other future expenses are recognized as costs as they arise.
Borrowing costs
Borrowing costs which are directly attributable to the purchase, construction
or production of an asset and which require considerable
time to complete for the intended use or sale are included in the
acquisition value of the asset. Borrowing costs are activated provided
that it is probable that they will result in future financial benefits and
the costs can be reliably measured.
Depreciation principles
Depreciation is based on the original acquisition value minus the
calculated residual value. Depreciation is made linearly over the
assessed useful life of the asset.
Buildings (operating buildings) 25–100 years
Land improvements 25–50 years
Asphalt and concrete factories 10–15 years
Vehicles and construction machinery 5–6 years
PCs 3 years
Other equipment and inventories 5–10 years
The useful life and residual value of assets are assessed annually.
Gravel and rock quarries are written down based on substance
depletion, i.e. the amount of gravel and rock removed in relation to
the calculated total amount of substance deemed recoverable in the
gravel and rock quarry.
Real estate
Group real estate holdings are divided as follows:
– Buildings and land entered under tangible fixed assets
– Project and development properties as inventories among
current assets
Properties used in the Group’s own operations consisting of office
buildings and warehouses (operational buildings) are entered as
buildings and land under tangible fixed assets. Valuation is made in
accordance with IAS 16, Tangible fixed assets, at acquisition value
deducted for accumulated depreciation and possible write-downs.
Direct and indirect holdings of undeveloped land and redeveloped
tracts for future development, developed investment properties for
project development, improvement and subsequent sale and which
are expected to be realized during our normal operational cycle are
entered as project and development property under current assets.
Valuation is made in accordance with IAS 2, Inventories, at the lowest
of either acquisition value or net sales value.
Intangible assets
Goodwill
Goodwill refers to the difference between the acquisition value of a
business and the fair value of acquired identifiable assets and
assumed liabilities.
Goodwill is value at acquisition value minus any accumulated writedowns.
Goodwill is divided between cash-generating units and is tested
at least once a year for write-down needs. Goodwill stemming from
the acquisition of joint ventures and affiliated companies is included
in the recognized value of participations in joint ventures and affiliated
companies.
In the case of business acquisitions which are less than the net
value of the acquired assets and the assumed liabilities, the difference
is recognized directly in profit for the year.
Research and development
Research costs intended to acquire new scientific or technological
knowledge are reported as costs as they arise. Development costs