Annual Report 2012.pdf - Cherry
Annual Report 2012.pdf - Cherry
Annual Report 2012.pdf - Cherry
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FUNCTIONAL AND<br />
REPORTING CURRENCY<br />
The parent company uses Swedish kronor (SEK)<br />
as its functional currency, which is also used<br />
as the reporting currency for the group and<br />
the parent company. Financial reports are<br />
therefore presented in Swedish kronor and all<br />
amounts are, unless otherwise stated, rounded<br />
off to the nearest thousand.<br />
FOREIGN CURRENCY<br />
TRANSACTIONS AND BALANCE SHEET<br />
ITEMS IN FOREIGN CURRENCY<br />
Transactions in foreign currency are converted<br />
to the functional currency according to the exchange<br />
rates applicable on the transaction date,<br />
or the date when the items are re-valued. Exchange<br />
rate profits and losses incurred during<br />
the payment of such transactions are reported<br />
in the income statement as other operating income<br />
or other operating expenses.<br />
Receivables and liabilities related to operations<br />
in foreign currency are valued at the yearend<br />
rate. Exchange rate differences incurred<br />
during conversion are reported in the income<br />
statement as other operating income or other<br />
operating expenses.<br />
Currency rate profits and losses attributable<br />
to loans and liquid assets are reported in the income<br />
statement as financial income or expenses.<br />
CONVERSION OF FOREIGN OPERATIONS<br />
Assets and liabilities in foreign operations are<br />
converted in the consolidated financial statements<br />
from the functional currencies of the<br />
operations at the year-end rates. Earnings and<br />
costs are converted at the average rate for the<br />
year. The currency rates are taken from the<br />
Riksbank. Conversion differences incurred<br />
during conversion are reported in other comprehensive<br />
income and accumulated in a separate<br />
component in equity, designated conversion<br />
differences.<br />
Goodwill and adjustments of fair value incurred<br />
during the acquisition of a foreign operation<br />
are treated as assets and liabilities for this<br />
activity, and are converted at the year-end rate.<br />
Exchange rate differences are reported in other<br />
comprehensive income.<br />
ASSESSMENTS AND ESTIMATES<br />
The preparation of financial statements in<br />
accordance with IFRS requires the executive<br />
management to make assessments and estimates<br />
and to make assumptions that influence<br />
the application of the accounting principles<br />
and reported amounts for assets, liabilities,<br />
earnings and costs.<br />
Estimates and assumptions are regularly reviewed<br />
and based on historical experience and<br />
other factors, including expectations of future<br />
events, that are considered to be justified in<br />
the prevailing conditions. The results of these<br />
estimations and assumptions are used to assess<br />
the reported values of assets and liabilities,<br />
which otherwise would not be clear from other<br />
sources. The actual result can deviate from<br />
these estimations and assessments.<br />
During the preparation of <strong>Cherry</strong>’s consolidated<br />
financial statements the board and the<br />
CEO have come to the conclusion that the valuation<br />
of gaming agreements and concessions,<br />
customer and restaurant receivables and the<br />
write-down of goodwill are the critical areas<br />
where other estimates and assessments would<br />
have an effect on the financial position and<br />
results.<br />
WRITE-DOWNS<br />
When the group assesses the write-down requirements<br />
for gaming agreements and concessions<br />
the utility value is assessed on the basis<br />
of forecast future cash flows from the cash<br />
generating units defined as ventures. The most<br />
important assumptions in these calculations<br />
refer to the expected rate of growth of turnover<br />
and development of the operating margin.<br />
The write-down requirement for goodwill<br />
is assessed annually be comparing the recovery<br />
value with the reported value of the asset.<br />
The most important assumptions in these calculations<br />
refer to the expected rate of growth<br />
of turnover, growth rate or forecast period,<br />
and interest. Write-downs of goodwill are not<br />
restored. For a description of write-downs of<br />
goodwill in 2012, see Note 15.<br />
CUSTOMER AND RESTAURANT RECEIVABLES<br />
Customer and restaurant receivables constitute<br />
an important part of <strong>Cherry</strong>’s balance sheet.<br />
Provisions for uncertain receivables are based<br />
on the credit worthiness of the debtor and<br />
the amount that expected to be received. For<br />
a more detailed description of the executive’s<br />
assessment of customer and restaurant receivables,<br />
see Note 19 and 20.<br />
SUPPLEMENTARY PAYMENTS<br />
In conjunction with the acquisitions made in<br />
recent years the acquisition price has been made<br />
up of supplementary payments paid during an<br />
agreed time after the acquisition, and based on<br />
the development of turnover and earnings and<br />
other parameters. The executive assess on a regular<br />
basis the expected result of supplementary<br />
payments. The fair value of conditional purchase<br />
amounts is estimated through the application<br />
of the so-called productive value method.<br />
The estimates are based on a discount rate of<br />
interest with the assumption of an expected re-<br />
sult of the supplementary payment.<br />
As of 31 December 2012 there were no supplementary<br />
payments related to the acquisitions<br />
of the last few years that would involve payments<br />
in the future. The terms and conditions<br />
required for payment have not been achieved<br />
and the revaluation of previously reported liabilities<br />
is reported in the income statement as<br />
other operating income.<br />
CONSOLIDATED FINANCIAL<br />
STATEMENTS – GROUNDS FOR<br />
CONSOLIDATION<br />
The consolidated financial statements include<br />
the parent company <strong>Cherry</strong> AB and all the<br />
subsidiaries. The subsidiaries are all the companies<br />
where the group is entitled to arrange<br />
financial and operative strategies with a view to<br />
achieving financial benefits, in a way normally<br />
employed for a shareholding of more than half<br />
of the voting rights. Subsidiaries are included<br />
in the consolidated financial statements as of<br />
the date the controlling influence is transferred<br />
to the group. They are excluded from the consolidated<br />
financial statements as of the date<br />
when the controlling influence is no longer<br />
valid.<br />
The group applies the acquisition method<br />
for acquisitions.<br />
ACQUISITIONS 2010 AND LATER<br />
All payments to acquire a business operation<br />
are reported at the fair value on the date of acquisition.<br />
The revaluation of any supplementary<br />
payments over and above what was assessed at<br />
the time of the acquisition is reported in the<br />
income statement. Holdings without a controlling<br />
interest in the acquired business can<br />
optionally for each acquisition be valued at either<br />
the fair value or the proportional share of<br />
the net assets in the acquired business, which<br />
are held without controlling interest. All acquisition<br />
related transaction costs are recognised<br />
and reported in the consolidated income statement<br />
as sales and administration expenses.<br />
The excess consisting of the difference between<br />
the acquisition value and the fair value<br />
of the group’s share of identifiable acquired<br />
assets, liabilities and contingent liabilities is<br />
reported as goodwill.<br />
ACQUISITIONS 2009 AND EARLIER<br />
All payments to acquire a business operation<br />
are reported at the fair value on the date of acquisition.<br />
The revaluation of any supplementary<br />
payments over and above what was assessed<br />
at the time of the acquisition is adjusted in relation<br />
to the acquisition value. All acquisition related<br />
transaction costs are reported as a part of<br />
the acquisition value for the acquired business<br />
annual report 2012 |<br />
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