Annual Report and Financial Statements 2007 - Finnlines

30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Finnlines is one of the largest European shipping companies
specialised in liner cargo services. The Group’s operations
are centred on sea transports in the Baltic Sea and North Sea
areas and on providing port services in Finland and Norway.
Through its subsidiaries and associated companies, the Group
has operations in eight northern European countries and in Russia.
The Group’s services are also offered throughout Europe
via an extensive network of agents. The Group’s parent company,
Finnlines Plc, is a Finnish public limited company, which
operates under Finnish jurisdiction and legislation. The parent
company is registered in Helsinki at Porkkalankatu 20, 00181
Helsinki. Copies of fi nancial statements can be obtained from
www.fi nnlines.com or the company’s headquarters.
These Group consolidated fi nancial statements were authorised
for issue by the Board of Directors of Finnlines Plc on 20
February 2008. According to the Finnish Companies Act, the
fi nancial statements are presented for adoption to the Annual
General Meeting.
2. ACCOUNTING PRINCIPLES
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The consolidated fi nancial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
using the IAS and IFRS standards and SIC and IFRIC interpretations
valid on 31 December 2007. The International Financial
Reporting Standards mean the standards accepted to be implemented
in the EU by the EU regulation (EY) No. 1606/2002, and
the related interpretations. The notes to the Group fi nancial statements
also comply with the Finnish accounting and corporate
legislation. Full fi nancial statement information of the parent company
is available at www.fi nnlines.com.
The consolidated fi nancial statements are primarily prepared
using the acquisition cost method. Exceptions to this principle
are fi nancial assets and liabilities recorded at fair value through
profi t or loss. Goodwill for business combinations formed before
2004 is equivalent to the book value reported in accordance with
the previous accounting standards, and is used as the deemed
cost in accordance with IFRS. The classifi cation and accounting
of these acquisitions were not adjusted when preparing the consolidated
opening balance sheet of 2005.
IMPLEMENTATION OF STANDARDS
The changes to the IAS 39 and IAS 19 standards published by
the IASB in 2004 and 2005 were implemented in 2006. The implementation
of the modifi ed standards does not have a material
effect on the fi nancial statements.
The Group has adopted the new standard IFRS 7 Financial
instruments Disclosures and the related amendment to IAS 1
Presentation of Financial Statements – Capital Disclosures as of
1 January 2007. Due to the adoption of the IFRS 7 standard, additional
notes relating to fi nancial instruments have been included
in the Notes to the Consolidated Financial Statements.
Interpretations of IFRIC 7, 8, 9, 10, mandatory as of 1 January
2007, did not have an impact on the Group's operations or fi nancial
statements.
Implementation of new or revised standards and interpretations
in future accounting periods:
Finnlines has started investigating the impact of the new IFRS 8
standard on the segment information. The Group will apply the
new standard as of 1 January 2009.
Interpretations of IFRIC 11, IFRIC 12, IFRIC 13 and IFRIC
14 will be applied as of 1 January 2009 but are not expected to
be relevant to the Group's fi nancial statements.
The Group will implement the revised IAS 23 Borrowing
Costs standard for the accounting period beginning on 1 January
2009. The revised standard requires that the borrowing costs for
an assets, e.g. a plant, must be capitalised if they are directly attributable
to the acquisition, construction or production of a qualifying
asset. The Group has earlier already capitalised all borrowing
costs for signifi cant assets acquired, e.g. during construction
of vessels, in the balance sheet as part of the acquisition cost of
the asset. The Group does not therefore expect the adoption of
the new standard to have a signifi cant impact on the future fi nancial
statements.
The Group will implement the IAS 1 standard Presentation of
Financial Statements for the accounting period beginning on 1
January 2009. The revised standard will mainly change the way
the fi nancial statements are presented. The Group expects the
change to have an impact mainly on the presentation of the income
statement and the statement of changes in the shareholders'
equity.
Of the abovementioned interpretations IFRIC 12, 13, 14,
IAS 23 Amendment and IAS 1 Amendment have not yet been
approved for application in the EU.
Accounting principles that require management discretion and
essential uncertainties related to estimates
When preparing the fi nancial statements, the Group’s management
must make estimates and assumptions, which affect their
content, and use its discretion in applying the accounting principles.
The most signifi cant of these relate to the impairment of
goodwill and other assets and to provisions and contingent liabilities.
Bases for these estimates and assumptions are described
in more detail in these accounting principles and in the following
notes to the consolidated accounts. The estimates are based on
the best current knowledge of the management, but the actual
fi gures may even substantially differ from these estimates.