Annual Report in English - Consilium

ACCountInG PolICIes
All amounts are in seK millions unless otherwise stated.
Accounting Policies
The most important accounting policies applied in preparing the consolidated financial
statements are described below. These policies have been applied consistently for all
presented years unless otherwise stated.
Basis of preparation
Consilium’s consolidated financial statements have been prepared in accordance with the
swedish Annual Accounts Act, RfR 1 supplementary Accounting Rules for Groups, and
international financial Reporting standards (ifRs) and ifRiC interpretations as adopted
by the eu. The financial statements have been prepared on the historical cost basis unless
otherwise indicated.
new and amended standards applied by the Group
none of the ifRs or ifRiC interpretations that are mandatory for financial periods
beginning on or after 1 January 2011 has had a significant impact on the Group.
new standards, amendments and interpretations of existing standards not yet
effective and which the Group will not apply early.
iAs 19 employee Benefits was amended in June 2011. The amendment requires the
Group to discontinue use of the corridor approach and instead recognise all actuarial
gains and losses in other comprehensive income as incurred. past service cost is recognised
immediately. interest expenses and expected return on plan assets will be replaced
by a net interest calculated using the discount rate, based on the net surplus or net
deficit of the defined benefit plan. The Group intends to apply the amended standard
for the financial year beginning 1 January 2013, and has not yet evaluated its effects. The
standard has not yet been adopted by the eu.
ifRs 9 financial instruments deals with the classification, measurement and reporting
of financial liabilities and assets. ifRs 9 was issued in november 2009 for financial assets
and in october 2010 for financial liabilities and replaces the parts of iAs 39 relating to
the classification and measurement of financial instruments. The categories in iAs 39
are replaced by two classifications – those measured at fair value and those measured
at amortised cost. The classification is determined at initial recognition using a business
model test and a contractual cash flow characteristics test. for financial liabilities, there
are no significant changes compared with iAs 39. The main change relates to liabilities
designated as measured at fair value through profit or loss. for these liabilities, the
amount of change in the fair value that is attributable to the credit risk of the liability is
required to be presented in other comprehensive income rather than in profit or loss,
unless this causes an accounting mismatch. The Group intends to apply the new standard
no later than the financial year beginning 1 January 2015, and has not yet evaluated its
effects. The standard has not yet been adopted by the eu.
ifRs 10 Consolidated financial statements, which is based on existing principles,
establishes control as the basis for consolidation. The standard provides additional
guidance in determining whether control exists when this is difficult to assess. The
Group will apply ifRs 10 for the financial year beginning 1 January 2013, and has not
yet evaluated its full impact on the financial statements. The standard has not yet been
adopted by the eu.
ifRs 11 Joint Arrangements is based on the core principle that a party to a joint
arrangement determines the type of joint arrangement in which it is involved by assessing
its rights and obligations. There are two types of joint ownership: joint operations and
joint ventures. proportionate consolidation of joint ventures is not allowed. The Group
uses the proportionate method at present. ifRs 11 is expected to have the following
effect on income statement items (based on 2011 figures):
sales -71.9
Gross profit/loss -23.1
operating profit/loss -6.8
profit/loss after financial items 0.0
The Group intends to apply ifRs 11 for the financial year beginning 1 January 2013, and
has not yet assessed its full impact on the financial statements. The standard has not yet
been adopted by the eu.
ifRs 12 disclosure of interests in other entities includes disclosure requirements for
subsidiaries, joint arrangements, associates and unconsolidated structured entities. The
Group will apply ifRs 12 for the financial year beginning 1 January 2013, and has not
yet evaluated its full impact on the financial statements. The standard has not yet been
adopted by the eu.
ifRs 13 fair Value measurement provides more consistent and less complex
measurement of fair value. The standard defines fair value, sets out in a single ifRs
a framework for measuring fair value and requires disclosures about fair value
measurements. ifRs 13 does not determine when an asset or liability is measured at
fair value. Rather, the measurement and disclosure requirements of ifRs 13 apply when
another ifRs requires or permits the item to be measured at fair value. The Group has
not yet evaluated the full impact of ifRs 13 on its financial reports. The Group intends to
ACCountInG PolICIes
apply the new standard in the financial year beginning 1 January 2015. The standard has
not yet been adopted by the eu.
none of the other ifRs and ifRiC interpretations that are not yet effective is expected
to have a significant impact on the Group.
significant accounting estimates and assumptions
preparation of the financial statements in accordance with ifRs requires use of critical
accounting estimates. in addition, management is required to make certain judgements
when applying the Group’s accounting policies. Areas involving a significant amount of
judgement, which are complex or require use of critical accounting estimates are as follows.
Assumptions used in goodwill impairment testing
The Group tests goodwill for impairment in accordance with the principles described
under intangible assets. The assumptions and accounting estimates regarding projected
cash flows and the discount rate using a weighted average capital cost are described in
note 10. Cash flow projections are based on the best estimate of future income and
operating expenses. impairment testing has not identified any goodwill impairment.
The margin used in the testing is such that company management does not believe any
changes in individual variables would cause the value in use to fall below the carrying
amount. management also believes that even a certain amount of movement in the most
critical variables will still not result in impairment losses.
Assumptions used in impairment testing of capitalised development expenditure
The Group tests capitalised development expenditure for impairment in accordance
with the principles described under intangible assets. Cash flow projections are based
on the best estimate of future income and operating expenses. impairment testing
has not identified any impairment of capitalised development expenditure. The margin
used in the testing was such that company management does not believe any changes
in individual variables will cause the value in use to fall below the carrying amount.
management also believes that even a certain amount of movement in the most critical
variables will still not result in impairment losses.
Assumptions used in impairment testing of deferred tax assets
A deferred tax asset is recognised in the balance sheet for the carryforward of unused
tax losses to the extent that it is probable that future taxable profit will be available
against which the unused losses can be utilised. The Group’s forecasts are used as a basis
for defining future profit. The carrying amount of a deferred tax asset is reviewed at
each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow the deferred tax asset to be utilised. uncertainty
regarding the future economic situation or other difficulties in the assessment of future
profit may result in a lower taxable profit in subsidiaries which have unused tax losses.
The probability of the Group being able to utilise unused tax losses is based on factors
such as estimates and recent years’ results. All unused tax losses have been recognised as
deferred tax assets.
trade receivables
Receivables are recognised at net amounts due less any provision for doubtful debts,
which are assessed on an individual basis. The net value reflects the amounts expected
to be received based on the known circumstances at the reporting date. Changed
circumstances, such as an increased number of defaults or a change in an existing
customer’s financial position, may result in deviations in the net value measurement. The
current market situation has resulted in an increased focus on customer credit ratings
and monitoring of trade receivables.
Disputes
Consilium is involved in disputes in the course of its normal business operations. disputes
may concern product liability, alleged errors in deliveries of goods and other issues
connected with Consilium’s operations. disputes may prove costly, time-consuming and
disruptive to normal business operations. At present, there are not considered to be any
disputes of significance in progress.
Cash flow
The cash flow statement is prepared using the indirect method. Reported cash flows
only concern transactions which involve cash inflows and outflows. Cash & cash equivalents
comprise cash and bank deposits.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the
parent company and entities controlled by the parent company (subsidiaries). Control
is achieved where the parent company owns, directly or indirectly, more than half of
the voting power and has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
The consolidated financial statements have been prepared in accordance with the acquisition
method. The cost of an acquisition comprises the fair value of assets transferred,
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