Annual Report in English - Consilium

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ACCountInG PolICIes equity instruments issued and liabilities incurred or assumed at the transfer date. The acquiree’s equity is defined as the difference between the fair values of identifiable assets, and assumed liabilities and contingent liabilities based on a market valuation conducted at the date of acquisition. The subsidiary’s equity is eliminated in its entirety, which means the Group’s equity only includes the portion of equity arising after the business combination. Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets of the subsidiary recognised at the date of acquisition. Business combinations during the year are consolidated from the date on which the Group gains control at amounts relating to the period after the acquisition. subsidiaries which have been disposed of are deconsolidated from the date on which control ceases. subsidiaries which have been portioned out to shareholders are deconsolidated from the distribution date. internal transactions, balances and gains are eliminated in their entirety, without taking into account the non-controlling interest. Joint ventures A joint venture is an arrangement whereby Consilium and one or more venturers have joint control. The Group is only engaged in joint-ventures that constitute a separate legal entity. The 50/50-owned joint venture companies have been consolidated using proportionate consolidation due to the absence of control. proportionate consolidation means the Group’s share of the assets, liabilities, income and expenses of the jointly-controlled entity are combined with the corresponding items in the consolidated income statement and balance sheet on a line-by-line basis. Associates An associate is an entity over which the parent Company has significant influence and is not a subsidiary. Holdings in associates are normally between 20% and 50%. investments in associates are recognised in the consolidated financial statements using the equity method of accounting, and are initially measured at cost. The Group’s share of the profit or loss of an associate after its acquisition is recognised in the income statement, and its share of changes in reserves is recognised under Reserves. Accumulated post-acquisition changes are reported as a change in the holding’s carrying amount. When the Group’s share of the losses of an associate amounts to or exceeds its holding, the Group does not recognise any subsequent losses. Any unrealised internal gains are eliminated to the extent of the Group’s share of the gain. unrealised losses are also eliminated. The share of profit or loss of associates is reported on separate lines in the consolidated income statement and balance sheet. The Group’s share of profit or loss of associates is recognised after tax. Foreign currency translation The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements are presented in swedish kronor, which is the parent company’s functional and presentation currency. The subsidiaries’ balance sheets are translated at the rates prevailing at the reporting date and the income statements are translated at the average rate for the year. exchange differences are recognised directly in consolidated equity. significant Closing rate Average rate exchange rates 2011 2010 2011 2010 usd 6.87 6.77 6.46 7.20 euR 8.91 8.99 9.00 9.56 GBp 10.67 10.44 10.34 11.11 foreign currency assets and liabilities are measured at the closing rate. exchange gains and losses on transaction payments and translation of monetary assets and liabilities are reported under net sales or cost of sales. Transactions entered into to hedge certain foreign currency risks are recognised in profit or loss until the hedging instrument expires. The consolidated results include exchange differences, mainly related to forward contracts, of seK 11.1 (8.9) million in operating profit and seK -0.1 (-2.6) million in net financial income/expense. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities in the entity and are translated at the closing rate. intra-group extended equity transactions in foreign currency are not translated at the closing rate, but at the transaction date rate. Business areas Consilium has two business areas – marine & safety and fire safety & Automation. The business areas are monitored internally by the chief operating decision maker, namely the president and Ceo. units within each business area have a similar risk profile and development. Consequently, the Group classifies the business areas as cash generating units when conducting goodwill impairment testing. 38 Revenue recognition Revenue comprises the fair value of the sale of goods and services, net of value-added tax and rebates, after elimination of intra-group sales. Revenue is recognised as follows: Sale of goods The Group’s net sales comprise the fair value of the sale of goods. Consilium recognises revenue when the Group has transferred to the customer the significant risks of ownership under the terms of delivery and it is probable that economic benefits associated with the sale of the goods will flow to the Group. sales are recognised net of VAT, discounts, returns and exchange differences on foreign currency sales, and after elimination of internal Group sales. Rendering of services and construction contracts Revenue and costs relating to the provision of services and construction contracts are recognised by reference to the stage of completion at the reporting date, often referred to as the percentage of completion method. The stage of completion is measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Where the outcome of a contract to provide services or a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of the contract costs incurred that are likely to be recoverable. An expected loss is recognised as an expense immediately. Interest income interest income is recognised over the relevant period using the effective interest method. Dividend income dividend income is recognised when the dividend has been adopted and the shareholders’ rights to receive payment have been established. Government grants Government grants are recognised as revenue when there is reasonable assurance that the grant will be received and the Group will comply with the conditions attaching to it. Government grants related to expense items are deferred and recognised over the periods necessary to match them with the related costs which they are intended to compensate. Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they are incurred. Consilium does not have any loans that are directly attributable to the Company’s development expenditure. taxes deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities and their corresponding tax bases, and is accounted for using the balance-sheet liability method. unused tax losses are recognised as deferred tax assets to the extent that it is probable that taxable profits will be available against which they can be utilised. unused tax losses include accumulated losses at the date of acquisition and subsequently arising losses. deferred tax assets and liabilities are measured using tax rates that have been enacted by the reporting date, and are reported as financial assets or non-current liabilities in the balance sheet. income tax for the year consists of current tax and deferred tax. if the outcome differs from the amounts initially recognised, these differences will affect the provisions for current and deferred tax and profit for the year. deferred tax liabilities are recognised for temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Intangible assets The Group’s intangible assets comprise capitalised development expenses, goodwill and patents, licences and similar rights. Goodwill Goodwill represents the difference between the cost of the shares in an acquired subsidiary and the acquisition-date fair value of the subsidiary’s net assets. Goodwill arising on the acquisition of an associate is included in the carrying amount of the investment and is assessed for impairment as part of the total investment. Goodwill reported separately is tested for impairment annually. Goodwill impairment is not reversed. A gain or loss on the disposal of an entity includes the residual carrying amount of the goodwill that relates to the entity. Goodwill is allocated at the date of acquisition to the cash generating units which are expected to benefit from the business combination that gave rise to the goodwill item. for a description of the methods and assumptions used for impairment testing and recognition, see note 10.
Product development and research expenditure relating to development projects for the construction and testing of new or improved products is capitalised under intangible assets to the extent that such expenditure is expected to generate future economic benefits. other development expenditure is recognised as an expense in the period in which it is incurred. development costs previously recognised as an expense are not capitalised in subsequent periods. Capitalised development costs are amortised using the straight-line method over a period of 3-5 years (the period in which future economic benefits are expected to flow to the company) from the date on which commercial production begins. in accordance with the ifRs transitional provisions in 2005, Consilium has reclassified the previously recognised goodwill arising from the acquisition of the net assets of nittan and servoteknikk in 2003 and 2004. As a result of the reclassification, Consilium’s consolidated financial statements now show product development acquisitions. At the acquisition date, the estimated useful lives and amortisation schedules were defined as 20 and 10 years, respectively. As these amortisation schedules are the same as those for previously recognised goodwill, there is no difference in amortisation charges. Amortisation is reported in the income statement under Research and development costs. expenditure on research activities is recognised as incurred. Research is not conducted as a separate or large scale activity in the Group, but is an ongoing process which forms an integral part of day-to-day operations. This type of expenditure can be difficult to distinguish as research, and does not in any case represent significant amounts. Patents, trademarks and licences patents, trademarks and licences are recognised at cost. patents, trademarks and licences have finite useful lives, and are recognised at cost less accumulated amortisation. Amortisation is applied to patents, trademarks and licences using the straight-line method over their estimated useful lives (5-10 years). Property, plant & equipment property, plant & equipment, including land and industrial buildings, is stated at cost less subsequent depreciation. Cost includes costs directly related to the acquisition of the asset. expenditure on improvement of an asset’s performance from its original level increases its carrying amount. Repair and maintenance costs are recognised as an expense. depreciation is charged to operating profit in the income statement and is applied using the straight-line method over the assets’ useful lives, based on the difference between their cost and residual value. Consilium applies the following useful lives: industrial buildings used in the course of business 25 years plant and machinery 5-7 years equipment, tools and fixtures & fittings 5 years The residual values and useful lives of assets are reviewed annually and adjusted if necessary. if an asset’s carrying amount exceeds its estimated recoverable amount, it is written down to the recoverable amount immediately. depreciation is not applied to land. Capital gains and losses are determined by comparing the selling price and the carrying amount. Capital gains and losses are recognised in profit or loss. leases leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. Assets held under finance leases are recognised at their fair value at the inception of the lease, or, if lower, at the present value of the minimum lease payments. finance leases are reported under non-current assets and financial liabilities in the balance sheet. future lease payments are apportioned between reduction of the lease obligation and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability for each period. depreciation of leased assets is on a basis consistent with the normal depreciation policy for similar assets. Costs of leases are reported under depreciation and interest in the income statement. The Group did hold any assets under finance leases in 2011 or in 2010. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards of ownership. lease payments are recognised as an expense on a straightline basis over the term of the lease. operating leases are reported under operating expenses in the income statement. leased cars, computers and premises are normally classified as operating leases. Impairment depreciation/amortisation is not applied to assets with an indefinite useful life, such as goodwill; instead, they are tested annually for impairment. The Group reviews the carrying amounts of assets whenever there is an indication that they may be impaired. if the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount is reduced to the asset’s recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and its value in use. impairment losses are recognised for each cash generating unit. Assets, other than financial assets and goodwill, for which impairment losses have previously been recognised are tested at ACCountInG PolICIes each reporting date to determine whether there is any need for reversal of the previous impairment. Inventories inventories consist of finished and semi-finished products and raw materials. inventories are measured at the lower of cost and net realisable value at the reporting date. Cost is calculated using the first-in, first-out method. finished and semi-finished products are measured at the manufacturing cost, including raw materials, direct labour, other direct overheads and production-related costs based on normal production. net realisable value is the estimated selling price in the ordinary course of business, less the estimated variable costs necessary to make the sale. Collective measurement is used for groups of inventories with similar characteristics. inventory measurement does not include interest costs. A deduction is made for internal gains arising from intra-group deliveries. An obsolescence provision has been recognised. Financial instruments financial instruments recognised in the balance sheet include cash & cash equivalents, trade receivables, current and non-current receivables, trade payables, loans and other liabilities. The Group classifies financial assets into the following categories: cash & cash equivalents, loans and receivables and available-for-sale financial assets. financial assets are classified on the basis of the purpose for which they were acquired. management makes the classification decision on initial recognition and reviews the decision at each reporting date. Loans and receivables loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are reported under current assets unless the settlement date is more than 12 months after the reporting date, in which case they are classified as non-current assets. loans and receivables are reported under trade receivables and other current and non-current receivables in the balance sheet. loan receivables are recognised at amortised cost using the effective interest method. Trade receivables are initially measured at fair value and thereafter at amortised cost using the effective interest method less any provision for impairment losses. A provision for impairment losses is recognised when there is objective evidence that the carrying amount of receivables will not be recovered, and an impairment loss is recognised when the loss is actually identified. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that have been designated as available for sale or have not been classified in any of the other categories. They are reported under non-current assets if management does not intend to dispose of them within 12 months of the reporting date. The assets are measured at fair value. Any changes in fair value are recognised directly in equity. An impairment loss is recognised if there is objective evidence of impairment. on disposal of the financial asset, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profit or loss. investments in available-for-sale equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. purchases and sales of financial assets are recognised at the trade date (the commitment date). financial assets are derecognised when the right to receive cash flows from the instrument has expired or been transferred, and the Group has transferred substantially all the risks and rewards of ownership. Cash & cash equivalents Cash & cash equivalents comprise cash on hand, bank deposits and short-term investments with an original maturity of three months or less. Cash & cash equivalents are initially recognised at fair value and thereafter at amortised cost. Hedge accounting Consilium uses derivative financial instruments to cover risks associated with foreign currency exposure. Consilium designates certain derivatives as hedges of highly probable forecast transactions for foreign currency exposure (cash flow exposure) within the framework of the financial policy defined by the Board. The Group applies hedge accounting for contracts which qualify for hedge accounting under iAs 39 financial instruments: Recognition and measurement. At the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument used in a hedging relationship is highly effective. unrealised gains and losses arising on the market valuation of hedging instruments and which meet the criteria for hedge accounting are recognised in equity. see also note 13. The fair value of a derivative which is a hedging instrument is reported under noncurrent assets or liabilities when the hedged item has a term to maturity of more than 12 months, and is reported under current assets or liabilities when the hedged item has a term to maturity of less than 12 months. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is deferred in equity. The gain or loss relating to the 39
Page 1 and 2: Annual Report 2011
Page 3 and 4: tHe YeAR In BRIeF significant event
Page 5 and 6: Fire safety & Automation The busine
Page 7 and 8: Marine & Safety business area The c
Page 9 and 10: ConsIlIuM’s MARKet oRGAnIsAtIon C
Page 11 and 12: Marine & safety Consilium’s produ
Page 13 and 14: Consilium’s offering Consilium ha
Page 15 and 16: These and several other factors hav
Page 17 and 18: offer functions that control automa
Page 19 and 20: Consilium’s offering Consilium pr
Page 21 and 22: predicts that energy demand in Asia
Page 23 and 24: SEK 14.70. At the end of 2011, Cons
Page 25 and 26: KeY FIGuRes AnD DeFInItIons Key fig
Page 27 and 28: The total number of vessels and the
Page 29 and 30: ConsolIDAteD InCoMe stAteMent seK m
Page 31 and 32: ConsolIDAteD stAteMent oF CHAnGes I
Page 33 and 34: InCoMe stAteMent, PARent seK millio
Page 35 and 36: stAteMent oF CHAnGes In eQuItY, PAR
Page 37: ACCountInG PolICIes All amounts are
Page 41 and 42: notes note 1 BusIness AReAs Busines
Page 43 and 44: note 2 sAlARIes, otHeR eMPloYee Ben
Page 45 and 46: note 9 PRoPeRtY, PlAnt & eQuIPMent
Page 47 and 48: not 13 FInAnCIAl RIsK MAnAGeMent, C
Page 49 and 50: note 19 PRovIsIons Group Provisions
Page 51 and 52: note 26 BoARD MeMBeRs AnD senIoR eX
Page 53 and 54: AuDItoR’s RePoRt To the annual me
Page 55 and 56: Board members - attendance, relatio
Page 57 and 58: stakeholder model Global supplier b
Page 59 and 60: AuDItoR’s RePoRt on tHe CoRPoRAte
Page 61 and 62: MAnAGeMent ove Hansson b. 1955. ll.
Page 63 and 64: ADDResses HeAD oFFICe Consilium AB

Annual Report in English - Consilium

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