STENA METALL AB - Stena Metall Group

Financial review | The Group
Accounting and valuation principles
Amounts stated in the annual report are
in millions of Swedish kronor (SEK million)
unless indicated otherwise.
General accounting principles
The annual report has been prepared in
accordance with the Annual Accounts
Act and the recommendations and pronouncements
of the Swedish Financial
Accounting Standards Council.
Changes in accounting principles
As of September 1, 2004 the accounts
are prepared according to the recommendations
and pronouncements of the
Swedish Financial Accounting Stand ards
Council. Guidance has previously been
obtained from a number of these recommendations.
The recommendations
applied for the first time are RR 6:99
Leases, RR 11 Revenue, RR 22 Preparation
of Financial Statements, RR 23 Related
Party Disclosures, RR 27 Financial
Instruments: Recognition and
Measurement, and RR 29 Employee
Benefits. The application of RR 6:99 increases
equipment by 30.7 (32.1) and
current liabilities by the same amount.
The application of RR 29 increases the
pension liability by 22.1, while reducing
the deferred tax liability by 6.1 and
unrestricted equity by 16.0.
The company’s shares are not publicly
traded. For this reason, it does not
apply RR 18 Earnings per Share and
RR 25 Segment Reporting.
Consolidated accounts
The consolidated accounts have been
prepared in accordance with the Swedish
Financial Accounting Standards Council’s
recommendation RR 1:00 Consolidated
Financial Statements.
The consolidated financial statements
comprise Stena Metall AB and all com-
panies in which the Parent Company at
the end of the fiscal year directly or indirectly
owns more than 50 percent of
the voting rights or other wise exercises
a decisive influence. Companies acquired
during the year have been included
in the consolidated income
statement as of their date of acquisition.
The consolidated accounts have been
prepared according to the purchase
method of accounting. The accounts of
foreign subsidiaries have been translated
to Swedish kronor according to the
Swedish Financial Accounting Standards
Council’s recommendation RR 8, which
calls for use of the current method. According
to this method, all assets, provisions
and liabilities are translated at
closing day exchange rates, while all income
statement items are translated at
the average exchange rates for the year.
Translation differences are posted directly
to shareholders’ equity.
Associated companies
Shareholdings in associated companies,
in which the Group owns at least 20
percent but not more than 50 percent of
the voting rights or otherwise exercises
a decisive influence over operational
and financial management, are normally
reported according to the equity method
in accordance with the Swedish Finan cial
Accounting Standards Council’s recommendation
RR 13.
The equity method means that the
book value of shares in associated companies
is carried by the Group as its
share of these companies’ equity plus
any residual surplus or deficit value.
In the consolidated income statement,
the Group’s share of the income
before tax of associated companies is
reported as “Income from investments
in associated companies.” The Group’s
share of the reported taxes of associated
companies is included in the Group’s
tax expenses. Profit shares earned after
the acquisition of associated companies
but which have not yet been realized
through dividends or distributions are
included in the Group’s restricted
equity.
Merger
Mergers are reported in accordance
with BFNAR 1999:1 Merger of wholly
owned subsidiaries. The consolidated
value method has been applied, whereby
the acquiring company reports the assets
and liabilities of the merged subsidiary
at the values reported in the
consolidated accounts.
Valuation principles, etc.
Assets, provisions and liabilities have
been valued at acquisition value unless
indicated otherwise.
Foreign currencies
Receivables and liabilities in foreign
currency are valued at closing day rates
in accordance with the Swedish Finan cial
Accounting Standards Council’s recommendation
RR 8. Where forward
contracts have been used as a currency
hedge, the forward rate is applied.
Financial instruments
The Group uses several different financial
instruments to minimize currency
risks from cash flows as well as assets
and liabilities. Moreover, various fixed
income instruments are used to ensure
an appropriate interest rate level.
To apply hedge accounting and accrual
of unrealized results from financial
instruments, they must be classified
as hedges of financial risks and at the
same time match the underlying asset
61