THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

Share Capital
Ordinary shares
Ordinary shares are classified as equity. Ancillary costs that directly
result from the issue of ordinary shares or share options are
recognized as a deduction from equity, net of any tax effects.
Sale of Merchandise and Products
Revenue from the sale of merchandise and products is shown at
the fair value of consideration received or receivable less any returns,
trade discounts and rebates. Sales revenue is recognized
when the significant risks and rewards deriving from ownership of
the merchandise or products have been transferred to the buyer,
recovery of the consideration is probable, the associated costs
and possible return of the goods can be reliably estimated and the
amount of revenue can be measured reliably. The transfer of risks
and rewards to the buyer is determined in accordance with
INCOTERMS (International Commercial Terms).
Leases
Leases, under the terms of which the lessor retains all significant
risks and benefits deriving from ownership of the leased object
are to be classified as operating leases. Operating lease payments
are recognized as an expense on a straight-line basis over the term
of the lease. There are no significant finance leases.
Financial Income and Expenses
Financial income comprises interest income on funds invested, dividend
income and changes in the fair value of financial instruments
(interest swaps). Interest income is recognized in the income statement
as it accrues using the effective interest rate method.
Financial expenses comprise interest expense on borrowings, unwinding
of discount on liabilities, changes in the fair value of financial
assets and impairment losses on financial assets. All
borrowing costs are recognized in the income statement using the
effective interest rate method.
Foreign exchange gains and losses are disclosed on a net basis.
Income Taxes
Income taxes comprise both current and deferred taxes. Income
taxes are recognized in the income statement unless they are directly
related to items that are directly recognized in equity.
Current taxes are taxes that are expected to be payable on taxable
profits of the current fiscal year. They are recognized using the
tax rate applicable to the year reported. Additionally, any adjustments
to tax expenses for previous years are also included here.
Deferred taxes are recognized as at the balance sheet date by applying
the liability method to all temporary differences between
the carrying amounts of assets, or respectively liabilities, in the
IFRS-based consolidated financial statements and the amounts
used for taxation purposes. No deferred taxes were recognized
with respect to the following temporary differences:
› The initial recognition of goodwill
› The initial recognition of an asset or a liability relating to a transaction
that does not constitute a business combination and
which affects neither the profit for commercial accounting purposes
nor the taxable result.
Deferred taxes are determined using the tax rates that are expected
to be applicable to the temporary differences when these
reverse and are based on tax legislation that has been enacted or
announced before the balance sheet reporting date as being applicable
at the time of the reversal. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current
taxes and liabilities and they relate to income taxes levied by the
same tax authority on a company, or in the case of joint assessment,
to different companies that have the intention to settle current
assets or current liabilities on a net basis or to realize tax
assets and tax liabilities simultaneously.
Deferred tax assets are recognized to the extent that it is probable
that taxable profits will be available in future against which deductible
temporary timing differences can be offset. The carrying
amount of the deferred tax assets is reviewed at each balance
sheet reporting date and is reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to
offset the deferred tax asset.
Sales Tax
Sales revenues, expenses, assets and liabilities are recognized net
of sales tax.
The following exceptions apply:
› if the sales tax incurred on the purchase of goods and services
cannot be recovered from the tax authorities, then the sales tax
is accordingly considered to be a component of the expense
item; and
› receivables and payables are recognized with the amount of the
sales tax included.
106 Annual Report 2008 Symrise AG