Annual Report 1999739KB - Essent

Accounting policies Basis of consolidationThe company financial statements of Essent NV and its group companies are consolidated in full in accordancewith uniform accounting policies. Minority interests in equity and results are disclosed separately. Intra-groupassets, liabilities, income and expenses are eliminated. Group companies are entities united in one organisationthat form part of the Essent NV economic unit and over which control is exercised.The principal participating interests included in the consolidated financial statements are listed in the annexe onpages 53 to 55. In accordance with Sections 379 and 384, Part 9, Book 2, of the Netherlands Civil Code, a completelist of participating interests has been filed at the Trade Registry in Arnhem.An abridged company profit and loss account has been prepared in accordance with Section 402, Part 9, Book 2,of the Netherlands Civil Code.These financial statements have been prepared under the historical cost convention. Departures from historicalcost rules, if any, are mentioned separately.essent1999 Change in accounting policies and basis of consolidationEssent NV was incorporated on 3 December 1999, with retroactive effect to 1 January 1999, by means of a sharefor-sharemerger between PNEM/MEGA Groep NV and NV EDON Groep. With effect from 1 January 1999, theaccounting policies of PNEM/MEGA and EDON were harmonised. The adjustment resulting from this harmonisationwas taken to shareholders’ equity in the opening balance sheet of Essent at 1 January 1999, resulting in acharge to shareholders’ equity of some NLG 157 million arising mainly from the following items: goodwill paid on acquisitions is charged direct to reserves; electricity distribution networks are depreciated over a period of thirty years; participating interests in which the Group holds an interest of more than 20% but less than 50% are includedin the balance sheet using the equity method.This harmonisation had a positive impact on the 1999 results of some NLG 113 million.Basis of valuationForeign currenciesAssets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the end ofthe financial year. Exchange differences are taken to the profit and loss account. Income and expenses denominatedin foreign currencies are translated into Dutch guilders at the exchange rate ruling at the time of the transaction.Intangible fixed assetsIntangible fixed assets consist of start-up and development costs. Paid goodwill is written off immediately toreserves.Tangible fixed assetsTangible fixed assets are valued at cost of acquisition or construction net of contributions received and lessdepreciation based on this value.Tangible fixed assets of the energy companies are depreciated on a straight-line basis, except for the Borssele phosphorusoven gas project, which is depreciated using the annuity method.Tangible fixed assets of the cablecom companies are depreciated using the straight-line method, except for the glassfibre network of the first, second and third order network areas, which is depreciated using the annuity method inaccordance with the increasing capacity utilisation over the years.34financial statements