annual-and-sustainability-report-2014

Notes to the Parent Company accountsNote 1 Company informationVattenfall AB's 2014 Annual Report was approved in accordance with a decisionby the Board of Directors on 17 March 2015. Vattenfall AB (publ) with corporateidentity number 556036-2138, the Parent Company of the Vattenfall Group, isa limited liability company with its registered office in Solna, Sweden with theaddress SE-169 92 Stockholm, Sweden.The balance sheet and income statement of the Parent Company included inthe Annual Report will be submitted at the Annual General Meeting (AGM) on27 April 2015.Note 2 Accounting policiesGeneralThe Parent Company Vattenfall AB’s accounts are prepared in accordance withthe Swedish Annual Accounts Act and recommendation RFR 2 – Accountingfor Legal Entities, issued by the Swedish Financial Reporting Board (RFR). RFR 2entails that Vattenfall AB should apply all standards and interpretations issued byIASB and IFRIC as endorsed by the European Commission for application withinthe EU. This should be done as far as possible within the framework of the SwedishAnnual Accounts Act by taking into consideration the relationship betweenaccounting and taxation.Vattenfall AB has applied the exemption rule regarding IAS 39 according toRFR 2, which entails that financial instruments are reported at cost.New and amended accounting standards effective as of 2015 are expected tohave no or minimal impact on Vattenfall AB’s financial statements.The accounting policies applied are stated in the applicable parts of Note 3 tothe consolidated accounts with the following amendments for the Parent CompanyVattenfall AB.Depreciation and amortisationAs in the consolidated accounts, depreciation and amortisation are based oncost and are applied on a straight-line basis over the estimated useful life of theasset in question. In addition, certain accelerated depreciation/amortisation(the difference between depreciation/amortisation according to plan anddepreciation/amortisation for tax purposes) in the Parent Company is reportedunder Appropriations and Untaxed reserves, respectively.Pension provisionsPension obligations in the Parent Company are calculated in accordance withgenerally accepted Swedish actuarial principles and are recognised according tothe Act on Safeguarding of Pension Obligations, (“Tryggandelagen”).Foreign currencyThe Parent Company applies hedge accounting for assets in a foreign currencyeffectively hedged by loans in a foreign currency. Effects of changes in exchangerates are not recognised for loans raised for the financing of foreign subsidiaries,associated companies and joint arrangements. Nonmonetary assets acquired ina foreign currency are recognised at the exchange rate at the time of the acquisition.The loans raised in connection with the acquisition of N.V. Nuon Energyare hedged, as in the consolidated accounts, from the date of the acquisition,1 July 2009.Other assets and liabilities in foreign currencies are recognised at the exchangerates of the balance sheet date.Realised exchange rate effectsRealised exchange rate effects that are attributable to loans used to hedgeinvestments in foreign currency are not recognised through profit or loss, but asa change in the reported cost of the shares. The policy concerning unrealisedeffects of such loans follows what is stated under foreign currency and is notreported.Income taxesTax legislation in Sweden allows companies to defer tax payments by makingprovisions to untaxed reserves. In the Parent Company, untaxed reserves arereported as a separate item on the balance sheet that includes deferred tax. Inthe Parent Company’s income statement, provisions to untaxed reserves anddissolution of untaxed reserves are reported under the heading Appropriations.Note 3 Exchange ratesSee Note 6 to the consolidated accounts.Note 4 Net sales2014 2013Sales including excise taxes:– sale of goods (electricity, heat, etc.) 32,887 38,980– rendering of services 1,450 1,131Excise taxes -2,661 -2,914Total 31,676 37,197Net sales per geographical area 2014 2013Nordic 27,899 33,867Continental/UK 3,751 3,328Other 26 2Total 31,676 37,197Net sales for products and services 2014 2013Electricity generation 9,047 13,816Trading 4,245 2,913Energy sales 14,827 17,127Heat 2,160 2,355Other 1,397 986Total 31,676 37,197Note 5 Intra Group transactionsOf the Parent Company’s total income from sales and total purchase costs,transactions with subsidiaries account for 21% (18%) of sales and 61% (54%) ofpurchase costs.Note 6 Cost of products soldDirect costs include production taxes and duties of SEK 26 million (49) andproperty taxes of SEK -34 million (3). In 2014 Vattenfall received a repayment ofSEK 37 million in property tax.Note 7 Other operating incomeOther operating income consists primarily of intra Group invoiced services,insurance compensation and operationally derived foreign exchange gains.Note 8 Other operating expensesOther operating expenses consist primarily of intra Group invoiced services,operationally derived exchange rate losses and depreciation.Note 9 Depreciation and amortisationAmortisation of intangible non-current assets and depreciation of property, plantand equipment in the income statement are broken down as follows:2014 2013Other operating expenses 513 526Selling expenses 3 6Administrative expenses 1 1Total 517 533Amortisation of intangible non-current assets is included above in Otheroperating expenses with the amount of SEK 79 million (90).Note 10 Impairment lossesImpairment of intangible non-current assets and of property, plant and equipmentin the income statement is broken down as follows:2014 2013Other operating expenses — 10Research and development costs — 69Total — 79132 Vattenfall Annual and sustainability report 2014