Annual report 1996 in English (2.93 Mb) - About H&M

Notes to the financial statements1 Accounting principlesConsolidated accountsOn consolidation, the cost of shares has been offsetagainst reported shareholders’ equity at the date ofacquisition. Any remaining difference (surplus value) isimmediately written off. Write-downs of SEK 65 M andSEK 23 M were carried out in1987 and 1989 respectively.Strict application of the recommendation of theSwedish Financial Accounting Standards Council concerningconsolidated accounts would not have affectedeither Group profit or Group balance in 1996 or theyear of comparison.Effective the 1993/94 financial year, the annualaccounts of subsidiaries have been translated toSwedish kronor in accordance with the current exchangerate method. The exchange rate at the balance sheetdate was used to consolidate the balance sheets of foreigncompanies. Income statements have been translatedusing the average annual exchange rate. Translationdifferences arising from the current method are chargeddirectly to Group shareholders’ equity.Receivables and liabilities in foreign currencyReceivables and liabilities in foreign currencies havebeen reported in accordance with Instruction No. 7 ofthe Swedish Accounting Board. This means thatreceivables and liabilities have been assessed at theexchange rate at the balance sheet date.Forward exchange agreements, which ensure theflow of currencies between countries, have been dealtwith in a manner where receivables and liabilities havebeen assessed at a forward rate. If no receivables orliabilities arose, the assessment of forward exchangeagreements did not affect the accounts.2 Start-up costsStart-up costs refer to the cost involved in modernisingand fitting out newly acquired premises and newlyestablished operations. Start-up costs have beencharged to the income statement in accordance withthe accounting and taxation practice of each country.3 Depreciation according to plan/fixtures, fittings andleasehold rights (SEK M)Fixtures, fittings and leasehold rights have been depreciatedat a rate of 12 per cent of acquisition cost.The book value of assets not fully depreciated is asfollows:GroupParent Company30 Nov. 96 30 Nov. 95 30 Nov. 96 30 Nov. 95Acquisition cost 2,229.0 1,772.4 310.9 253.9Accumulated depreciationaccording to plan - 803.4 - 657.3 - 114.4 - 89.7Net book value 1,425.6 1,115.1 196.5 164.24 Depreciation according to plan/real estate (SEK M)Real estate has been depreciated at 3 per cent ofacquisition cost. The tax assessment value of Swedishreal estate amounts to SEK 79.2 M, of which the taxassessment value of the land with site leaseholdsaccounts for 6.0 M and SEK 4.3 M for other land.The book value of assets not fully depreciated is asfollows:GroupParent Company30 Nov. 96 30 Nov. 95 30 Nov. 96 30 Nov. 95Acquisition cost 233.2 225.2 149.0 140.4Accumulated depreciationaccording to plan - 38.7 - 31.8 - 29.8 - 25.4Net book value 194.5 193.4 119.2 115.05 Net interest income/expenseGroupParent Company1995/96 1994/95 1995/96 1994/95Interest income 88.2 121.4 39.2 104.8Interest expense - 18.1 - 28.5 - 10.9 - 13.1Net interest income/expense 70.1 92.9 28.3 91.76 TaxesGroup companies calculate income tax in accordancewith the rules and regulations of the country in question.Deferred tax expense in the consolidatedaccounts amounts to 30 percent of the change inuntaxed reserves for the year. The Group has madeallocations for calculated taxes on expected dividendsfrom subsidiaries during the next year.7 Stock-in-tradeThe value of stock-in-trade is reported in the consolidatedfinancial statements net of market-value obsolescence.Parent Company financial statements reportthe value of stock-in-trade net of the tax-deductibleobsolescence reserve.8 Share capitalThe share capital consists of 4,860,000 class ‘A’shares (10 votes per share) and 36,516,800 class ‘B’shares (one vote per share), with a par value of SEK 5each. The total number of shares is 41,376,800.9 Shareholders’ equityChange in shareholders’ equity, Group (SEK M)Share Restricted Unappro- Total sharecapitalreserves priated holders’earnings equityShareholders’equity 1 Dec. 95 206.9 863.2 3,186.1 4,256.2Dividends - 320.7 - 320.7Changes in restricted reserves 6.3 - 6.3Capital shares in untaxed reserves 155.6 - 155.6Translation differences - 37.2 - 74.5 - 111.7Profit for the year 1,331.0 1,331.0Shareholders’ equity 30 Nov. 96 206.9 987.9 3,960.0 5,154.8