Annual report 2004/05

Cash Flow Statement cont.
TSEK Group Parent Company
Supplementary information
1) Acquisition of subsidiaries
Notes to the financial statements
Accounting principles
SkiStar’s annual report has been
prepared in accordance with the
Swedish Annual Accounts Act and
follows the recommendations and
provisions of the Swedish Financial
Accounting Standards Council and the
Emerging Issues Task Force. From
1 September 2004, RR 29 Employee
Benefits will be applied. The application
of this recommendation has not had
any significant effect on the company’s
results or financial position. In general,
the accounting principles are unchanged
compared to the previous annual
financial statements.
Consolidated accounts
The scope of the financial statements
The Group’s annual financial statements
include the financial statements for the
Parent Company and all subsidiaries as
defined in the Swedish Annual Accounts
Act.
1 Sep 2004
-31 Aug 2005
Acquisition accounting
The consolidated accounts have been
prepared in accordance with the
recommendation on consolidated
financial statements, RR 1:00, issued
by the Swedish Financial Accounting
Standards Council, and by applying the
acquisition accounting method. The
amount of equity in the acquired
subsidiaries has been determined on the
basis of a fair value valuation of the
assets and liabilities of the companies at
the point in time of acquisition. For
those cases in which the fair value of
assets and liabilities results in a
1 Sep 2003
-31 Aug 2004
significantly different value than book
value, the fair value shall comprise the
1 Sep 2004
-31 Aug 2005
1 Sep 2003
-31 Aug 2004
Tangible fixed assets –68 845 –11 794 – –
Intangible fixed assets – – – –
Deferred taxes including accrued expenses – – – –
Current receivables –2 341 –122 – –
Liabilities 70 986 – – –
Cash and bank balances – – – –
Purchase price paid –200 –11 916 – –
Liquid funds in acquired companies – – – –
Effect on the Group’s liquid funds –200 –11 916 – –
2) Fixed assets sold
Machinery and equipment 56 648 – 49 197 –
Buildings, tenant-owner’s rights and land 142 431 19 775 10 731 7 517
Other 2 341 – 334 –
Total 201 420 19 775 60 262 7 517
3) Adjustment for non-cash items
Provisions 2 717 – –46 –
Capital gains –51 094 –25 384 –43 292 –25 502
Write-down of subsidiaries – – 29 872 66 778
Reported depreciation/amortisation 122 516 116 375 86 877 85 744
Total adjustment 74 139 90 991 73 411 127 020
1) Acquired subsidiaries refer to Vintertorget in Sälen KB, for 2004/05, and Fastica Lindvallen AB, for 2003/04.
Group’s acquisition cost. The difference
between the acquisition cost of the subsidiaries’
shares and the value of equity
calculated in conjunction with the
acquisition analysis is reported as goodwill
on consolidation. Acquired companies
are included in the Group from the
date of acquisition and the companies
sold are included in the Group up to and
including the date of sale.
Translation of the accounts of foreign
subsidiaries
SkiStar’s foreign (non-Swedish)
operations are classified as autonomous,
as these operations are conducted with
a high degree of independence.The
translation of foreign companies’
income statements and balance sheets is
based on the current method. This
implies that assets and liabilities are
translated at the closing rate of exchange
and that all items in the income
statements are translated at the average
exchange rate for the period.
Translation differences are not reported
in the income statement, but are
reported directly against the Group’s
equity. In order to reduce foreign exchange
risk, assets in foreign
subsidiaries are only valued in local
currency.
Associated companies
The term ”associated companies” refers
to companies in which SkiStar has a
long-term shareholding amounting to a
minimum of 20-50% of the number of
votes or in which SkiStar exercises
significant influence. Reporting of the
associated companies takes place
according to the equity method. Shares
in profits from associated companies are
reported in the consolidated income
statement on a separate line under
“Operating income” and the Group’s
portion of the associated companies’
taxes is reported in the item “Tax
income for the year”. The shares in
profits are calculated based on SkiStar’s
participation in the equity of the
respective associated companies. Shares
in associated companies are reported in
the consolidated balance sheet as a
separate item under the heading
“Financial fixed assets”. The carrying
value of the shareholding is reported in
relation to SkiStar’s share of the
respective companies’ profit after
tax, reduced by dividends received.
Undistributed profits in associated
companies are reported under “Equity”
in the item “Restricted reserves”.
Minority shares
Minority shares in the Group’s net
profit are reported in the consolidated
income statement. The minority share
of the equity of subsidiaries is reported
as a separate item in the balance sheet.
This item also includes the share of
equity of untaxed reserves in these
subsidiaries.
Segment reporting
The primary basis for the classification
of the Group’s segments is geographical,
based on the different destinations.
The secondary segment comprises the
Group’s business segments. The Group’s
internal reporting has been established
with a focus on the follow-up of
profitability for the respective
destinations.
Group information
Of the Parent Company’s net sales,
TSEK 6,324 (3,883) refer to sales to
subsidiaries. Of the Parent Company’s
expenses, TSEK 8,594 (938) refer to
purchases from subsidiaries.
Related parties
Mats Paulsson and Erik Paulsson have
controlling influence over the Group.
These two individuals have significant
ownership interests in Peab and
Wihlborgs. During the 2004/05
financial year, the Group purchased
goods and services from Peab for TSEK
63,288 (42,448) and sold goods and
services to Peab for TSEK 817 (954).
Services were purchased from Fabege/
Wihlborgs for TSEK 1,094 (592). As
per 31 August 2005, the Group had
accounts payable to Peab in a total
amount of TSEK 11,719 (12,747) and
to Wihlborgs in a total amount of
TSEK 0 (130). The Group also had
accounts receivables from Peab in an
amount of TSEK 70 (265).
Valuation principles
Fixed assets, long-term liabilities and
provisions primarily consist of amounts
that are expected to be recovered or
paid later than twelve months from
balance sheet date.
Revenue recognition
The Group generates its income primarily
from the sale of ski passes, agency
commission for the hire of cabins and
apartments, hiring of ski equipment and
from ski school activities.
Receivables and liabilities in foreign
currencies
Receivables and liabilities in foreign
currencies in the Group’s accounts are
reported at the closing rate of exchange.
Gains and losses arising from operating
receivables and liabilities are reported at
net value and are charged to
operating income. SkiStar’s currency
exposure from foreign subsidiaries is
not hedged, in accordance with
established policy.
Inventories and accounts receivable
Inventories primarily consist of ski
equipment for hire, including accessories,
and a simple line of ready-to-wear
clothing for sale at the Group’s ski
rental locations. Inventories are valued
according to the first-in, first-out
principle at the lower of either
acquisition cost or net realisable value.
Bad debts are entered in the amounts
that, on the basis of individual
assessment, are expected to be paid.
Tangible fixed assets
Tangible fixed assets are reported as
assets in the balance sheet when, on the
basis of the information available, it is
likely that the future economic benefit
associated with their acquisition will
accrue to the Group and when the
assets’ acquisition cost can be calculated
in a reliable manner. Tangible fixed
assets are reported at acquisition cost
after deductions for accumulated
depreciation according to plan. The
following periods of depreciation are
applied:
Lifts and parts
of the snow system 5.00 %
Other machinery
and equipment 10.00-30.00 %
Buildings 2.50-5.00 %
Land improvements 3.75-5.00 %
Slopes 0.00 %
Leasing
SkiStar has operating lease agreements
for piste machines and scooters. These
agreements are classified as operating
lease agreements due to the fact that the
financial risks and benefits of ownership
are not substantially transferred to the
lessee (that is, to SkiStar).
Intangible fixed assets
Acquired intangible fixed assets are
reported at acquisition cost, less
accumulated amortisation and writedowns.
All intangible fixed assets are
amortised at a rate of 20% per year.
46 47