Annual Report 2009 - Ecco

40
Accounting policies
Basis of preparation
The financial statements of the Parent
Company and the Group for 2009 are
presented in accordance with the provisions
of the Danish Financial Statements Act
applicable to class C companies.
Basis of consolidation
The consolidated financial statements comprise
ECCO Sko A/S and subsidiaries in which
ECCO Sko A/S has a controlling influence on
the company’s operations. The consolidated
financial statements are prepared on the basis
of the audited financial statements of ECCO
Sko A/S and its subsidiaries by adding items
of a similar nature. The financial statements
used for consolidation are adapted to the
accounting policies of the Group.
On consolidation, intercompany income
and expenses, intercompany accounts and
gains on intercompany sales and purchases
between the consolidated companies are
eliminated. On acquisition of subsidiaries,
the share of the acquired company’s net
asset value is determined based on the
Group’s accounting policies. If the acquisition
price deviates from the net asset value, the
difference is allocated, wherever possible,
to the assets and liabilities or provisions that
have a higher or lower value.
The income statements of foreign subsidiaries
are translated at average exchange rates,
and the balance sheet is translated at the
exchange rates ruling on the balance sheet
date. Exchange differences arising on the
translation of the opening equity of foreign
subsidiaries at the exchange rates ruling on
ECCO’s Annual Accounts 2009 / Accounting policies
31 December, and differences between the
net profit of subsidiaries at average exchange
rates and the exchange rates ruling at 31
December are recognised in equity. As in
previous years, property, machinery, plant and
equipment in the production subsidiaries in
Portugal, Indonesia, Thailand, Slovakia
and China are measured at cost in DKK less
accumulated depreciation. Currency translation
of receivables from foreign subsidiaries,
where the receivables are part of the total
investment in the subsidiary, is recognised
directly in equity.
Minority interests
Minority interests’ share of profits and equity
of subsidiary undertakings is stated separately.
Income statement
Net revenue: Sales are recognised on dispatch
of products, and net revenue consists of
amounts invoiced excluding VAT and less
returned products, discounts and rebates.
Raw materials and consumables: Raw
materials and consumables include raw
materials and consumables used for in-house
production. Cost also includes consumption
of commercial products.
Other external costs: Other external costs
comprise costs relating to the Company’s primary,
ordinary activity, including lasts, cutting
dies, maintenance, rent of plant, premises,
office expenses, sales promotion expenses,
fees, etc.
Staff costs: Staff costs comprise remuneration
to employees, including pension and social
security costs.
Profit from subsidiaries: Profit from subsidiaries
comprise the proportionate share of profit
before tax. The proportionate share of tax in
the companies is recognised in the line item
“income taxes”.
Unrealised intercompany profits: Unrealised
intercompany profits comprise profits unrealised
in the Group on trading in products and
fixed assets between consolidated
companies.
Income taxes: Estimated tax on the profit for
the year is recognised in the income statement
along with the year’s change in deferred
tax. No tax is set aside for investments in
subsidiaries as it is intended to hold the
investments for more than three years.
ECCO Sko A/S and the Danish subsidiaries
are encompassed by the Danish regulations
regarding mandatory joint taxation.
Subsidiaries are part of the joint taxation
from the moment where they are a part of
the consolidation in the annual accounts to
the moment where they are omitted from the
consolidation.
ECCO HOLDING A/S is the administrative
company in the joint taxation and settles all
payments of corporate tax in the Danish
subsidiaries with the tax authorities.
The current Danish corporate tax is allocated
by paying a joint taxation contribution
between the companies in the joint taxation.
The contribution is allocated according to the
taxable income in the companies. Companies
in the joint taxation with a taxable deficit