Notes to the financial statements

Accounting policies

The consolidated financial statements, which include all Group companies, have been prepared using the acquisition cost method. The difference between the acquisition cost and equity of subsidiaries at the time of acquisition is stated as consolidated goodwill and Group reserve without allocating them to the subsidiaries' asset items.

Consolidated goodwill and Group reserve are shown separately on the balance sheet. Depreciation of goodwill and recognition of Group reserve as income have been offset in the profit and loss statement.

Intra-Group transactions and margins have been eliminated. Companies in which the Group has a 50% holding have been consolidated as joint ventures.

The profit and loss statements of foreign subsidiaries have been translated into euros at the average exchange rate during the year. The balance sheets have been translated into euros at the exchange rates at the balance sheet date. The exchange rate differences arising in translation and the translation differences in the equities of foreign subsidiaries are shown under retained earnings.

The figures in the financial statements are stated in thousands of euros.

Valuation of fixed assets

Fixed assets have been recognised in the balance sheet at acquisition cost less depreciation according to the plan. Fixed assets are depreciated on a straight-line basis over their useful lives. Depreciation periods are:

  • Intangible rights and other long-term expenditure 3 - 5 years
  • Goodwill 5 years
  • Consolidated goodwill and Group reserve 5 - 10 years
  • Buildings 25 years
  • Structures 10 years
  • Production machinery 3 - 10 years
  • Equipment 3 - 5 years

Valuation of inventories

Inventories are stated according to the FIFO method at the acquisition cost or replacement value or the probable realisable value, whichever is the lower. The inventory value includes variable costs.

Cash in hand and at banks

Cash in hand and at banks includes liquid assets, bank balances and deposits of less than three months.

 

Derivatives

Derivatives include currency forwards, which are used to hedge forecast cash flows in sales and purchase contracts denominated in foreign currency. The negative fair values of currency derivative in respect of trade receivables and payables booked in the balance sheet for 2016 have been booked as provisions in financial expenses in the profit and loss statement based on a statement issued by the Accounting Board in December 2016. Derivatives were earlier treated in full as off-balance sheet items. The change in accounting principle has no material impact on comparability of the information in the financial statements.

Currency items

All receivables and liabilities in currencies other than the euro in the 2016 financial statements have been translated into euros at the balance sheet date at the average rate quoted by the European Central Bank. An exception to this was currency denominated receivables and liabilities that were hedged by currency forwards and recognised at forward rates. The change in accounting principle has no material impact on the comparability of the information in the financial statements.

Pensions

The pension security of Group employees has been arranged through external pension insurance companies. Pension costs are expensed during the year accrued.

Deferred taxes

Deferred tax liabilities or assets have been calculated on the basis of temporary differences between their carrying amounts and the tax base, using the tax base for subsequent years confirmed at the balance sheet date. The balance sheet includes deferred tax liabilities in their entirety and deferred taxes based on their probable amount. Consolidated income tax assets and liabilities are shown as separate items on the balance sheet.