Hexagon - Annual Report 2005

Comments and Notes Write-downs The adoption of IFRS is being accounted pursuant to IFRS 1, “First-time An evaluation of whether any need for write-downs exists is performed at each Adoption of International Financial Reporting Standards”. The general require- balance sheet date, i.e. whether the recorded value of an asset exceeds its ment is for a corporation to establish its accounting standards, and then apply recoverable value. If the need for a write-down is identified, a write-down is them retroactively to determine an opening balance pursuant to IFRS. However, effected to the amount corresponding to the recoverable value, which in turn, some exemptions from this retroactive adoption are permitted, and Hexagon comprises the greater of an asset’s net realizable value and the value in use. has selected the following: Previous write-downs are reversed at relevant amounts to the degree that is justifiable, except that write-downs of goodwill are never reversed. • To apply IFRS 3, “Business Combinations”, prospectively from the transition date of 1 January 2004. Financial instruments • To set all translation differences to zero at the transition date pursuant to IAS Financial instruments are valued and reported in accordance with IAS 39. Fi21, “Effects of Changes in Foreign Exchange Rates”. nancial instruments not matched to a corresponding item in the balance sheet • To adopt IAS 39, “Financial Instruments, Recognition and Measurement”, are carried at market value, with changes in the value flowing through the in-prospectively from 1 January 2005, with the resulting effects reviewed become statement. low. Accounting policies in the parent company Effects of the Adoption of IFRS The Parent Company applies the same accounting polices as the Group with Investigation of the effects of the adoption of IFRS is completed, with the areas the following exceptions: where a significant impact on Hexagon’s net earnings in 2004 and shareholders’ equity has arisen is listed below. • In the Parent Company all leases are treated as operational leases. For Hexagon’s part, the most significant effects of the adoption of IFRS relate • In the Parent Company all pension plans are treated as defined contribution to corporate acquisitions (IFRS 3) and minority interests (IAS 32). plans. • The Parent Company normally accounts group contributions paid and re-Recalculated Consolidated Shareholders’ Equity and Net Earnings ceived, and the corresponding fiscal effect, directly to shareholders’ equity. In those cases where group contributions received can be considered as MSEK Note Amount dividends, however, the group contribution is accounted as a financial revenue, and the tax effect is included in income tax for the year in the Income Shareholders’ equity, accounting Statement. standards 31 Dec. 2003 2,272 • In the Parent Company the shares in subsidiaries are carried at cost less any Recalculation of pension commitments pursuant to RR 29 1 –23 impairment charges recorded. Shareholders’ equity, accounting standards, 1 Jan. 2004 2,249 In 2005 the Parent Company changed it’s accounting for hedging of investments in foreign subsidiaries. In prior years the loans raised to finance the acquisition of such investments were not revalued due to changes in exchange rates. In 2005 the parent company changed this to revaluing the loans with Minority interests 2 47 Negative goodwill 3 42 Total change to IFRS 89 changes in foreign currency exchange rates flowing through the income state-Shareholders’ equity pursuant to IFRS 1 Jan. 2004 2,338 ment. The impact of the change in accounting policy has been recorded directly to equity, net of the corresponding tax effect. MSEK Note Amount Approval of accounts Shareholders’ equity, accounting The Group’s income statement and balance sheet and the Parent Company’s standards 31 Dec. 2004 2,345 income statement and balance sheet will be presented to the Annual General Meeting for approval on May 5, 2006. Minority interests 2 46 Negative goodwill 3 37 Goodwill amortisation 4 99 Adoption of International Financial Reporting Standards (IFRS) as of 1 January 2005 Hexagon adopted the EU-approved IFRS on 1 January 2005, which also en- Amortisation of other intangible fixed assets, after tax –1 Restructuring costs from acquisitions, after tax 5 –31 Translation differences 7 compasses prevailing IAS (International Accounting Standards). The recommendations from the Swedish Financial Accounting Standards Council, which Total change to IFRS 151 Hexagon applied until 2004 inclusive, are largely based on IAS, and accord-Shareholders’ equity pursuant to IFRS, 31 Dec. 2004 2,496 ingly, the consolidated financial statements were already largely harmonized to Market valuation of commercial financial instruments, after tax 7 0 the new Standards. The First-quarter Interim Report 2005 was the first financial report published Shareholders’ equity pursuant to IFRS 1 Jan. 2005 2,496 pursuant to IFRS. MSEK Note Amount Net earnings, accounting standards 2004 357 Minority interests 2 7 Goodwill amortisation 4 99 Depreciation of other intangible fixed assets, reclassified from goodwill after tax 6 –1 Depreciation on tangible fixed assets related to negative goodwill 3 –5 Restructuring costs related to acquisitions, after tax 5 –37 Total change to IFRS 63 Net earnings, IFRS 2004 420