ANNUAL REPORT Notes
to the former owners , and the new shares issued by the Group . The consideration transferred includes the fair value of assets or liabilities resulting from a contingent consideration arrangement . Subsequent changes in the fair value of contingent consideration are recognised through profit or loss . Transaction costs in conjunction with acquisitions are expensed in the consolidated income statement when they arise .
Companies acquired during the year are included in the consolidated financial statements in amounts pertaining to the period after the acquisition . Profit from companies sold during the year is included in the consolidated income statement for the period until the divestment date .
Items included in the financial statements of each of the Group ’ s entities are measured using the currency of the primary economic environment in which the entity operates ( functional currency ). The Swedish krona ( SEK ), which is the Parent Company ’ s functional currency and presentation currency , is utilised in the consolidated financial statements . All foreign subsidiaries are translated to SEK by applying the current method . This means that all of the assets and liabilities of foreign subsidiaries are translated at the exchange rate in effect on the balance sheet date . All items in the income statements are translated at the average rate for the year . Translation differences are recognised in the consolidated statement of comprehensive income .
Intra-Group transactions and balance sheet items , as well as unrealised gains on transactions between Group companies , are eliminated in their entirety . Unrealised losses are also eliminated , unless the transaction provides evidence of impairment of the transferred asset . Where necessary , the accounting policies for subsidiaries have been adjusted to guarantee consistent application of the Group ’ s policies .
The consolidated income statement includes non-controlling interests ( previously termed “ minority shares ”) under net profit for the year . In the consolidated balance sheet , non-controlling interests are recognised as a separate item under the Group ’ s shareholders ’ equity .
In connection with each individual company acquisition , the Group determines whether all non-controlling interests are to be measured at either fair value or at the proportionate share of net assets of the acquired company . Transactions with non-controlling interests that do not result in a change in control are recognised in shareholders ’ equity . When the Group no longer has control , each remaining holding is measured at fair value at the date on which control ceased . Changes in carrying amounts are then recognised in the consolidated income statement . The fair value subsequently constitutes the basis of future recognition of the remaining holding as an associated company , joint venture or financial asset .
REVENUE RECOGNITION Service assignments performed on a current account basis are recognised in revenue at the same rate as the services are performed , i . e ., both revenue and expenses are recognised in the period in which they are earned and consumed , respectively . Fees earned as at the balance sheet date that have not been invoiced are recognised as accrued revenue . When the outcome of a fixed-price assignment can be reliably calculated , income and expenses attributable to the assignment are recognised as revenue and expenses in proportion to the degree of completion on the balance sheet date ( percentage of completion ). The degree of completion is primarily determined based on the number of hours as at the balance sheet date in proportion to the estimated total number of hours for the assignment . If it is difficult to calculate the earnings of an assignment , yet nevertheless probable that costs incurred will be covered by the customer , revenue is recognised on the balance sheet date at an amount corresponding to the costs incurred for the assignment . Accordingly , no profit is recognised .
When the outcome of an assignment cannot be reliably calculated , only the costs that the client is expected to pay are recognised as revenue . No revenue is recognised if it is probable that costs incurred will not be paid by the client . An expected loss is immediately recognised as an expense to the extent that it can be calculated .
Fixed-price assignments currently make up a small portion of the Group ’ s net sales . Invoiced fees for fixed-price service assignments that have not been performed are recognised as advances from customers .
Revenue for sales of goods is recognised on complete delivery to the customer , and revenue for data operation services is recognised in pace with the services being performed . Licence fees for software and program service agreements for which companies in the Group do not have any commitments to customers are recognised as revenue on the delivery date . Revenue from support and maintenance agreements for which the companies in the Group have a commitment to customers is allocated over the period of agreement .
INCOME TAXES Reported income taxes comprise tax to be paid or received for the current year , adjustments of current tax for previous years and changes in deferred tax .
Measurement of all tax liabilities / assets is done at nominal amounts in accordance with the tax regulations and tax rates that have been decided on or announced , and which are likely to be adopted .
Tax is recognised through profit or loss , except when the tax pertains to items recognised in other comprehensive income or directly in shareholders ’ equity . In such cases , tax is also recognised in other comprehensive income or shareholders ’ equity .
Deferred tax is calculated using the balance sheet method on all temporary differences arising between the recognised and tax values of assets and liabilities . Deferred tax assets pertaining to tax loss carryforwards or other future tax deductions are recognised to the extent that it is likely that the deductions can be offset against surpluses in connection with future taxation .
RECEIVABLES , AND RECEIVABLES AND LIABILITIES IN FOREIGN CURRENCY Loan receivables and trade accounts receivable are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market . These items are distinguished by the fact that they arise when the Group provides funds , goods or services directly to a customer without intending to trade in the receivable . These amounts are included under current assets , with the exception of items falling due more than 12 months after the balance sheet date , which are classified as non-current assets . Loan receivables and trade accounts receivable are initially measured at fair value and subsequently at amortised cost by applying the effective interest method , less any provisions for impairment . A reserve is established for impairment when the amount that is expected to be paid following an individual assessment is less than the carrying amount of the asset .
Receivables and liabilities in foreign currency are measured at the exchange rate in effect on the balance sheet date . In cases where currency hedges have been applied , for example forward cover , both the hedged item and the hedging instrument are measured at fair value . Transactions in foreign currency are translated at the spot rate on the transaction date . Exchange rate differences pertaining to operating receivables and liabilities are recognised in operating profit , while exchange rate differences pertaining to cash and cash equivalents and loans are recognised as financial income and expenses in the income statement . Restatement of liabilities at the exchange rate in effect on the balance sheet date for consideration paid and provisions for estimated contingent consideration in
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