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Jotun Annual Report 2014

14 GENERAL JOTUN GROUP Summary of significant accounting policies The Jotun Group consists of Jotun A/S and its subsidiaries. The consolidated financial statement consists of the Group and Group’s net interests in associated companies and jointly controlled entities. Jotun A/S is a limited company incorporated in Norway. The Jotun Group’s headquarter is in Sandefjord, Norway, and the Group including associated companies and jointly controlled entities employs around 9 700 people in 43 countries. 1. STATEMENT OF COMPLIANCE The Jotun Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations as adopted by the International Accounting Standards Board (IASB) and approved by the European Union (EU). 2. BASIS FOR PREPARATION OF THE ANNUAL ACCOUNTS The consolidated financial statements are based on historical cost, with the exception of financial instruments at fair value and loans, receivables and other financial liabilities which are recognised at amortised cost. The consolidated financial statements have been prepared on the basis of going concern. 3. BASIS FOR CONSOLIDATION The Jotun Group’s consolidated financial statements comprise Jotun A/S and companies in which Jotun A/S has a controlling interest. The financial statements of subsidiaries are included in the consolidated financial statement from the date that control commences until the date that control ceases. Control is achieved when the Jotun Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if Jotun Group has: - Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) - Exposure, or rights, to variable returns from its involvement with the investee - The ability to use its power over the investee to affect its returns Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: - The contractual arrangement with the other vote holders of the investee - Rights arising from other contractual arrangements - The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance. Interests in joint ventures and associates The Group has interests in joint ventures, which are jointly controlled entities, whereby the ventures have contractual arrangements that establish joint control over the economic activities of the entities. The agreements require unanimous agreements for financial and operating decisions among the ventures. The Group’s investments in its associates and joint ventures are accounted for using the equity method. An associate is an entity in which the Group has significant influence. Under the equity method the investments in the joint venture and associated companies are recognized in the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the joint venture and associate. Goodwill relating to the associates is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The income statement reflects the Group’s share of the result of operation of the joint venture and associated company. This is the profit attributable to equity holders of the joint venture and associated company, after tax and non-controlling interests in the subsidiaries of the joint venture and associated company. The financial statements of the associates are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment


Jotun Annual Report 2014
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