Criterios de diversificación, dispersión y congruencia de las inversiones 61

Vasallen AB and its subsidiaries create long-term value growth through customer-oriented development and improvement of defense-related properties to attractive acquisition objects in the commercial market.

The Parent Company is wholly owned by the Swedish State.

2

SUMMARY OF KEY ACCOUNTING PRINCIPLES

The key accounting principles applied in the preparation of the con- solidated accounts are provided below. These principles have been consistently applied for all the years presented, unless otherwise indicated.

2.1 Basis for preparation of reports

The consolidated accounts have been prepared in accordance with the Annual Accounts Act, International Financial Reporting Stand- ards (IFRS) and interpretative pronouncements from the Interna- tional Financial Reporting Interpretations Committee (IFRIC) that have been adopted by the EU. The consolidated accounts are also contained in IFRS 1 “First time adoption” since this is the first time the consolidated accounts have been prepared in accordance with IFRS as by the EU. The Swedish Financial Accounting Stand- ards Council recommendation RR 30, supplementary accounting regulations, is also applied.

The Parent Company’s functional currency is the Swedish krona, which is also the reporting currency for both the Parent Company and the Group. Unless otherwise indicated, all amounts are rounded off to the nearest million. The consolidated accounts are prepared in accordance with the cost method, aside from the handling of certain financial assets and managed properties which are assessed at fair value. Financial assets that are assessed at fair value consist of com- mercial paper, bank-, residential- and municipal-certificates and bonds.

Effective January 1, 2005, IAS 32 and IAS 39 are being applied. The application of IAS 32 entailed no revised accounting principles, only an expanded disclosure requirement. In accordance with the Company having elected not apply to the above standards for the comparison year 2004, these standards will henceforth be applied.

The application of IAS 39 entailed revised accounting princi- ples with respect to financial instruments.

The effect of the application of IAS 39 is inconsequential and is covered in Note 19.

The Parent Company applies the same accounting principles as previously with the exceptions of the Swedish Financial Accounting Standards Council’s recommendation RR 32 “Reporting for legal entities.” The accounting principles for the Parent Company are provided in Note 5.

Information concerning future standards

IAS 1 Amendment – Presentation of financial statements:

Capital disclosures (The amendment to the standard is supported by

the European Commission).

The amendment takes effect January 1, 2007 and in today’s situation could entail expanded supplementary disclosures in Vasallen’s annual report.

Amendment to IAS 19 Employee Benefits (The amendment to the

standard is supported by the European Commission).

IAS 19 was revised in December 2004. The revisions pertain to the fiscal years beginning after January 1, 2006. As matters presently stand, Vasallen has yet to decide whether or not the new option to

report actuarial profits and losses shall be applied. However, the expanded disclosure requirements shall be evident in the 2006 annual report.

Amendment to IAS 21 The effects of changes in foreign exchange rates (The amendment to the standard is not supported by the

European Commission).

IAS 21 was revised in December 2005. The revisions pertain to the fiscal years beginning after January 1, 2006. As matters presently stand, these revisions will have no effect on Vasallen.

IAS 39 Amendment – The fair value option (The amendment to the standard is supported by the European Commission).

An amendment to IAS 39 was issued in June 2005 pertaining to the fair value option. The revision takes effect beginning January 1, 2006. In Vasallen’s estimation, the amendment will have no effect on the Group’s earnings and financial standing.

IAS 39 Amendment – Cash flow Hedge Accounting of Forecast Intra- group Transactions (The amendment to the standard is not sup-

ported by the European Commission).

An amendment to IAS 39 was issued in April 2005 pertaining to Cash flow Hedge Accounting of Forecast Intra-group Transactions. The revision takes effect beginning January 1, 2006. In Vasallen’s estimation, the amendment will have no effect on the Group’s earn- ings and financial standing.

IAS 39 and IFRS 4 Amendment Financial guarantees (The amend-

ments to the standards are supported by the European Commission). The standard takes effect January 1, 2006 and is not regarded as applicable to Vasallen.

IFRS 1 and IFRS 6 Amendments (The amendments to the stand-

ards are supported by the European Commission).

The amendments apply in the case of a company electing to apply IFRS prior to January 1, 2006 and therefore do not apply to Vasallen.

IFRS 6 Exploration for and evaluation of mineral assets (This

standard is supported by the European Commission).

This standard takes effect January 1, 2006 and is not regarded as applicable to Vasallen.

IFRS 7 Financial Instruments: Disclosures (This standard is sup-

ported by the European Commission).

This standard will affect disclosures concerning financial instru- ments. The standard will be applied from January 1, 2007.

IFRIC 4 Determining whether an arrangement contains a lease (The

recommendation is supported by the European Commission). IFRIC 4 is applicable for fiscal years beginning after January 1, 2006. Vasallen has elected not to apply IFRIC 4 in advance of this but will apply IFRIC 4 and the transition provisions in its 2006 reporting. Accordingly, Vasallen will apply IFRIC 4 based on the conditions that applied at January 1, 2005. In Vasallen’s estimation, the adoption of IFRIC 4 will have no effect on the Group’s current agreement.

IFRIC 5 Rights to Interests Arising from Decommissioning, Restora- tion and Environmental Funds (This recommendation is supported

by the European Commission).

This recommendation is not applicable to Vasallen.

IFRIC 6 Liabilities arising from participation in a specific market

(This recommendation is supported by the European Commission). The recommendation applies to the fiscal year beginning after December 1, 2005 and this standard is not applicable to Vasallen.

IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (This recommendation is

not supported by the European Commission).

The recommendation takes effect March 1, 2006 and is not appli- cable to Vasallen.

IFRIC 8 Scope of IFRS 2 (This recommendation is not supported

by the European Commission).

The recommendation applies for the fiscal year beginning after May 1, 2006 and is not considered applicable for Vasallen.

2.2 Consolidated accounts

Subsidiaries

Subsidiaries are all of the companies in which Vasallen is entitled to formulate financial and operating strategies in a manner that usu- ally reflects a shareholding amounting to more than 50% of voting rights. Subsidiaries are included in the consolidated accounts from the date when decisive influence passes to the Group. They are excluded from the consolidated accounts from the date that this influence ceases. All subsidiaries are wholly owned by Vasallen.

The purchase method is used for reporting the Group’s acquisi- tion of subsidiaries. The acquisition cost of an acquisition consists of fair value of assets relinquished as payment, issued equity instru- ments and liabilities that arise or are taken over at date of transfer, plus costs that are directly attributable to the acquisition. Identifi- able acquired assets and liabilities assumed and contingent obliga- tions related to a company acquisition are initially valued at fair value at date of acquisition, regardless of extent of any minority interests. The surplus comprised by the difference between acquisi- tion value and fair value in the Group’s share of identifiable acquired net assets is reported as goodwill. If acquisition cost is less than fair value for the acquired subsidiary’s net assets, the difference is reported directly in the income statement (item 2.6)

Intra-Group transactions, balance sheet items and unrealized gain on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless the transaction consti- tutes evidence that an impairment of a transferred asset is impend- ing. As the need arises, accounting principles are revised to guaran- tee consistency in the application of the Group’s principles.

2.3 Segment reporting

An operating segment is a grouping of assets and operations that provide products or services that are subject to risks as well as opportunities distinct from those that apply to other operating seg- ments. Geographic areas provide products or services within an eco- nomic environment that are subject to risks as well as opportunities distinct from those that apply to other economic environments.

The Company is organized into geographic areas which com- prise the primary segment. The secondary segment is comprised of leasing of premises and contracting operations, respectively

2.4 Translation of foreign currency

Functional currency and report currency

The items included in the financial reports for the various units in the Group are valued in the currency of the economic environment in which the respective companies are mainly active (functional cur- rency). The Parent Company’s functional currency is the Swedish krona, which is also the reporting currency for both the Parent Company and the Group.

Transactions and balance sheet items

Transactions in foreign currencies are translated to the functional currency according to the exchange rate in effect on the date of transaction. Translation gains and losses in connection with the payment of such transactions and the translation of monetary assets and liabilities in foreign currencies at the exchange rate in effect at balance-sheet date, are reported in the income statement. Exceptions are when the transactions constitute hedges for fulfilling the conditions for hedge accounting of cash flows or of net invest- ments, then profits/losses are reported as equity.

Group companies

Earnings and financial position for all Group companies having another functional currency than the reporting currency are trans- lated to the Group’s reporting currency according to the following: (i) assets and liabilities for each of the balance sheets are trans-

lated at the exchange in effect on the balance-sheet date, (ii) income and expenses for each of the income statements are

translated at the average exchange rate and

(iii) all translation differences that arise are reported as a separate part of equity.

2.5 Intangible assets

Development costs for intangible fixed assets developed in-house are capitalized if future economic advantages can be demonstrated. Capitalized expenditures for computer programs are amortized during their estimated economic life (three years).

2.6 Tangible fixed assets

Managed properties

Managed properties are defined as properties (land or buildings – or part of a building – or both) held for the purpose of generating rental revenues or value appreciation or both, than for (a) utiliza- tion in the production of goods or services or for administrative purposes or, (b) for sale as part of ongoing operations.

Managed properties, which mainly include office buildings with tenant ownership, are held for long-term rental yield and not by the Group in its own operations. Managed properties are reported at fair value, which consists of the market value established on an annual basis by external or internal appraisers. Changes in fair val- ues are reported in the income statement under the item value changes.

Accrued costs for construction, additions and renovations are included in the value for managed properties. Accrued costs include all direct costs attributable to the respective object, and costs for own personnel.

Equipment

All other tangible fixed assets are booked at cost with deduction for depreciation according to plan. Cost value includes charges directly attributable to the acquisition of the asset.

Costs that arise are added to the asset’s reported value, or reported as a separate asset, depending on which is appropriate, only when it is probable that the future economic advantages associ- ated with the asset will be of benefit to the Group, and the asset’s acquisition value can be reliably measured. All other forms of repairs and maintenance, as with maintenance measures in connec- tion with renovations and tenant adaptations, are reported as costs in the income statement in the period they arise.

2.7 Depreciation and impairments

Depreciation of other assets to distribute their acquisition value or revalued amount down to the estimated residual value is carried out straight-line according to plan over the estimated economic life as follows:

–Equipment 3–20 years (5%–33.3%)

The difference between booked depreciation and depreciation according to plan is reported to the respective legal entities as appropriations and accumulated depreciation in excess of plan as untaxed reserves.

The assets’ residual values and economic lives are tested at each balance-sheet date and adjusted as the need arises.

An asset’s reported value is immediately impaired to its recycled value if the asset’s reported value exceeds its appraised recycled value.

Assets with an indeterminate economic life are not depreciated but are tested annually with respect to possible impairment losses. Assets being depreciated are appraised with respect to value decrease whenever events or changes in conditions indicate that the reported value may not be recyclable. An impairment loss is made in the amount with which the asset’s reported value exceeds its recov-

erable value. Recoverable value is the higher of an asset’s fair value less sales costs, and its use value. In assessing the requirement for impairment, assets are grouped at the lowest level, where there are separate identifiable cash flows (cash-generating units). The earlier impairment of an asset is reversed when a revision occurs in the assumptions which on the occasion of the impairment formed the basis for establishing the asset’s recoverable value. The reversed amount increases the asset’s reported value, but no higher than to the value the asset would have had (after deduction for normal depreciation) if no impairment had occurred.

2.8 Financial fixed assets

Financial fixed assets are reported at the original acquisition value, with due attention to any impairment requirement.

2.9 Financial instruments

The Group classifies its financial instruments in the following cate- gories: Financial assets valued at fair value via the income state- ment, accounts receivable – trade, financial instruments which are held until due date and financial assets that can be sold. The classifi- cation is dependent on why the asset was acquired. Management determines the classification of the instruments at the first reporting and reviews this decision at every reporting occasion.

Financial assets valued at fair value via the income statement

This category has two sub-categories: financial assets that are held for trading purposes and those which from the beginning are referred to as valued to fair value via the income statement. A financial asset is classified in this category if it was acquired mainly to be sold immedi- ately or if this classification was determined by management. Deriva- tive instruments are also categorized by being held for trading pur- poses if they are not identified as hedges. Assets in this category are classified as current assets if they are either held for trading or expected to be realized within 12 months of balance-sheet date.

Accounts receivable – trade

Accounts receivable – trade are non-derivative financial assets with fixed or fixable payments not listed on an active market. The dis- tinctive feature is that they emerge when the Group is providing money, goods or services directly to a customer, with no intention of dealing with receivables that may arise. These are included in cur- rent assets, with the exception of items with due dates more than 12 months after balance-sheet date, which are classified as fixed assets. Accounts receivable are included in accounts receivable in the bal- ance sheet. (Item 2.11).

Financial instruments held until expiration

Financial instruments held until expiration are non-derivative financial assets with fixed or fixable payments and with predeter- mined duration that Group management has the intention and capability of holding until expiration. During the fiscal year, the Group has held commercial paper, bank-, residential and municipal certificates and bonds.

Financial assets that can be sold

Financial assets that can be sold are non-derivative assets consigned to this category or not classified in any of the other categories. They are included among fixed assets provided that management does not intend divesting the asset within 12 months following the bal- ance-sheet date.

Purchase and sale of financial instruments are reported on the transaction date – the date when the Group undertakes to buy or sell the asset. Financial instruments are valued initially at fair value plus transaction costs, which pertains to all financial assets not val- ued at fair value via the income statement. Financial instruments are removed from the balance sheet when entitlement to receive cash flows from the instrument has expired or been transferred and the Group has transferred virtually all risks and advantages associ- ated with ownership entitlement. Financial assets that can be sold and financial assets valued at fair value via the income statement are

reported at time of acquisition at fair value. Accounts receivable – trade and financial investments held until expiration are reported at accrued acquisition value with the application of the effective-interest method. Realized and unrealized gains and losses due to changes in fair value, that pertain to the category to which the financial assets are valued at fair value via the income statement, are included in the income statement during the period in which they occurred. Unreal- ized gains and losses due to changes in fair value, for non-monetary instruments that can be classified as instruments that can be sold are reported as equity. When instruments, which have been classified as instruments that can be sold, are sold or when impairments are required for these, accumulated adjustments are transferred to the income statement, such as Revenues from financial instruments.

2.10 Inventories

Inventories are reported at the lower of acquisition value and net sales value. The acquisition value is ascertained through use of the first-in, first-out method (FIFO). The net sales value is the esti- mated sales price in ongoing operations and with deduction for appropriate variable selling expenses.

2.11 Accounts receivable and rentals receivable

Accounts receivable – trade are reported initially at fair value and then at accrued acquisition value with the application of the effec- tive-interest method, less any reservation for value reduction. A reservation for value reduction of accounts receivable – trade is made when there is objective evidence that the Group will not receive all amounts that have fallen due for payment according to the original terms and conditions. The amount of the reservation is determined by the difference between the asset’s reported value and the current value of the assessed future cash flows, with effective- interest discount. The reserved amount is reported in the income statement.

2.12 Contracting agreements

Contracting costs are reported as they occur.

When the outcome of a contracting assignment cannot be estimated in a reliable manner, only that income is reported that corresponds to impending assignment charges in an amount that the client is likely to pay.

When the outcome of a contracting assignment can be esti-

In document REAL DECRETO 304/2004, de 20 de FEBRERO, POR EL QUE SE APRUEBA EL REGLAMENTO DE PLANES Y FONDOS DE PENSIONES (página 117-123)