Foreign currency translation
1.
ACCOUNTING POLICIES
On initial recognition, transactions denominated in currencies other than the
individual company’s functional currency are translated at the exchange rate
ruling at the transaction date. Receivables, payables and other monetary
items denominated in foreign currencies that have not been settled at the
balance sheet date are translated at the exchange rates at the balance sheet
date. Exchange differences between the exchange rate at the transaction
date and the exchange rate at the date of payment or the balance sheet date,
respectively, are recognised in the income statement under financial items.
The consolidated and the parent company financial statements of CeMat A/S
for 2021 have been prepared in accordance with International Financial
Reporting Standards as adopted by the EU and additional Danish disclosure
requirements for annual reports of reporting class D entities (listed) as set out
in the Danish Executive Order on Adoption of IFRSs issued in pursuance of the
Danish Financial Statements Act and the rules and regulations of Nasdaq
Copenhagen.
Property, plant and equipment and intangible assets, inventories and other
non-monetary assets acquired in foreign currency and measured based on
historical cost are translated at the exchange rates at the transaction date.
The consolidated financial statements and the parent company financial
statements are presented in Danish kroner (DKK), which is the Group’s
presentation currency and the functional currency of the parent company.
On recognition in the consolidated financial statements of entities whose
financial statements are presented in a functional currency other than Danish
kroner (DKK), the income statements are translated at average exchange
rates for the respective months, unless these deviate materially from the
actual exchange rates at the transaction dates. In that case, the actual
exchange rates are used. Balance sheet items are translated at the exchange
rates at the balance sheet date.
Implementation of new and revised standards and interpretations
New and revised standards and interpretations applying to financial years
beginning on 1 January 2021 have been implemented in the annual report for
2021.
Standards and interpretations affecting the profit/loss for the year or the
financial position
The implementation of new and revised standards and interpretations in the
annual report for 2021 has not resulted in changes to presentation or
disclosure.
Exchange differences arising on the translation of foreign subsidiaries’
opening balance sheet items to the exchange rates at the balance sheet date
and on the translation of the income statements from average exchange rates
to exchange rates at the balance sheet date are recognised in other
comprehensive income.
Standards and interpretations affecting presentation and disclosure
The implementation of new and revised standards and interpretations in the
annual report for 2020 has not resulted in changes to presentation or
disclosure.
Foreign exchange adjustments of receivables from or payables to subsidiaries
which are considered part of the parent company’s overall investment in the
subsidiary in question are recognised in other comprehensive income in the
consolidated financial statements, while they are recognised in the income
statement of the parent company.
Standards and interpretations not yet in force
In Management’s opinion, the application of new and revised standards and
interpretations will not have a material impact on the annual reports for the
coming financial years. In other respects, the accounting policies are
consistent with last year’s, as described in the following.
Tax
Tax for the year, which consists of current tax and changes in deferred tax for
the year, is recognised in the income statement with respect to the portion
attributable to the profit/loss for the year and directly in equity with respect
to the portion attributable to entries directly in equity.
Consolidated financial statements
The consolidated financial statements consolidate the financial statements of
the parent company, CeMat A/S, and subsidiaries in which the parent
company directly or indirectly holds more than 50% of the shares.
Current tax payable and receivable is recognised in the balance sheet as the
tax calculated on the taxable income for the year, adjusted for tax paid on
account.
Basis of consolidation
The consolidated financial statements are prepared on the basis of the
financial statements of the parent company and those of the subsidiaries,
which are all prepared in accordance with the Group’s accounting policies.
The calculation of the year’s current tax is based on the tax rates and tax rules
applicable at the balance sheet date.
On consolidation, items of the same nature are aggregated and intra-group
income and expenses, intra-group balances and shareholdings are
eliminated. Unrealised gains and losses on transactions between
consolidated companies are also eliminated.
Deferred tax is measured using the tax rates and tax rules that, based on
legislation in force or in reality in force at the balance sheet date, are expected
to apply in the respective countries when the deferred tax is expected to
crystallise as current tax. Changes in deferred tax as a result of changed tax
rates or rules are recognised in the income statement, unless the deferred tax
can be attributed to items previously recognised directly in equity. In the
latter case, the change is also recognised directly in equity.
Financial statement items of subsidiaries are fully consolidated. The non-
controlling interests’ proportionate share of the profit/loss is included in the
consolidated profit/loss and comprehensive income for the year and as a
separate item under consolidated equity.
Deferred tax is measured using the balance sheet liability method on all
temporary differences between the carrying amount and the tax base of
assets and liabilities. However, deferred tax is not recognised on temporary
differences relating to the initial recognition of goodwill or the initial
recognition of a transaction, apart from business combinations, and where
the temporary difference existing at the date of initial recognition affects
neither profit/loss for the year nor taxable income.
Non-controlling interests
On initial recognition, non-controlling interests are either recognised at their
fair value or at their pro-rata share of the fair value of the acquired company’s
identifiable assets, liabilities and contingent liabilities. The choice of method
is made individually for each transaction. The non-controlling interests are
subsequently adjusted for their proportionate share of changes to the equity
of the subsidiary. The comprehensive income is allocated to the non-
controlling interests irrespective of the non-controlling interest consequently
becoming negative.
Deferred tax is provided on temporary differences arising on investments in
subsidiaries and associates, unless the parent company is able to control
when the deferred tax is to be realised and it is likely that the deferred tax
will not crystallise as current tax within the foreseeable future.
Acquisition or sale of non-controlling interests in a subsidiary not resulting in
loss of controlling influence is recognised in the consolidated financial
statements as an equity transaction, and the difference between the
remuneration and the carrying amount is allocated to the parent company’s
share of equity.
Deferred tax is calculated based on the planned use of the individual asset
and the settlement of the individual liability, respectively.
Deferred tax assets, including the tax base of tax loss carry-forwards, are
recognised in the balance sheet at the value at which the asset is expected to
54
