Page 56 - Kitron Annual Report 2011

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Notes to the financial statements Kitron ASA
56
Kitron annual report 2011
Payroll tax is expensed for funded (collective) pension
plans, and accrued in accordance with changes in the
pension commitment for unfunded pensions.
Tax
Tax cost in the profit and loss account comprises the sum
of tax payable for the period and changes to deferred
tax or deferred tax assets. Deferred tax is calculated at a
rate of 28 per cent on the basis of temporary differences
between accounting and tax values, plus possible tax
loss for carrying forward at the end of the fiscal year. Tax
increasing and reducing temporary differences which re-
verse or could reverse in the same period are eliminated.
and are recorded net in the balance sheet. Recognition of
deferred tax assets on net tax-reducing differences which
have not been eliminated, and tax loss for carrying for-
ward, is based on expected future earnings. Deferred tax
and tax assets which can be recognised in the balance
sheet are stated net.
Tax on group contribution paid which is recognised as
an increase in the cost price of shares in other com-
panies, and tax on group contribution received which
is recognised directly against equity, is recognised
directly against tax in the balance sheet (against tax
payable if the group contribution has an effect on tax
payable and against deferred tax if the group contribu-
tion has an effect on deferred tax).
Cash flow statement
The cash flow statement is prepared using the indi-
rect method. Cash and cash equivalents include cash
in hand, bank deposits and other short-term liquid
placements which immediately and with insignificant
currency risk can be converted to known amounts
of cash and with a maturity which is less than three
months from the acquisition date.
Interest rate risk
Interest on the group’s interest-bearing debt is charged at the relevant market rate prevailing at any given
time (base rate plus interest margin). No interest rate instruments have been eetablished in the company. The
company does not have significant interest-bearing assets, so that its income and cash flow from operational
activities are not significantly exposed to changes in the market interest rate.
Currency risk
Exchange rate developments represent a risk for the company both directly and indirectly. No contracts which
reduce this risk had been concluded at 31 December 2011.
Price risk
The raw materials price risk for the company’s business is small. Nevertheless, the risk of price fluctuations is
hedged through long-term purchase contracts as well as the conclusion of strategic agreements with suppliers
and other players in the market.
Note 1 Financial risk