Accounting principles for financial reporting

37 Accounting principles for financial reporting

The company financial statements have been prepared in accordance with the provisions of Part 9, Book 2 of the Dutch Civil Code, and the same accounting policies have been applied as in the consolidated financial statements as permitted by Section 362(8), Part 9, Book 2 of the Dutch Civil Code. The descriptions of the activities and structure of the company as stated in the notes to the consolidated financial statements, including the disclosure of directors’ remuneration and the overview of subsidiaries and associates, also apply to the company financial statements.

The company financial statements of Stedin Holding N.V. consist of the company income statement and the company balance sheet. The euro is the functional currency. All amounts are in millions of euros, unless stated otherwise.

Associates

Associates over whose commercial and financial policies significant influence is exercised are stated at net asset value, but not for an amount lower than nil. If the net asset value is negative, the associate is stated at nil. In this context, other long-term interests are taken into account, which in effect must be qualified as part of the net investment in the associate. Where the company provides security for all or part of the debts of the associate concerned, or has the constructive obligation (in proportion to its share) to enable this associate to pay its debts, a provision is recognised. The amount of this provision is determined by taking into account any bad debt provisions already deducted from the receivables concerned. A statutory reserve is formed for reserves of associates that are subject to restrictions on distributions.

Stedin Holding N.V. provides loans to associates, and credit losses might arise on those loans. Stedin has opted to eliminate the expected credit losses on loans and receivables from associates in the company financial statements, as required by IFRS 9.

Revaluation reserve

The legal entity maintains a revaluation reserve with respect to:

  • increases in the value of assets, other than financial instruments, recognised directly in equity;

  • increases in the value of assets for which value adjustments are recognised in profit and loss and for which no regular market prices exist; and

  • changes in the value of derivatives stated at fair value and subject to cash flow hedge accounting.

Deferred tax liabilities are deducted from the revaluation reserve in the event of differences between valuation for accounting and for tax reporting purposes. The realised part of the revaluation reserve is taken to the other reserves.

For the other accounting policies with regard to equity, see note 2.2.21 Perpetual subordinated bond loan in the notes to the consolidated financial statements.