ACCOUNTING PRINCIPLES
Scope of consolidation
The consolidated financial statements comprise the parent company, all subsidiaries and associated companies. More information about the companies in the Group is given below in note 13.
The parent company in VR Group is VR-Group Ltd and its domicile is Helsinki, Finland. Copies of the consolidated financial statements are available from the company's head office at Vilhonkatu 13, P.O. Box 488, 00101 Helsinki, Finland.
Principles for consolidation
Intragroup shareholdings
The consolidated financial statements are prepared using the aquisition method. Goodwill on consolidation is amortized in five years.
Intragroup transactions and margins
Intragroup transactions, internal receivables and liabilities as well as internal distribution of profit are eliminated.
Minority interest
Minority interest is separated from equity and net profit and shown as a separate item.
Associated companies
Associated companies are consolidated using the equity method. The group's share of profit in associated companies is shown as a separate item.
Comparability of the consolidated financial statements
The financial statements are prepared in accordance with the Finnish Accounting Act of 30 December 1997 (1336). The figures for comparison are from the financial year 1 January - 31 December 2014, 12 months.
Recognition of long-term projects
Revenue from VR-Track Ltd's contruction projects is recognized as a precentage of their completion. The precentage of completion is determined by monitoring the actual project costs to date and comparing them with the estimated total costs of the project. As net sales is recognized a share of the estimated total revenue of the projects based on the precentage of their completion.
In case of estimated losses from long-term projects, losses from the uncompleted precentage of the projects are recognized as provisions.
Valuation principles
Fixed assets are capitalized at direct acquisition costs. Fixed assets totalling M€ 15.2 (M€ 24.7) were produced for own use.
Inventories are valued at average cost in line with the prudence concept of accounting. Production for own use included in inventories is valued at direct production costs. Work in progress includes variable costs accrued at the balance sheet date. Production for own use included in inventories also includes a part of fixed costs.
Financial securities are valued at acquisition cost.
Receivables, liabilities and other commitments in foreign currencies are translated into Euros at average exchange rate at the balance sheet date published by the European Central Bank.
Balance sheets of foreign subsidiaries are consolidated at average exchange rate at the balance sheet date and income statements at average exchange rate of the financial year published by the European Central bank.
Pensions
The statutory pension security under the Employees' Pensions Act (TyEL) is arranged through an external pension insurance company. Pension costs are expensed as incurred. Some of the employees enjoy a supplementary pension plan, which is arranged through VR Pension Fund. The Pension Fund is closed since 1.7.1995. The Pension Fund administers supplementary pension benefits for 1576 employees at year end 2015. In 2015 no additional payments were paid to the Pension Fund. The Group's pension commitments are fully covered.
Comparability of parent company financial statements
The financial statements are prepared in accordance with the Finnish Accounting Act of 30 December 1997 (1336). The figures for comparison are from the financial year 1 January - 31 December 2014, 12 months.