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BASIS OF PREPARATION
Jotun A/S is a limited liability company incorporated in Norway. The Group’s
headquarter is in Sandefjord, Norway, and the Group including associates
and joint ventures employs around 10 300 people in 47 countries.
The Group consists of the parent company Jotun A/S and its subsidiaries.
The consolidated financial statements consist of the Group as well as the
Group’s net interests in associates and joint ventures.
1.1 ACCOUNTING POLICIES
Accounting policies, estimates and judgements are incorporated into the
individual notes with the exception of general information described in
this section.
The consolidated financial statements are prepared based on the
historical cost principle, except for financial assets and liabilities which are
recognised at fair value.
The consolidated financial statements have been prepared on the basis
of the going concern assumption.
Statement of compliance
The Group’s consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards (IFRS)
and interpretations as adopted by the European Union (EU), as well as
Norwegian disclosure requirements that follow from the Norwegian
Accounting Act.
Debt and equity instruments in the Group are not traded in a public market.
Consequently, operating segment reporting according to IFRS 8 does not
apply for the Group.
Basis for consolidation
The Group’s consolidated financial statements comprise Jotun A/S and
companies in which Jotun A/S has a controlling interest. The financial
statements of subsidiaries are fully consolidated from the date that
control commences until the date that control ceases.
The financial statements of the subsidiaries are prepared for the same
reporting period as Jotun A/S. All intercompany balances, income and
expenses and cash flows relating to transactions between members of
the Group are eliminated in full.
Interests in associates and joint ventures
The Group has interests in associates and joint ventures. An associate is
an entity in which the Group has significant, but not controlling influence,
with an ownership normally between 20 and 50 per cent. A joint venture
is a jointly controlled entity, normally with a 50/50 ownership.
The Group’s investments in associates and joint ventures are accounted
for using the equity method. Under the equity method, the Group
presents its share of the companies’ results after tax on a separate line
in the income statement. Share of equity is reported as investments in
associates and joint ventures in the balance sheet.
The financial statements of associates and joint ventures are prepared for
the same reporting period and based on the same accounting policies as
for the Group.
Non-controlling interests
The non-controlling interests are presented separately in the consolidated
financial statements representing the minority’s share of equity and
profit.
Foreign currency transactions
In the individual financial statements for each entity in the Group,
transactions in foreign currency are initially recorded in the entity’s
functional currency based on exchange rates at the date of transaction.
Monetary items in foreign currency are translated into functional currency
using the exchange rate applicable at the balance sheet date. Nonmonetary
items in foreign currency are translated into functional currency
using the exchange rate applicable at the transaction date.
Translation of foreign operations to NOK
The Group’s presentation currency is Norwegian Krone (NOK). This is
also Jotun A/S’ functional currency. Each entity in the Group determines
its own functional currency, and the majority of financial statements are
denominated in other currencies than NOK.
Assets and liabilities in entities with other functional currencies than
NOK are translated into NOK using the exchange rate applicable at the
balance sheet date. Their income statements are translated monthly at
the average exchange rate for the month. Exchange rate differences are
recognised in other comprehensive income.
Financial risk management
Jotun A/S uses foreign currency options and forward currency contracts
to ensure predictability in the short to medium term cash flows.
Hedge accounting in the Group is limited to hedge of net investment. Jotun
A/S finances the majority of its subsidiaries with intercompany loans in local
currencies. Intercompany loans for which settlement is neither planned nor
likely to occur in the foreseeable future are accounted for as part of the
net investment in foreign operations. In addition, a USD loan and a rolling
currency swap serve as a hedge of net investments in foreign operations
for which gains or losses related to the effective portion of the hedge are
recognised in other comprehensive income.
1.2 NEW ACCOUNTING POLICIES
No new IFRS standards, amendments or interpretations have been issued
that have a significant impact on the consolidated financial statements for
the Group
1.3 ESTIMATES AND JUDGEMENTS
In preparing the consolidated financial statements, Management makes
various accounting estimates and assumptions that form the basis of
the presentation, recognition and measurement of Jotun’s assets and
liabilities.
Determining the carrying amounts of some assets and liabilities requires
estimates and assumptions concerning future events. Estimates and
assumptions are based on historical experience and other factors, which
Management assesses to be reasonable, but which by their nature involve
uncertainty and unpredictability. These assumptions may have to be
revised as unexpected events or circumstances may occur.
The areas that involve a high degree of judgement and are material to the
financial statements are described in more detail in the relevant notes.
1.4 EVENTS AFTER THE BALANCE SHEET DATE
New information regarding the Group’s financial position at the end of
the reporting period and that becomes known after the reporting period,
is recorded in the annual accounts. Events after the reporting period that
do not affect the Group’s financial position at the end of the reporting
period, but which will affect the Group’s financial position in the future,
are disclosed if significant.
No events have taken place after the balance sheet date that would have
affected the financial statements, or any assessments carried out.
Jotun Group
20 I Jotun Annual Report 2021