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employee benefit assets or liabilities in future
periods.
In the course of the ordinary operating
activities of Autoneum Group, obligations from
guarantee and warranty, litigation and tax
risk, and environmental risk can arise. Provisions
for these obligations are measured on the basis
of estimated future cash outflow. The outcome of
these business transactions may result in claims
against Autoneum that may be below or above
the related provisions. Provisions for obligations
from guarantee and warranty are recognized
when damage has occurred and the related cash
outflow can be estimated reliably, but a material
uncertainty concerning the kind of damage
and the kind of compensation exists. Provisions
for litigation and tax risk comprise complex
cases that include material uncertainties. Environ-
mental provisions are recognized for the expec-
ted costs for the cleanup and reconstruction of
contaminated sites that are interdependent
of many uncertainties, such as Autoneum’s share
of the cost or the applicable approach for
determining these costs. The financial impact
of these cases for future periods can only
be estimated, because uncertainties relating to
amount and date of cash outflow exist.
Assumptions in relation to income taxes
include interpretations of the tax regulations
in place in the relevant countries. The adequacy
of these interpretations is assessed by the
tax authorities. This can result, at a later stage,
in changes in the income tax expenses. To
determine whether a deferred income tax asset
on tax loss carryforwards may be recognized
requires judgment in assessing whether there will
be future taxable profits against which these
tax loss carryforwards can be offset.
Assessing whether Autoneum has control
over an entity includes all facts and circum-
stances that may indicate that the Group is able
to direct the relevant activities and key deci-
sions. Autoneum concludes that it has control
over the entities in which it holds 50% or
more (refer to note 23, p. 91), based on specific
rights allocated. Facts and circumstances
indicating that Autoneum controls an entity may
change and lead to a reassessment of the man-
agement’s conclusion.
Scope and methods of consolidation
The consolidated financial statements of
Autoneum Holding Ltd include the Company
and its subsidiaries. Subsidiaries are entities
controlled by the Group. The Group controls
an entity when it is exposed to, or has rights to,
variable returns from its involvement with the
entity and has the ability to affect those returns
through its power over the entity. The financial
statements of subsidiaries are included in the
consolidated financial statements from the date
on which control commences until the date on
which control is lost. Acquisitions are accounted
for using the acquisition method. Intercompany
transactions are eliminated.
If Autoneum does not have control over
entities but significant influence, which is usually
the case if Autoneum holds interests of between
20% and 50%, these investments are classified
as associated companies and accounted for
using the equity method. Interests of less than
20% where Autoneum does not have significant
influence are accounted for at fair value. The
subsidiaries and associated companies are listed
in note 36 on page 102.
Foreign currency translation
Items included in the financial statements of
each Group company are measured using the
currency of the primary economic environment
in which the company operates (“functional
currency”). The consolidated financial statements
are prepared in Swiss francs, which is the
functional currency and the reporting currency
of Autoneum Holding Ltd.
Transactions in foreign currencies are trans-
lated into the functional currency by applying
the exchange rates prevailing on the date of the
67
Autoneum
Financial Report 2015
Consolidated financial statements