Annual Report 2012
Accounting principles
Company’s field of business and its effect on the accounting principles applied to the financial statements
The company’s field of business is private equity and other related investment. The company aims to promote Finnish businesses by making investments in funds and directly in companies.
The term of private equity funds is generally 10 years, during which the funds call in commitments given by investors to the fund. The company’s outstanding commitments are listed under contingent liabilities. Liquid assets to cover unpaid commitments are entered as liquid securities in the balance sheet and as cash in hand and at banks in the balance sheet.
The distribution of profit from funds as well as sales gains and sales losses on liquid assets are entered in financial income and financial expenses in the income statement. Owing to the nature of the company’s operations, the company does not have any net sales. Sales gains arising from exits from direct investments are included in other operating income, and sales losses arising from exits from direct investments are included in other operating expenses, both in the income statement. Interest on loans is entered as income to the extent that its realisation can be deemed probable.
Accounting principles and scope of consolidated financial statements
Finnish Industry Investment Ltd’s wholly-owned subsidiaries Start Fund Management Oy and Tesi Fund Management Oy have been included in the consolidated financial statements using the acquisition cost method.
Finnish Industry Investment Ltd’s subsidiary Start Fund I Ky, which is wholly-owned through Start Fund Management Oy, has been included in the consolidated financial statements using the acquisition cost method. No separate financial statements have been prepared for the subgroups Start Fund Management Oy and Start Fund I Ky.
Due to the nature of the company’s direct investments and shares in funds, these have not been treated as associated companies in the consolidated financial statements although in some cases the company’s ownership exceeds 20%.
Valuation principles used in the financial statements
Non-current assets
Intangible and tangible assets are entered in the balance sheet at acquisition cost less planned depreciation. Depreciation periods are:
Intangible assets straight-line depreciation 5 years
Machinery and equipment reducing balance 25%
Investments
Shares and holdings (Ky’s) and other long-term investments are valued in the balance sheet at acquisition cost or at a lower fair value. Fair value has been defined based on the International Private Equity and Venture Capital Valuation Guidelines (IPEVG). Owing to the nature of the investments, the definition of the fair value of an investment calls for the discretion of Finnish Industry Investment Ltd’s Management Group and the use of estimates.
A reduction in value has been made on fund investments if the reduction was of significance (at least 20%) and permanent. Permanence was judged against the life of the fund (life of at least 48 months) and the amount invested (capital calls to fund totalling at least 40% of commitments).
Liquid securities
Liquid securities are valued at acquisition cost or at a lower market value.
Deferred taxes
Deferred tax assets are calculated on the temporary differences between the taxable values and the book values of assets, as well as on confirmed losses.
As at 31 December 2012, the Group and the parent company had deferred tax assets of €13.8m, of which €3.3m was entered in the balance sheet of the Group and of the parent company. The total deferred tax asset is estimated to be the probable amount of the tax asset.

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