Annual Report 2010 - Falck

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Notes to the Group financial statements Note 1 Accounting policies (continued) rates ruling at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates ruling at the balance sheet date are recognised directly in other comprehensive income and are classified in equity in a separate currency translation reserve. On the divestment of wholly-owned foreign entities, foreign exchange adjustments accumulated in equity via other comprehensive income and which can be attributed to entities are reclassified from the “Currency translation reserve” to the income statement together with any gain or loss on the divestment. On the divestment of partially owned foreign subsidiaries, the part of the currency translation reserve that relates to non-controlling interests is not recognised in the income statement. On partial divestment of foreign subsidiaries without giving up control, a proportionate share of the currency translation reserve is transferred from the parent company shareholders’ to the non-controlling shareholders’ share of equity. On partial divestment of associates and joint ventures, the proportionate share of the accumulated currency translation reserve is reclassified from equity to the income statement. Any repayment of intercompany balances that are considered part of the net investment is not considered, in itself, a partial divestment of subsidiaries. DERIvATIvE FINANCIAL INSTRUmENTS Derivative financial instruments are recognised from the trade date and measured at fair value. The fair value of derivative financial instruments is recognised as separate assets or liabilities in other receivables or other payables, respectively. The fair value of derivative financial instruments is determined on the basis of market data and generally accepted pricing models. Hedges of net investment Derivative financial instruments entered into in order to effectively hedge investments in foreign subsidiaries are recognised in the balance sheet at the time they are entered into and are measured at fair value at the balance sheet date. Exchange gains and losses are recognised directly in equity as a separate hedging reserve. Group | Falck Annual Report 2010 59 Fair value hedges Derivative financial instruments entered into in order to hedge other assets and liabilities denominated in foreign currency are recognised in the balance sheet at the time they are entered into and are stated at fair value at the balance sheet date. Any market value adjustments of derivative financial instruments entered into to hedge other assets and liabilities are recognised in the income statement in the same line items as the transactions hedged. Cash flow hedges Changes in the part of the fair value of derivative financial instruments designated as and qualifying for hedging of future cash flows, and which effectively hedge changes in the value of the hedged item, are recognised in equity. When the hedged transaction is realised, any gains or losses regarding such hedging transactions are transferred from equity and recognised in the same financial item as the hedged item. When proceeds from future borrowings are hedged, any gains or losses regarding hedging transactions are, however, transferred from equity over the maturity period of the borrowings. Forward premiums or forward discounts on forward exchange transactions are recognised in the income statement during their terms. Other derivative financial instruments For derivative financial instruments which do not meet the criteria for hedge accounting, changes in the fair value are recognised in the income statement under financials. INCOmE STATEmENT Revenue represents the value of services and goods delivered and invoiced subscriptions attributable to the financial period, and is recognised in the income statement if delivery and transfer of risk to the buyer have taken place before year-end, and if the income can be reliably measured and is expected to be received. The value of services rendered is included on the basis of the percentage delivered out of the total service. Revenue from subscriptions is allocated to the income statement on a straight-line basis. Revenue from sales of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.
60 Falck Annual Report 2010 | Group Notes to the Group financial statements Note 1 Accounting policies (continued) Revenue is measured at the fair value of the agreed consideration excluding VAT and other taxes collected on behalf of third parties. All discounts granted are recognised in revenue. Other operating income represents revenue of a secondary nature relative to the Group’s principal activities, such as gains on the sale of assets and rental income. Cost of sales and external assistance represents costs incurred and external assistance used to generate the year’s revenue. Other external costs include costs relating to operating and maintaining equipment and property as well as sales and administrative expenses. Staff costs represent salaries and wages, pension contributions, social security costs and other staff costs. Goodwill impairment represents impairment of goodwill based on an annually performed impairment test of each cashgenerating unit. Exceptional items represent material items of a non-recurring nature that are not directly attributable to the Group’s ordinary activities. Income from investments in associates in the consolidated financial statements represents the proportionate share of the results after tax in the associates, made up according to the Group’s accounting policies and after elimination of the proportionate share of intra-group profits/losses. Dividend from Group companies is recognised in the parent company’s income statement in the financial year in which the dividend is declared. An impairment test is made if more than the period’s comprehensive income in subsidiaries and associates is distributed in the period in which the dividend is declared. Financials represent interest receivable and payable, realised and unrealised capital gains and losses and amortisation related to financial assets and liabilities. Dividends to capital holders who have received put options in connection with business combinations are recognised as a financial expense in the cases where the option price is independent of dividend payments. Financials are recognised at the amounts related to the year. Furthermore, realised and unrealised gains and losses on derivative financial instruments which cannot be classified as hedging arrangements are included. INCOmE TAXES Tax on the profit for the year represents corporation tax payable and changes in deferred tax. Tax for the year that is attributable to amounts recognised in other comprehensive income is recognised in other comprehensive income. Joint taxation The parent company is taxed jointly with its domestic subsidiaries. Corporation tax for the jointly taxed Danish companies is allocated according to the taxable income of these companies. Falck A/S is the management company for the national joint taxation and consequently settles all payments of income taxes with the tax authorities in respect of the jointly taxed companies. Income taxes payable Corporation tax payable includes corporation tax made up on the basis of estimated taxable income for the financial year and prior-year adjustments. Deferred tax Deferred tax is calculated according to the balance sheet liability method and is based on all timing differences between the accounting and tax value of assets and liabilities. Deferred tax is not recognised on goodwill that is not tax deductible, and deferred tax is not recognised on undistributed profits in subsidiaries and timing differences that arose at the time of recognition in the balance sheet other than for acquisitions if such differences will not affect profit or taxable income. When alternative tax rules can be applied to determine the tax base, deferred tax is measured based on the management’s planned use of the asset or settlement of the liability respectively. Deferred tax assets, including the tax base of tax loss carryforwards, are recognised under other non-current assets at the expected value of their utilisation, either as a set-off against tax on future income or as a set-off against deferred tax liabilities within the same legal tax entity and jurisdiction. Deferred tax assets and liabilities are offset within the same legal tax unit or jurisdiction. Deferred tax assets are measured at the value at which they are expected to be realised.
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Annual Report 2010 - Falck

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