English - DFDS

66 NOTEs
DFDS annual report 2009
Assets
Current assets are defined as:
n Assets expected to be realised in, or are held for sale or consumption in,
the normal course of DFDS’ operating cycle, or
n Assets held primarily for trading purposes or which are expected to
be realised within twelve months of the balance sheet date, or
n Cash or cash equivalent assets that are not restricted in use.
All other assets are defined as non-current assets.
Non-current intangible and tangible assets
Generally the following applies unless otherwise specified:
n Non-current intangible and tangible assets are measured at cost less the
accumulated amortisation/depreciation and impairment.
n Cost for non-current intangible and tangible assets include the costs of
external suppliers, materials and components (only tangible assets), direct
wages and salaries.
n Interest paid from the time of payment until the date when the asset is
available for use is included in cost. Cost also comprises gains and losses on
transactions designated as hedges of non-current tangible assets.
n The basis for amortisation/depreciation is determined as the cost less the
expected residual value.
n Non-current intangible and tangible assets are amortised/depreciated on a
straight-line basis to the estimated residual value over the expected useful
life at DFDS.
n Expected useful life at DFDS and residual value are reassessed at least
once a year. In estimating the expected useful life for ships it is taken into
consideration that DFDS is continuously spending substantial funds on
ongoing maintenance.
n The effect of changes to the amortisation/depreciation period or residual
value is recognised prospectively as a change in the accounting estimate.
Goodwill
At initial recognition goodwill is recognised in the balance sheet at cost as
described in the section ‘Business combinations’. Subsequently, goodwill is
measured at cost less accumulated impairments. Goodwill is not amortised.
An impairment test is performed annually in connection with the presentation
of next year’s budget.
The book value of goodwill is allocated to the Group’s cash-generating
units at the time of acquisition. Allocation of goodwill to cash-generating units
is described in Note 11 and 39.
Development projects
Development projects, primarily the development of IT software, are recognised
as non-current intangible assets if the following criteria are met:
n the projects are clearly defined and identifiable;
n the Group intends to use the projects;
n there is sufficient assurance that future earnings can cover
development costs and administrative expenses; and
n the cost can be reliably measured.
Ships
The rebuilding of ships is capitalised if the rebuilding can be attributed to:
n Safety measures.
n Measures to lengthen the useful life of the ship.
n Measures to improve earnings.
n Docking.
Expenses for improvements and maintenance are recognised in the income
statement as incurred, including general maintenance work, to the extent the
work can be designated as ongoing general maintenance (day-to-day service).
Basically, other costs are capitalised.
Docking costs are capitalised and depreciated on a straight-line basis over
the period between two dockings. In most cases, the docking interval is two
years for passenger ships and 2½ years for freighters and ro-pax ships.
Gains or losses on the disposal of ships are determined as the difference
between the selling price less the selling costs and the carrying amount at the
disposal date. Gains or losses on the disposal of ships are recognised as gain/
loss on disposal of ships, buildings and terminals.
Passenger and ro-pax ships
Due to differences in the wear of the components of passenger and ro-pax
ships, the cost of these ships is divided into components with low wear, such
as hulls and engines, and components with high wear, such as parts of the
hotel and catering area.
Freighters
Cost of freighters is not divided into components as there is no difference in
the wear of these ships.
Depreciation, expected useful life and residual value
The average depreciation period for component with low wear is 30 years
for passenger ships and 25 years for ro-pax ships from the year in which the
ships were built. The depreciation period for freighters is 25 years from the
year in which the ships were built.
For passenger and ro-pax ships, components with high wear are depreciated
over 10-15 years. For ships the residual value of components with high
wear is determined as DKK 0.
Other non-current tangible assets
Other non-current tangible assets comprise buildings, terminals and machinery,
tools and equipment and leasehold improvements.
The expected useful lives are as follows:
Buildings
Terminals etc.
Equipment etc.
Leasehold improvements
25-50 years
10-40 years
4-10 years
are max. depreciated over
the term of the lease
The amortisation of capitalised development projects starts after the completion
of the development project and is provided on a straight-line basis
over the expected useful live, normally 3-5 years, but in certain cases up to
10 years.
Other non-current intangible assets
Other non-current intangible assets comprise the value of customer relations
or similar identified as a part of acquisitions. Other non-current intangible
assets are measured at cost less accumulated amortisations/depreciations
and impairment. Depreciation is provided on a straight-line basis over the
expected useful live, normally 3-5 years, but in certain cases up to 10 years.
Gains or losses on the disposal of buildings, terminals, equipment and leasehold
improvements are determined as the difference between the selling
price less the disposal costs and the carrying amount at the date of disposal.
The gains on the disposal of these non-current assets are recognised in the
income statement as ‘Profit on disposal of tangible assets’.
Assets held under financial leases
Assets held under financial leases are recognised in the balance sheet at the
lower of fair value and the present value of the minimum lease payments.
The capitalised minimum lease payments are recognised in the balance sheet
as a liability and the interest element of the lease payments is recognised in