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INDEX INDEXfrom the rest of the business in terms ofoperations and accounting, and if the unithas either been divested or separated asheld for sale and the sale is expected tobe realised within one year according to aformal plan.The net profit/loss from discontinuingoperations, value adjustments after tax ofrelated assets and liabilities and gains orlosses from divestments are presented asa separate item in the income statementtogether with comparative figures. In thenotes, revenue, costs, value adjustmentsand tax for the discontinuing operationare stated. Assets and related liabilities ofdiscontinuing operations are stated asseparate items in the balance sheet withoutrestatement of comparative figures,while the main items are specified in thenotes.Cash flows from operating, investing andfinancing activities for the discontinuingoperations are stated in a note.Assets held for saleAssets held for sale comprise non-currentassets and disposal groups held for sale.Disposal groups are groups of assetswhich are to be disposed of collectivelyby sale etc. in one single transaction. Liabilitiesin respect of assets held for saleare liabilities which are directly related tosuch assets and which will be transferredas a result of the transaction. Assets areclassified as 'held for sale' when their carryingamounts are primarily recoveredthrough disposal within twelve monthsaccording to a formal plan rather thanthrough continued use.Assets or disposal groups held for saleare measured at the lower of carryingamount at the time of classifying theasset or disposal group as 'held for sale'and the fair value less selling costs. Assetsare not depreciated/amortised as fromthe time at which they are classified as'held for sale'.Impairment losses arising upon initialclassification as 'held for sale' and gains orlosses resulting from a subsequent measurementat the lower of carrying amountand fair value less selling costs are recognisedin the income statement under therelevant items. Gains and losses are statedin the notes.Assets and related liabilities are stated asseparate items in the balance sheet, whilethe main items are specified in the notes.Comparative figures in the balance sheetare not restated.Foreign currency translationA functional currency is determined foreach of the reporting enterprises in thegroup. The functional currency is thecurrency which is used in the primaryfinancial environment in which the individualreporting enterprise operates.Transactions in currencies other than thefunctional currency are foreign currencytransactions.On initial recognition, transactions denominatedin foreign currencies aretranslated to the functional currencyusing the exchange rate applicable atthe transaction date. Exchange rate differencesarising between the exchangerate applicable at the transaction dateand the exchange rate applicable at thedate of payment are recognised in theincome statement under financial incomeor expenses.Receivables, payables and other monetaryitems denominated in foreign currenciesare translated using the exchange rateapplicable at the balance sheet date. Thedifference between the exchange rateapplicable at the balance sheet date andthe exchange rate applicable at the dateat which the receivable or payable aroseor the exchange rate applied in the latestannual report is recognised in the incomestatement under financial income or expenses.On recognition in the consolidated financialstatements of foreign enterprises witha functional currency other than DanthermA/S's presentation currency, theincome statements are translatedusing the exchange rate applicable at thetransaction date, and the balance sheetitems are translated using the exchangerates applicable at the balance sheet date.The average exchange rates for the individualmonths are used as the exchangerate applicable at the transaction date inso far as this does not alter the picturesignificantly. Foreign exchange differencesarising from the translation of the equityof foreign companies at the beginningof the year using the exchange rates applicableat the balance sheet date andthe translation of income statementsfrom the exchange rates applicable at thetransaction date using the exchange ratesapplicable at the balance sheet date arerecognised directly in equity.Foreign currency translation adjustmentof balances with foreign enterprises,which are considered to be part of thetotal net investment in the enterpriseconcerned, are recognised directly inequity in the consolidated financial statements.Similarly, foreign exchange gains andlosses are recognised directly in equity inthe consolidated financial statements forthe parts of loans and derivative financialinstruments which have been raisedfor hedging the net investment in suchenterprises and which effectively hedgeagainst similar foreign exchange gainsand losses on the net investment in theenterprises.In the event of full or partial divestmentof foreign entities or in the event of repaymentof balances which are considered tobe part of the net investment, the shareof the accumulated foreign currencytranslation adjustments which are recogniseddirectly in equity and which may beattributable thereto is recognised in theincome statement along with any gainsor losses resulting from the divestment.Derivative financial instrumentsDerivative financial instruments are recognisedas from the trading day and aremeasured in the balance sheet at fairvalue. The fair value of derivative financialinstruments is included in other receivablesunder current assets (positive fairvalues) and other payables under currentliabilities (negative fair values), respectively,and a set-off of positive and negativevalues is only made when the companyis entitled to and intends to settle severalfinancial instruments net. The fair valueof financial instruments is determined onthe basis of current market data andrecognised valuation methods.Changes in the fair value of derivativefinancial instruments which are classifiedas and meet the conditions for hedgingfuture cash flows and which effectivelyhedge changes in the value of thehedged item are recognised in equityunder a separate reserve for hedgingtransactions. When the hedged transactionis realised, gains and losses resultingfrom such hedging transactions are transferredfrom equity and recognised in thesame item as the hedged item.For derivative financial instruments thatdo not meet the conditions for treatmentas hedging instruments, changes in thefair value are recognised continuously inthe income statement under net financials.Some contracts are subject to termswhich correspond to derivative financialinstruments. Such embedded financialinstruments are recognised separatelyand measured continuously at fair value ifthey differ significantly from the contractin question unless the entire contracthas been recognised and is continuouslymeasured at fair value.Income statementRevenueRevenue from the sale of goods for resaleand finished goods is recognised in theincome statement, provided that the riskhas passed to the buyer before the endof the year and provided that the incomecan be measured reliably and is expectedto be received. Revenue concerningservices, including the sale of service,is recognised according to invoicing atthe time of the service visit. Revenue ismeasured at fair value excluding VAT andtaxes levied on behalf of a third partyless rebates and discounts. Generally, theDantherm group does not accept returngoods, so no provisions are made for returngoods.Other operating incomeOther operating income comprises itemsof a secondary nature in relation to thecompany's primary activities.Other external expensesOther external expenses comprise costsof distribution, sales, advertising, administrationand premises as well as baddebts etc. Development costs which donot fulfil the criteria for capitalisation are48 Dantherm Annual Report 2011 Annual Report 2011 Dantherm 49