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INDEX INDEXalso recognised under other externalexpenses.Staff costsStaff costs comprise wages and salaries aswell as social security expenses and pensionsetc. in respect of the employees.Share of profit/loss after tax in associatesThe proportionate share of the associates'net profit/loss and minority interests isrecognised in the consolidated incomestatement after elimination of the proportionateshare of intercompany gains andlosses.Financial income and expensesFinancial income and expenses compriseinterest, capital gains and losses as well aswrite-downs of securities, payables andforeign currency transactions, amortisationof financial assets and liabilities aswell as allowances and compensationunder the tax prepayment scheme etc.Financial income and expenses alsocomprise realised and unrealised gainsand losses concerning derivative financialinstruments which cannot be classified ashedging agreements.Borrowing costs relating to general borrowingor loans which concern the acquisition,establishment or developmentof qualified assets are attributed to thecost of assets commenced after 1 January2009 in accordance with IAS 23.Tax on profit/loss for the yearThe company is covered by the Danishrules on compulsory joint taxation of theDantherm group's Danish companies.Subsidiaries are included in the jointtaxation from the time of their inclusionin the consolidated financial statementsuntil the time of their exclusion from theconsolidation. The company is an administrationcompany for the joint taxation,settling all payments of income tax withthe tax authorities.The current Danish income tax is distributedamong the jointly taxed companiesthrough the payment of joint taxationcontributions calculated in proportion totheir taxable income. Companies usingtaxable losses in other companies pay ajoint taxation contribution to the parentcorresponding to the tax value of theutilised losses, while companies whosetax losses are used by other companiesreceive a joint taxation contribution fromthe parent corresponding to the tax valueof the utilised losses (full allocation).Tax for the year which consists of thecurrent income tax for the year, the jointtaxation contribution for the year andchanges in deferred tax – also as a resultof a change in the tax rate – is recognisedin the income statement with the portionattributable to the net profit/loss for theyear and directly in equity with the portionattributable to amounts recogniseddirectly in equity.AssetsIntangible assetsGoodwillGoodwill is recognised at cost on firstrecognition in the balance sheet as describedunder 'Business combinations'.Goodwill is subsequently measured atcost less accumulated impairment. Goodwillis not amortised.The carrying amount of goodwill is allocatedto the group's cash-generatingunits at the date of acquisition. The determinationof cash-generating units followsthe management structure and internalfinancial management.Development projects, patents andlicencesClearly defined and identifiable developmentprojects where the technical degreeof utilisation, adequate resources and apotential future market or use in the companycan be demonstrated, and wherethe intention is to produce, market or usethe project, are recognised as intangibleassets, provided that the cost can becalculated reliably and there is sufficientcertainty that future earnings or the netselling price can cover the productionand selling costs as well as administrativeexpenses and development costs. Otherdevelopment costs are recognised in theincome statement as incurred.Recognised development costs aremeasured at cost less accumulated amortisationand impairment losses. Costcomprises salaries, amortisation and othercosts which are attributable to the company'sdevelopment activities.Grants relating to development projectsare deducted from the incurred costs.Upon completion of the developmentwork, development projects areamortised according to the straight-linemethod over their estimated useful lives.The amortisation period is three to sixyears. The basis of amortisation is also reducedby any impairment losses. Patentsand licences are measured at cost less accumulatedamortisation and impairmentlosses. Patents and licences are amortisedaccording to the straight-line methodover the shorter of the remaining patentor agreement period and their useful lives– however, the maximum being six years.The basis of amortisation is reduced byany impairment.Property, plant and equipmentLand and buildings, leasehold improvements,plant and machinery as well asother plant, fixtures and fittings, tools andequipment are measured at cost less accumulateddepreciation and impairmentlosses.Cost comprises the acquisition price andcosts directly related to the acquisitionuntil the time when the asset is ready foruse. For assets of own manufacture, costcomprises direct and indirect costs ofmaterials, components, subsuppliers andwages and salaries.The lease of assets, where the groupobtains actual benefits and risks associatedwith the ownership of an asset, isactivated as financially leased assets. Thecost is calculated at the lower value of theassets' fair value and the present valueof the future minimum lease payments.When calculating the present value, theinternal rate of interest of the lease or anapproximation of this value is used as thediscount rate. The corresponding financiallease commitments are recognisedunder liabilities. Lease costs concerningoperating leases are recognised continuouslyin the income statement over thelease period.Subsequent costs relating to, e.g., thereplacement of components of property,plant and equipment are included in thecarrying amount of the asset concernedwhen it is probable that the incurrencewill bring future financial benefits tothe group. The carrying amount of thereplaced components ceases upon recognitionin the balance sheet and is transferredto the income statement. All othercosts of ordinary repair work and maintenanceare recognised in the income statementas incurred.The cost of a total asset is split into separatecomponents which are depreciatedseparately if the useful lives of the individualcomponents differ.Property, plant and equipment are depreciatedaccording to the straight-linemethod over the assets' expected usefullives which are:Building partsLeasehold improvementsPlant and machineryOther plant, fixtures andfittings, tools and equipmentLand is not depreciated.15-30 years5 years3-8 years3-7 yearsThe basis of depreciation is determinedtaking into account the residual value ofthe asset and is reduced by any impairment.The residual value is determinedat the date of acquisition and reassessedon an annual basis. If the residual valueexceeds the carrying amount of the asset,depreciation ceases.In the event that the depreciation periodor the residual value is changed, thedepreciation effect is recognised prospectivelyas a change in the accountingestimate.Equity investments in associatesEquity investments in associates aremeasured in the consolidated financialstatements according to the equitymethod whereby the investments aremeasured in the balance sheet at theproportionate share of the companies'equity value calculated according to thegroup's accounting policies less or plusthe proportionate share of unrealised50 Dantherm Annual Report 2011 Annual Report 2011 Dantherm 51