saxo-bank-annual-report-2015

NOTES – SAXO BANK GROUP
Note
1 Accounting policies
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by
the EU, and the requirements in the Danish FSA’s executive order No. 1306 dated 16 December 2008 on the application of IFRS by entities subject
to the Danish Financial Business Act.
On 18 April 2016, the Board of Directors and Board of Management authorise the annual report for the financial year 2015 for Saxo Bank A/S for
issue. The annual report will be submitted for approval by the shareholders of Saxo Bank A/S, at the subsequent annual general meeting on 29
April 2016. The accounting policies adopted in the year remain unchanged from prior year.
Comparative figures
Certain minor changes have been made to the comparative figures for 2014, due to reclassifications.
Basis of preparation
The consolidated financial statements are presented in Danish kroner (DKK), which is the functional currency of Saxo Bank A/S. All amounts have
been rounded to nearest DKK thousand, unless otherwise indicated.
The consolidated financial statements of Saxo Bank A/S for the year ended 31 December 2015 comprise Saxo Bank A/S and its subsidiaries (together
referred to as “the Group”) and the Group’s interests in jointly controlled entities and associates.
The consolidated financial statements have been prepared on the historical cost basis, except for the following assets and liabilities, which are
measured at fair value: trading assets, investment securities, investment properties and trading liabilities. Assets classified as held for sale are
measured at the lower of the carrying amount before the changed classification and fair value less costs to sell. Domicile properties are carried at
a revalued amount, being the fair value at the date of revaluation.
Basis of consolidation
The consolidated financial statements comprise the parent company Saxo Bank A/S and subsidiaries in which Saxo Bank A/S has control. Control
exists when Saxo Bank A/S is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. When determining whether Saxo Bank A/S has control, de facto control and potential voting rights, which
at the reporting date are substantive, are considered. For a right to be substantive, the Saxo Bank A/S must have the practical ability to exercise
that right.
Changes in the Group’s interest in a subsidiary that do not result in loss of control are accounted for as equity transactions.
Upon loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and other components of
equity related to the subsidiary. Any resulting gain or loss is recognised in the income statement. Any interest retained in the former subsidiary is
measured at fair value at the date, that control is lost. Subsequently it is accounted for as an associate, joint venture or investment security depending
on the level of influence retained.
Information on Group subsidiaries is disclosed in note 38.
Entities in which the Group has significant influence are considered associates. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control of those. Significant influence is generally presumed to exist when the
Group owns or control directly or indirectly more than 20% of the voting rights.
Joint arrangement whereby the Group and the parties involved have joint control of the arrangement and have rights to the net assets of the arrangement
are considered joint ventures.
The consolidated financial statements have been prepared as a consolidation of the financial statements of Saxo Bank A/S and subsidiaries prepared
according to the Group’s accounting policy. On consolidation, intra-group income and expenses, shareholdings, intra-group balances, and
realised and unrealised gains and losses on intra-group transactions are eliminated.
The non-controlling interest’s share of the net profit/loss for the year and of the equity of subsidiaries, which are not wholly owned, are included
in the Group’s net profit/loss and equity, respectively, but is disclosed separately.
Business combinations
Acquired businesses are recognised in the consolidated financial statements from the date of acquisition. The date of acquisition is the date when
the Group effectively obtains control of the acquired entity. Businesses which are divested are recognised in the consolidated financial statements
until the date on which control ceases.
For acquisitions where the Group obtains control of the acquired business the acquisition method is applied. The identifiable assets, liabilities and
contingent liabilities of acquired businesses are measured at fair value at the acquisition date. Identifiable intangible assets are recognised if separable
or if they arise from contractual or other legal rights. Deferred tax related to fair value adjustments is recognised.
Any excess of the fair value of the consideration transferred over the fair value of the identifiable assets, liabilities and contingent liabilities acquired
is recognised as goodwill in Intangible assets. When the excess is negative, a bargain purchase gain is recognised in the profit for the year
at the acquisition date. Goodwill and fair value adjustments in connection with the acquisition of a foreign entity with a functional currency other
than the presentation currency used in the Group are treated as assets and liabilities belonging to the foreign entity and translated into the foreign
entity’s functional currency at the exchange rate at the transaction date.
If uncertainties exist at the acquisition date regarding identification or measurement of acquired identifiable assets, liabilities and contingent liabilities
or regarding the consideration transferred, initial recognition will take place on the basis of provisionally determined fair values. If identifiable
48 · SAXO BANK · ANNUAL REPORT 2015