saxo-bank-annual-report-2015

NOTES – SAXO BANK GROUP
Note
1 Accounting policies · continued
assets, liabilities and contingent liabilities are subsequently determined to have a different fair value at the acquisition date from that first assumed,
goodwill is adjusted up to 12 months after the acquisition date. The effect of the adjustments is recognised in the opening balance of
equity and the comparative figures are restated accordingly.
The consideration transferred comprises the fair value of the assets transferred and liabilities and contingent liabilities incurred. If parts of the
consideration are conditional upon future events (contingent consideration), these parts are recognised at fair value at the acquisition date.
Transaction costs that the Group incurs in connection with the business combination are recognised in the income statement.
Changes in estimates of contingent consideration relating to business combinations are generally recognised in the income statement in Other
income or Other expenses. However, if new information becomes available within 12 months from the acquisition date and provides evidence of
conditions relating to the contingent consideration or circumstances that existed at the acquisition date, the acquisition accounting is adjusted
with effect on goodwill.
In a business combination achieved in stages (step acquisition), the shareholding held immediately before the step acquisition is remeasured at fair
value at the acquisition date and recognised as the cost of the shareholding in the entity. Gain or losses from the remeasurement is recognised in
Other income or Other expenses.
At initial recognition a non-controlling interest is measured at fair value or at its proportionate interest in the fair value of the net assets acquired.
The measurement principle is elected on a transaction-by-transaction basis and is disclosed in the notes together with the description of the acquired
business.
On acquisition of non-controlling interests acquired net assets are not remeasured at fair value. On acquisition of non-controlling interests, the difference
between the consideration transferred and the non-controlling interests’ share of total carrying amount including goodwill is transferred
from the non-controlling interests’ share of equity to equity attributable to the shareholders of Saxo Bank A/S. On disposal of shareholdings to
non-controlling interests, the difference between the consideration received and the share of total carrying amount, including goodwill, acquired
by the non-controlling interests is transferred from equity attributable to the shareholders of Saxo Bank A/S to the non-controlling interests’ share
of equity.
Gains or losses on the divestment or winding-up of subsidiaries, associates or joint ventures are measured as the difference between the consideration
received adjusted for directly related divestment or winding-up costs and the carrying amount of the net assets at the time of disposal or
winding-up including any carrying amount of goodwill.
Offsetting
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently
has a legally enforceable right to offset the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle
the liability simultaneously.
Foreign currency translation
The functional currency of each of the Group’s entities is the currency of the country in which the entity is domiciled, as most income and expenses
are settled in local currency. Transactions denominated in currencies other than the functional currency are considered transactions in foreign
currency.
Transactions in foreign currency are translated at the exchange rate of the entity’s functional currency at the transaction date. Monetary assets and
liabilities in foreign currency are translated at the exchange rates at the reporting date. Realised and unrealised gains and losses are recognised in
the income statement as foreign exchange rate adjustments.
On recognition in the consolidated financial statements of entities with a functional currency other than the presentation currency of the Group
(DKK), the income statements, statements of other comprehensive income and cash flow statements are translated at the exchange rates at the
transaction date. The statements of financial position are translated at the exchange rates at the reporting date. An average exchange rate for
the month is used as the exchange rate at the transaction date to the extent that this does not significantly deviate from the exchange rate at the
transaction date. Foreign exchange rate adjustments arising on translation of opening balance of equity of foreign entities (including goodwill) at
the exchange rates at the reporting date and on translation of the income statement from the exchange rates at the transaction date to the exchange
rates at the reporting date, are recognised in other comprehensive income and presented in equity under Translation reserve.
On recognition in the consolidated financial statements of associates and joint ventures with a functional currency other than DKK, the share of
profit/loss for the year is translated at average exchange rates and the share of equity (including goodwill), is translated at the exchange rates at
the reporting date. Foreign exchange rate adjustments arising on translation of the share of the opening balance of equity of foreign associates
and joint ventures at the exchange rates at the reporting date, and on translation of the share of profit/ loss for the year from average exchange
rates to the exchange rates at the reporting date, are recognised in other comprehensive income and presented in equity under Translation
reserve.
On complete or partial disposal of a foreign entity, the share of the cumulative amount of the exchange rate adjustments recognised in other
comprehensive income relating to that foreign entity is recognised in the income statement when the gain or loss on disposal is recognised.
Hedge accounting
When a derivative or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment in a foreign entity,
the effective portion of changes in the fair value of the hedging instrument is recognised in other comprehensive income and presented in equity
under Translation reserve. Any ineffective portion of changes in the fair value of the hedging instrument is recognised immediately in the income
statement. The amount recognised in other comprehensive income is reclassified and recognised in the income statement on disposal of the foreign
entity.
SAXO BANK · ANNUAL REPORT 2015 · 49