Annual Report 2006 ISS Global A/S

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NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY Note Page Accounting policies 1 Significant accounting policies 107 Income statement 2 Staff costs 110 3 Share-based payments 111 4 Fees to auditors 113 5 Other expenses 113 6 Net finance costs 113 7 Taxes 114 Cash flow statement 8 Net proceeds from financing 114 9 Balance sheet Non-current assets 115 10 Financial assets and liabilities 116 11 Share capital 116 12 Long-term debt 116 13 Other Contingent liabilities 117 14 Derivatives 118 15 Related party transactions 121 16 Subsidiaries and joint ventures 122 _____________________________________________________________________________________________________________ ANNUAL REPORT 2006 / Parent Company Financial Statements 106
NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY 1 January - 31 December. Amounts in DKK millions 1. Significant accounting policies STATEMENT OF COMPLIANCE The financial statements of ISS Global A/S have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU being effective for accounting periods beginning on 1 January 2006 and the statutory order on the adoption of IFRS issued pursuant to the Danish Financial Statements Act. Amendments to IAS 21, "The effects of Changes in Foreign Exchange Rates", and IAS 39, "Financial Instruments: Recognition and Measurement", both being effective for accounting periods beginning on 1 January 2006 have had no impact on the financial statements of ISS Global A/S. The accounting policies set out below have been applied consistently to all periods presented in these financial statements except for the change described below in respect of the changed classification of Interest paid in the cash flow statement. BASIS OF PREPARATION The financial statements have been prepared on the historical cost basis, as modified by the revaluation of available-for-sale financial assets, and financial assets and liabilities (including derivative financial instruments) at fair value through the income statement. CHANGES IN ACCOUNTING POLICIES Compared to prior years, the presentation of interest paid in the cash flow statement has been changed. To better reflect the distinction between operating and financing activities following the acquisition of ISS A/S by FS Funding A/S interest paid is now included in cash flow from financing activities instead of cash flow from operating activities. Comparative figures have been restated accordingly. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. ISS Global A/S believes the following are the areas involving critical accounting estimates and judgements used in the preparation of the financial statements: • the impairment testing of cost of investments in subsidiaries the assessment of ongoing litigation and the valuation of contingent liabilities the valuation of tax assets and bad debt provisions. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revisions affect only that period, or in the period of the revision and future periods if the revision affects both current and future periods. GENERAL Foreign currency Transactions in foreign currency are translated at the exchange rate ruling at the date of transaction. Monetary assets and liabilities in foreign currency are translated at the exchange rate ruling at the balance sheet date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Realised and unrealised exchange gains and losses are included in the income statement under Net finance costs. INCOME STATEMENT Operating expenses Staff costs comprises salaries, security expenses and other employee related expenses to Key Management. Other operating income and expenses, net includes income and expenses related to the operation of service equipment and other non-current assets, administrative expenses, including expenses related to audit and legal assistance etc. Share-based compensation The fair value of equity settled, share-based compensation plans, is recognised as an expense with a corresponding increase in equity. The fair value is fixed at grant date and allocated over the vesting period. The fair value of the options and warrants granted is measured using the Black-Scholes valuation method taking the terms and conditions upon which they were granted into account. Non-market vesting conditions are included in the assumptions about the number of options and warrants that are expected to become exercisable. At each balance sheet date, ISS Global A/S revises this estimate. ISS Global A/S recognises the impact of the revision of the original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period. Adjustments relating to prior years are included in the income statement in the year of adjustment. Continues _____________________________________________________________________________________________________________ ANNUAL REPORT 2006 / Parent Company Financial Statements 107
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ISS Global A/S Bredgade 30 DK - 126
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Key Figures Amounts in DKK millions
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growth. Furthermore, the effect of
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In 2006, ISS Global continued the p
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to costs related to a turnaround pl
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structure, ISS established an Opera
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Strategy ISS Global is a fully owne
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Geography ISS intends to increasing
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Openness and transparency In additi
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tors. The controllers perform follo
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Risk Factors ISS Global is a fully
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tual obligations could harm ISS’s
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If ISS fails to manage growth and i
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ISS may incur substantial liabiliti
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thus reduce or prevent dividend pay
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Independent Auditor’s Report To t
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Organic growth ISS Global uses esti
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2006 primarily related to redundanc
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Tempo as well as a number of smalle
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including non-interest-bearing debt
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CONSOLIDATED CASH FLOW STATEMENT 1
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CONSOLIDATED STATEMENT OF TOTAL REC
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NOTES TO THE CONSOLIDATED FINANCIAL
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Page 55 and 56: NOTES TO THE CONSOLIDATED FINANCIAL
Page 103 and 104: CASH FLOW STATEMENT OF THE PARENT C
Page 105: STATEMENT OF TOTAL RECOGNISED INCOM
Page 109 and 110: NOTES TO THE FINANCIAL STATEMENTS O
Page 123: Definitions EBITDA = Operating prof
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Annual Report 2006 ISS Global A/S

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