Annual Report 2006 ISS Global A/S

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
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ANNUAL REPORT 2006 / Parent Company Financial Statements
107