Annual Report 2006 ISS Global A/S

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 January – 31 December. Amounts in DKK millions
1. Significant accounting policies (continued)
Joint ventures ISS Global’s interests in jointly controlled entities are regarded as joint ventures and recognised in the consolidated
financial statements by including ISS Global’s proportionate share of the entities’ assets, liabilities, income and expenses on a lineby-line
basis with items of a similar nature.
Transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses on income and expenses
arising from intra-group transactions are eliminated when preparing the consolidated financial statements. Unrealised gains arising
from transactions with associates and jointly controlled entities are eliminated to the extent of ISS Global’s interest in the entity.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Business combinations Acquired entities are included in the consolidated financial statements as from the date when control
commences. Entities that are divested or wound-up are included until the date where control ceases or the entity is wound-up.
Comparative figures are not restated for entities acquired, divested or wound-up.
Acquisitions are treated in accordance with the purchase method, under which identifiable assets, liabilities and contingent liabilities
of acquired entities are recognised in the balance sheet at fair value at the date of acquisition. Identifiable intangible assets are
recognised if separable or if they arise from contractual or other legal rights, provided that the fair value can be measured reliably.
Tax impact related to fair value adjustments is taken into account.
Excess cost of acquisition over the fair value of acquired assets, liabilities and contingent liabilities is capitalised as goodwill.
Goodwill is allocated to cash-generating units and tested for impairment annually. The first impairment test is prepared no later than
at the end of the year of acquisition.
For acquisitions made prior to implementing IFRS as at 1 January 2004, goodwill is included on the basis of its deemed cost, which
represents the net book value as at 31 December 2003, recorded under previously applied accounting policies.
If the initial accounting for a business combination can be determined only provisionally by the end of the period in which the
combination is effected, adjustments made within twelve months of the acquisition date to the provisional fair value of acquired
assets, liabilities and contingent liabilities or cost of the acquisition, are adjusted to the initial goodwill. The adjustment is calculated
as if it was recognised at the acquisition date. Comparative figures are restated. Subsequent to this period, goodwill is only adjusted
for changes in estimates of the cost of the acquisition being contingent on future events. However, subsequent realisation of
deferred tax assets not recognised on acquisition will result in the recognition in the income statement of the tax benefit concurrently
with a write-down of the carrying amount of goodwill to the amount that would have been recognised if the deferred tax asset had
been recognised at the time of the acquisition.
Gains or losses on the divestment or winding-up of subsidiaries or associates are measured as the difference between the sales or
winding-up sum 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 value of goodwill. Accumulated exchange rate adjustments on divested or wound-up
subsidiaries or associates recognised in equity after 1 January 2004, the date of transition to IFRS, are included in the income
statement under Net finance costs at the time of divestment or wind-up.
Foreign currency Items included in the financial statements of each of ISS Global’s entities are measured using the currency of
the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are
presented in Danish kroner, which is the functional and presentation currency of ISS Global A/S.
Transactions in foreign currency are translated into the functional currency 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. Nonmonetary
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.
The income statements of foreign subsidiaries are translated into Danish kroner using the average exchange rates prevailing during
the year, whereas balance sheet items are translated by applying the exchange rates ruling at the balance sheet date.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity having a functional currency different from Danish
kroner are treated as assets and liabilities belonging to the foreign entity and translated into Danish kroner at the exchange rates
ruling at the balance sheet date.
Continues
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ANNUAL REPORT 2006 / Consolidated Financial Statements
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