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)
Non-current assets
Software and other intangible assets
Buildings
Leasehold improvements
Plant and equipment
Expected useful life
5-10 years
20-40 years
Over the lease term
3-10 years
If the estimated useful lives of the assets or the estimated residual value is changed the impact on the amortisation and depreciation
is recognised prospectively.
Gains and losses arising on the disposal or retirement of non-current assets are measured as the difference between the selling price
less direct sales costs and the net carrying amount, and are recognised in the income statement under Other operating expenses in
the year of sale, except gains and losses arising on disposals of property, which are recognised under Other income and expenses,
net.
Leased assets Assets held under finance leases are at inception of the agreement measured in the balance sheet at the lower of
the fair value and the present value of future lease payments. When calculating the present value, the interest rate implicit in the
lease or an approximated rate is applied as the discount rate. Assets held under finance leases are depreciated in accordance with
the policy for non-current assets acquired by ISS Global.
Financial assets Investments in associates are measured in accordance with the equity method. Associates with a negative net
asset value are stated at zero, and amounts owed to ISS Global by such associates are written down by ISS Global’s share of the
negative net asset value to the extent it is considered uncollectible. Should the negative net asset value exceed the receivable, the
residual amount is recognised under provisions to the extent ISS Global has a legal or constructive obligation to cover the negative
balance.
Costs related to tenders for public offers for PPP (Public Private Partnership)/PFI (Private Finance Initiative) contracts are recognised
in the income statement as incurred. If ISS Global is awarded status as preferred bidder, directly attributable costs and investments
from that date, if any are recognised under Financial assets. For PPP/PFI contracts awarded, the costs are amortised over the term
of the contract. If ISS Global is not awarded the contract, all costs are recognised in the income statement.
Investments in PFI contracts are classified as available-for-sale and are measured at fair value at the balance sheet date, with any
resulting gains or losses being recognised directly in equity. When these investments are de-recognised, the cumulative gain or loss
previously recognised directly in equity is recognised in the income statement. The fair value is the quoted bid price at the balance
sheet date.
Inventories Raw materials and supplies are measured at the lower of cost under the FIFO principle and net realisable value.
Finished goods and Work in progress are measured at the lower of cost plus attributable overheads and net realisable value. The
cost price of raw materials and supplies includes the purchase price plus costs directly related to the purchase. Net realisable value is
the estimated selling price less costs of completion and selling costs.
Receivables are measured at amortised cost less a provision for doubtful debts based on an individual assessment. Provisions and
realised losses during the year are recognised under Other operating expenses.
Contract work in progress is measured at the sales value of the proportion of work completed at the balance sheet date. The sales
value is calculated based on the stage of completion and the total amount expected to be received for each individual contract.
Progress billings related to the completed proportion of work to be performed are deducted from the recognised value, while progress
billings exceeding the completed proportion of work to be performed are recognised as Prepayments from customers under Current
liabilities.
Securities are measured at fair value at the balance sheet date, with any resulting gains or losses recognised directly in the income
statement.
Treasury shares Proceeds related to the acquisition or disposal of treasury shares are taken directly to equity.
Dividends are recognised in the period in which they are declared.
Financial liabilities are initially measured at the value of the proceeds received less related transaction costs. Subsequently,
financial liabilities are measured at amortised cost, equal to the capitalised value when applying a constant effective rate of interest,
and the difference between the proceeds initially received and the nominal value is recognised in the income statement over the loan
period.
Continues
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ANNUAL REPORT 2006 / Consolidated Financial Statements
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