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)
Pensions and similar obligations Net obligations in respect of defined benefit pension plans are calculated separately for each
plan by estimating the amount of future benefits that employees have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. Discount rates
are based on the market yield of high quality corporate bonds or government bonds in the country concerned approximating to the
terms of ISS Global’s pension obligations. The calculations are performed by a qualified actuary using the Projected Unit Credit
Method. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is
recognised as an expense in the income statement on a straight-line basis over the average period until the benefits vest. To the
extent that the benefits vest immediately, the expense is recognised immediately in the income statement.
All actuarial gains and losses are recognised directly in equity.
Net pension assets are only recognised to the extent that ISS Global is able to derive future economic benefits in the way of
refunds from the plan or reductions of future contributions.
Other provisions comprises obligations concerning labour related matters, self-insurance, integration costs related to
acquisitions, dismantling costs, and various other operational issues. The provisions are recognised when ISS Global has a legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle
the obligation.
Derivatives are measured at fair value calculated according to generally accepted valuation methods and recognised in Other
receivables or Other liabilities.
For derivatives hedging the fair value of recognised assets and liabilities the value of the hedged asset or hedged liability is also
stated at fair value in respect of the risk being hedged. When a hedging instrument expires or is sold, terminated or exercised but
the hedged asset or hedged liability with a determinable maturity still exist, the adjustment recorded as part of the carrying amount
of the hedged item is amortised to the income statement from that date onwards using the effective interest method.
The effective part of the changes in the fair value of derivatives hedging future transactions is recognised directly in equity, net of
tax. On realisation of the hedged item, value changes recognised under equity are reversed and recognised together with the
hedged item. When a hedging instrument expires or is sold, terminated or exercised but the hedged future transactions are still
expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy
when the transaction occurs.
Derivatives that qualify as net investment hedges of subsidiaries, joint ventures and associates are recognised directly in equity, net
of tax.
For derivatives, which do not comply with the hedge accounting conditions, changes in fair value are recognised as Net finance
costs in the income statement as they occur.
Non-current assets held for sale Assets are classified as held for sale when the carrying amount of the assets will primarily be
recovered through a sale within 12 months according to a formal plan rather than through continuing use. Assets held for sale are
recognised at the lower of the carrying amount and fair value less costs to sell. Assets held for sale are not amortised or
depreciated. Impairment losses on initial classification as held for sale are included in the income statement. The same applies to
gains and losses on subsequent remeasurement. Assets and related liabilities are separated in the balance sheet and the main
elements are specified in the notes to the financial statements.
Discontinued operations comprises a component of ISS Global’s business that represent a separate major line of business or
geographical area of which the operations and cash flows can be clearly distinguished, i.e. as a minimum a cash-generating unit.
Classification as discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for
sale. The profit or loss is separated in the income statement, assets and related liabilities are separated in the balance sheet, and
the cash flows from operating, investing and financing activities are disclosed in the notes to the financial statements.
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ANNUAL REPORT 2006 / Consolidated Financial Statements
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