ANNUAL REPORT 2011 - DONG Energy

eporting enterprise operates. Transactions in currencies other
than the functional currency are accounted for as transactions
in foreign currencies.
On initial recognition, transactions in foreign currencies are
translated into the functional currency at the exchange rates
at the transaction date. Exchange differences arising between
the exchange rates at the transaction date and at the date of
payment are recognised in profit for the year as finance income
or costs.
Receivables, payables and other monetary items in foreign
currencies are translated into the functional currency at the exchange
rates at the balance sheet date. The difference between
the exchange rates at the balance sheet date and at the date
at which the receivable or payable arose or was recognised in
the latest annual report is recognised in profit for the year as
finance income or costs.
On recognition in the consolidated financial statements of
subsidiaries and proportionately consolidated enterprises
with a different functional currency than DKK, the items in
the statement of comprehensive income are translated at the
exchange rates at the transaction date, and the balance sheet
items are translated at the exchange rates at the balance sheet
date. An average exchange rate for each month is used as the
exchange rate at the transaction date to the extent that this
does not significantly distort the presentation of the underlying
transactions. Exchange differences arising on translation of the
opening equity of these enterprises at the exchange rates at
the balance sheet date and on translation of the statements of
comprehensive income from the rates at the transaction date
to the exchange rates at the balance sheet date are recognised
directly in equity within a separate translation reserve. Such
foreign exchange adjustments are allocated between the parent
company’s and the non-controlling interests’ equity.
Foreign exchange adjustments of balances that are accounted
for as part of the total net investment in enterprises with a
different functional currency than DKK are recognised in the
consolidated financial statements directly in equity within a
separate translation reserve. Likewise, foreign exchange gains
and losses on the portion of loans and derivative financial instruments
that has been entered into to hedge the net investment
in these enterprises and that provides an effective hedge
against corresponding foreign exchange gains/losses on the
net investment in the enterprise are taken directly to a separate
translation reserve in equity.
On recognition in the consolidated financial statements of
associates with a different functional currency than DKK,
the share of profit for the year is translated using an average
exchange rate, and the share of equity including goodwill is
translated at the exchange rates at the balance sheet date.
Exchange differences arising on translation of the share of
foreign associates’ opening equity at the exchange rates at
the balance sheet date and on translation of the share of profit
for the year from average rates to the exchange rates at the
balance sheet date are recognised directly in equity within a
separate translation reserve.
When a foreign entity is disposed of, in full or in part, and control
is lost, or when balances that are considered part of the net
investment are repaid, the share of the cumulative exchange
adjustments that is recognised directly in equity relating to
that foreign entity is reclassified to profit for the year together
with any gain or loss on disposal. The part of the translation reserve
that relates to non-controlling interests is not transferred
to profit for the year.
On partial disposal of foreign subsidiaries that does not result
in a loss of control, a proportionate share of the translation
reserve is transferred from the parent company shareholders’
share of equity to the non-controlling interests’ share of equity.
Repayment of balances that are considered to form part of the
net investment does not constitute a partial disposal of the
subsidiary.
Other external expenses
Other external expenses comprise expenses for exploration,
maintenance of production equipment, rent, external assistance,
sales and marketing, research and development, and
office expenses, etc.
staff costs
Staff costs comprise wages, salaries, remuneration, pensions,
social security costs and other staff-related costs.
Other operating income and expenses
Other operating income and expenses comprise items secondary
in nature to the Group’s activities, including gains and
losses on ongoing disposal and replacement of intangible assets
and property, plant and equipment, and grants received
for certain production assets, and research and development
projects.
Grants for production assets and development projects are
recognised as the assets to which they relate are depreciated.
Other income and expenses are recognised as earned/incurred.
Gains and losses on disposal of intangible assets and property,
DONG ENERGY ANNUAL REPORT 2011 – COnsOliDatED finanCial statEmEnts
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