The income statement is classified according to function.
Revenue is recognized in the income statement if delivery and the transfer of risk to the purchaser have taken place by the balance sheet date and the income can be made up reliably. The year’s revenue is measured less commission and discounts granted in connection with the sales.
Cost of sales comprises the cost of products sold. The cost includes the purchase price of raw materials, supplies and goods for resale, direct payroll costs and a proportion of production overheads, including costs for the operation and depreciation of production facilities and the operation, administration and management of factories. In addition, the costs and impairment charges to net realizable value of obsolete and slow-moving goods are recognized.
Research and development costs comprise costs incurred for salaries and wages, depreciation and other overheads as well as costs relating to research partnerships.
Research costs are recognized in the income statement when incurred. Development costs are capitalized if the conditions for capitalizing them are deemed to have been met. Otherwise, such costs are recognized in the income statement when incurred.
Development costs incurred by the Ingredients Sector are used to maintain earnings on an ongoing basis, and the conditions for capitalizing such costs are therefore not deemed to have been met.
In the Allergy Sector, it is deemed that development costs should not normally be capitalized until the development of the product has been completed and all necessary public registrations and marketing authorizations have been received.
Costs reimbursed in accordance with a contractual agreement with a partner are set off against the expenses incurred.
Sales and marketing expenses comprises expenses incurred for sales staff salaries, advertising and exhibition costs, depreciation, etc.
Administrative expenses comprises expenses incurred for administrative staff and management, including office expenses, salaries, depreciation, etc.
Other operating income and expenses comprise income and expenses of a secondary nature relative to
the activities of the Chr. Hansen Group.
Amortization of goodwill comprises the year’s amortization and any impairment losses.
Restructuring costs arising in connection with acquisitions relating to the acquiring company are recognized in the balance sheet as a provision and are expensed in the income statement. Restructuring costs relating to the company acquired are included in the calculation of goodwill and are recognized in the income statement in the form of amortization of goodwill.
Profit from subsidiaries and associates. In the Parent Company’s income statement, a proportionate share is recognized of each subsidiary’s and associate’s profit after elimination of unrealized intercompany gains and losses. The share of each company’s tax is recognized under tax on profit from ordinary activities.
Financial items comprise interest receivable and interest payable, commissions, the interest component of payments on finance leases, amortization income and costs as well as value adjustments of long-term financial assets, derivative financial instruments and items denominated in foreign currency. Financial items are recognized in the income statement in the amounts relating to the financial year.
Tax on the profit for the year comprises current tax on the year’s expected taxable income, the year’s change in deferred tax and any prior-year adjustment to tax.
The provision for deferred tax is calculated and recognized according to the liability method for all temporary differences between the accounting values and tax values of assets and liabilities.
The tax value of tax losses carried forward and negative deferred taxes are stated as assets if it is probable that they will reduce future tax payments.
The tax that would arise on a possible sale of shares in subsidiaries is not provided in the balance sheet unless such shares are expected to be sold within a short period of time.
No deferred tax liability is stated for goodwill, unless it is amortizable for tax purposes.
Deferred tax is calculated on the basis of current tax rules and tax rates in the respective countries.
The Parent Company is taxed jointly with its Danish subsidiaries. The Parent Company provides for and pays the total Danish tax based on the taxable income of these companies. The tax on the jointly taxed income is allocated and distributed among the jointly taxed companies pursuant to the modified parent company procedure. Deferred tax is recognized in the balance sheet of the jointly taxed companies.
Jointly taxed companies are included in the Danish tax prepayment scheme.