Income statement
Revenue
Revenue comprises freight income from vessels and management income. Revenue is recognised in the income statement for the financial year as earned. The determination of whether revenue and other operating income is considered earned is based on the following criteria:
- a binding sales agreement has been made;
- the sales price has been determined;
- delivery has taken place; and
- payment has been received or may reasonably be expected to be received.
Accordingly, freight income is recognised upon receipt of the services (percentage of completion) in accordance with the charter parties concluded, from the vessel’s departure to the delivery of the cargo (discharge). The departure date is defined as the date of the most recent discharge, and the voyage ends at the date of the next discharge (discharge to discharge). For vessels operating on timecharters, the charter hire is recognised over the term of the agreement. Management income is recognised upon receipt of the services in accordance with the management agreements concluded.
For vessels operating in pools, income is recognised on a timecharter basis, i.e. after set-off of direct voyage costs, including bunker oil consumption, commissions and port charges.
Other operating income
Other operating income comprises items of a secondary nature relative to the Group’s and the parent company’s principal activity. The item mainly relates to the part of the Group’s trading in derivative financial instruments (FFAs) that is not for hedging purposes. The item, furthermore, comprises rents received.
Vessel operating costs
Vessel operating costs comprise the expenses, excluding depreciation and staff costs, incurred to generate the revenue for the year. Vessel operating costs therefore include charter hire for chartered vessels (operating leases), bunker oil consumption, other voyage costs such as commissions and port charges, repair and maintenance costs, insurance costs, provision for docking costs and other operating expenses. Like revenue, vessel operating costs are recognised upon receipt of services in accordance with the charter parties concluded.
Other external costs
Other external costs comprise costs of properties, office expenses, external assistance, etc.
Profits from the sale of vessels, etc.
Profits from the sale of vessels are stated as the difference between the sales price for the vessel less selling costs and the carrying amount of the vessel in question at the time of delivery. Furthermore, any gains and losses upon repayment of related loans are included.
Profits from the sale of other tangible assets are also included.
Income from investments in subsidiaries and joint ventures
In the parent company’s income statement, the subsidiaries’ and the joint ventures’ dividends are recognised in the financial year when they are declared.
In the Group’s income statement, the Group’s shares of the joint ventures’ results after tax are included in the item ”Investments in joint ventures”.
Net financials
Financial income and costs comprise interest, financing costs of finance leases, realised and unrealised exchange rate adjustments, fair value adjustments of forward exchange contracts, market value adjustments of securities and dividends received on shares recognised in securities.
Fair value adjustments of certain hedging instruments
Fair value adjustments of certain hedging instruments comprise changes in the fair values of derivative financial instruments that are used to hedge future bunker purchases and freight income, but do not qualify for hedge accounting. As the hedging instruments are realised, the accumulated fair value adjustments are reclassified to the same income statement item as the hedged transaction.
Tax on the profit for the year
The Company’s current tax consists of tax paid according to the regulations of the Danish Tonnage Tax Act for shipping activities and according to general tax regulations for other activities. Other activities comprise derivatives trading, letting of the Company’s domicile and management income.
Dampskibsselskabet "NORDEN" A/S
