Dividends are recognised as a liability at the time of adoption by the shareholders in general meeting. Dividends proposed by the management in respect of the year are stated in the notes. Dividend is not paid in respect of treasury shares.

 

The purchase and sale of treasury shares and dividends thereon are taken directly to retained earnings under equity.

 

The value of services rendered by employees as consideration for share-based incentive payments is measured at the fair value of the granted options and employee shares. For options, this fair value is recognised in the income statement over the vesting period. The fair value of employee shares is recognised at the grant date. A corresponding increase is recognised in equity.

 

The fair value of the options is determined using the Black- Scholes valuation model, taking into account the terms of the grant and the actual number of vested options. On recognition, the number of options expected to vest is estimated. The estimate is adjusted over the vesting period to the actual number of vested options. The fair value of the employee shares is the quoted price (all trades at 5 p.m.) at the grant date.

 

Provisions are recognised when, as a consequence of an event that has occurred before or on the balance sheet date, the Group or the parent company has a legal or constructive obligation, and it is likely that economic benefits will flow from the Company to meet the obligation.

 

Provisions for docking costs are recognised for bareboat-chartered vessels where the agreement entails a commitment on the part of the Group or the parent company to bring vessels into dock regularly. Provisions are made on a current basis at an amount equal to a pro rata share of the estimated cost of the next docking of each individual vessel, as the value of the liability increases continuously. The provisions are recognised in the income statement in the item ”Vessel operating costs”.

 

The Company entered the Danish tonnage tax regime with binding effect for a period of ten years as from 2001. Based on NORDEN’s planned use of vessels and recovery of recaptured depreciation, respectively, the tonnage tax regime does not result in a liability, hence it does not result in any deferred tax in the balance sheet. The liability is merely a contingent tax liability. The amount of contingent tax is stated in the note ”Company tax”.

 

Other activities of the Group and the parent company are not subject to deferred tax.

 

Bank debt is recognised at the time the loans are obtained in the amount of the proceeds after deduction of transaction costs. In subsequent periods, such loans are recognised at amortised cost, equivalent to the capitalised value applying the effective rate of interest at the inception of the loan, to the effect that the difference between the proceeds and the nominal value is recognised in the income statement over the term of the loan.

 

The capitalised residual lease liability under finance leases is also considered a financial liability.

 

Other liabilities, comprising trade payables, prepayments received on vessels for resale, payables to joint ventures and other payables are measured at amortised cost, corresponding substantially to nominal value.

 

Prepayments comprise costs incurred relating to subsequent financial years such as charter hire, rent, insurance premiums, subscription fees and interest.

 

Deferred income comprises payments received relating to revenue in subsequent years, such as freight income, charter hire, interest and insurance premiums.

 

Prepayments and deferred income are measured at nominal value.

 

The cash flow statement shows the Group’s and the parent company’s cash flows for the year distributed on operating, investing and financing activities, net changes for the year in cash and cash equivalents as well as the Group’s and the parent company’s cash and cash equivalents at the beginning and end of the year.

 

Positive amounts indicate inflows, whereas negative amounts indicate outflows.

 

Cash flows from operating activities are stated as the profit/loss adjusted for non-cash operating items such as depreciation and impairment, profits from the sale of vessels, provisions, fair value adjustments of certain hedging instruments and exchange rate adjustments of non-current liabilities, changes in working capital, interest received and paid and plus or minus corporation tax paid or received. Working capital includes current assets less current liabilities, excluding the items included in cash and cash equivalents.

 

Cash flows from investing activities comprise cash flows from the purchase and sale of non-current assets.

 

Cash flows from financing activities

Cash flows from financing activities comprise cash flows from the raising and repayment of non-current liabilities as well as payments regarding shareholders, including dividends and the acquisition and sale of treasury shares.