Accounting policies

The annual report is presented in accordance with the Consolidated Act on the Danish National Research Foundation, the Danish Executive Order on the Administration of the Funds of the Danish National Research Foundation, the Royal Decree on the Charter of the Danish National Research Foundation and the provisions of the Danish Financial Statements Act governing reporting class C enterprises (large) with the adjustments resulting from the special nature of the foundation.

The provisions of the Danish Financial Statements Act governing reporting class C enterprises (large) prescribe preparation of a cash flow statement. Due to the nature of the foundation’s activities, the cash flows cannot reasonably be broken down by cash flows from operating, investing and financing activities, for which reason the cash flow statement has been omitted, referring to Section 11(3) of the Danish Financial Statements Act. In addition, the foundation has decided to derogate from the format requirements laid down by the Danish Financial Statements Act for the income statement in order to illustrate the special nature of the foundation.

The accounting policies applied are consistent with those applied last year.

INCOME STATEMENT
lnterest income
lnterest income from bonds and bank deposits are accrued so it relates to the financial year under audit.

Dividend
Dividend received on shares is included in the income statement at the time of distribution.

Realized capital gains and losses on and market value adjustments of securities
Realized capital gains and losses
on and market value adjustments of securities (bonds and equities) are included in the income statement.

Other income
Other income comprises general donations from private donors. The funds are recognized when transferred to the foundation.

External expenses for the scientific activities of the foundation
Such expenses comprise expenses for the foundation’s scientific activities, including expenses for the consideration of applications and evaluation of grants.

lncome tax
The foundation is not liable to tax.

BALANCE SHEET
Fixed assets
Leasehold improvements are recognized in the balance sheet at cost less accumulated depreciation. Fixed assets are depreciated straight-line over their estimated useful lives of five years.

Office equipment and furniture is recognized at cost less accumulated depreciation. Office equipment and furniture is depreciated straight-line over their estimated useful lives, meaning three years for IT hardware and software and five years for other office equipment.

Assets costing less than DKK 25,000 per unit are expensed in the year of acquisition.

Securities
Listed securities (bonds and equities) are measured at fair value (quoted price) at the balance sheet date. Bonds redeemed at the time of presentation of the annuaI accounts are recognized at par value. Other investments are measured at the lower of the value at the date of acquisition and fair value.

Net capital
Distributions by the foundation mainly take the form of multiannual total grants awarded over a number of years concurrently with, and conditional on, the actual completion of the research projects. An amount corresponding to the unpaid share of such total grants is recognized as predisposed capital under the net capital. Other net capital is classified as non-predisposed capital. An amount corresponding to the total grants provided during the year is transferred from the non-predisposed capital to the predisposed capital. The grants paid during the year are deducted from the predisposed capital.

Foreign currency translation
Foreign currency transactions are translated into DKK applying the exchange rate at the transaction date. Realized and unrealized gains and losses are recognized in capital income in the income statement.

Bank deposits and securities denominated in foreign currencies are translated into DKK applying the balance sheet date exchange rate. Realized and unrealized foreign exchange gains and losses are recognized in capital income in the income statement.

Derivative financial instruments
The Danish National Research Foundation only applies derivative financial instruments to hedge the currency and interest rate risks involved in the portfolio of securities.

Changes in the fair value of derivative financial instruments classified as and complying with the requirement for hedging the fair value of a recognized asset or a recognized liability are recorded in the income statement together with changes in the value of the hedged asset or the hedged liability. In doing so, symmetrical recognition of gains and losses on the item hedged and the hedging instrument, respectively, is ensured.

Premiums received or paid as well as forward premiums and discounts are recognized in the income statement over the terms of the instruments. The fair value of derivative financial statements classified as and qualifying for hedging of an instrument to hedge a recognized asset or liability is recognized in the balance sheet along with the asset or liability to which hedging relates.