Hexagon Annual Report 2018

NOTES NOTE 1 GENERAL Hexagon Composites ASA is a public limited Company with its registered office in Norway. The company’s headquarter is at Korsegata 4B, 6002 Aalesund, Norway. The Board of directors authorized the annual report for publication on 19 March 2019. The Group's operations are described in note 4. The consolidated annual financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the EU as of 31.12.2018, and Norwegian disclosure requirements listed in the Norwegian Accounting Act as of 31.12.2018. NOTE 2 ACCOUNTING POLICIES 2.1 BASIS OF PREPARATION OF ANNUAL FINANCIAL STATEMENTS The consolidated financial statements have been prepared on a historical cost basis, with the exception of financial derivatives at fair value through profit or loss and financial derivatives used as cash flow hedges that are recognized at fair value. The consolidated financial statements have been prepared using uniform accounting policies for equivalent transactions and events under otherwise identical circumstances. The Group’s presentation currency is NOK. This is also the Parent Company’s functional currency. The statement of financial position figures of entities with a different functional currency are translated at the exchange rate prevailing at the end of the reporting period for balance sheet items, including goodwill, and the exchange rate at the date of the transaction for profit and loss items. The monthly average exchange rates are used as an approximation of the transaction exchange rate. Translation differences are recognized in other comprehensive income (“OCI”). The functional currency is determined in each entity in the Group based on the currency within the entity's primary economic environment. Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated using the closing rate, non-monetary items that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Changes in the exchange rate are recognized continuously in the accounting period. 2.2. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY The Group’s consolidated financial statements comprise Hexagon Composites ASA and it's subsidiaries as of December 31, 2018. An entity has been assessed as being controlled by the Group when the Group is exposed to or have the rights to variable returns from its involvement with the entity, and has the ability to use its power over the entity to affect the amount of the Group’s returns. 2.3 BASIS OF CONSOLIDATION Thus, the Group controls an entity if and only if the Group has all the following: • power over the entity; • exposure, or rights, to variable returns from its involvement with the entity; and • the ability to use its power over the entity to affect the amount of the Group’s returns. There is a presumption that if the Group has the majority of the voting rights in an entity, the entity is considered as a subsidiary. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over the entity. Including ownership interests, voting rights, ownership structure and relative power, as well as options controlled by the Group and shareholder's agreement or other contractual agreements. Reference is made to note 30 which contains a list of the subsidiaries and note 25 which lists joint ventures. 8 78 2018 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS