Hexagon Annual Report 2019

NOTES – PARENT COMPANY (NOK 1 000) The annual accounts have been prepared in accordance with the provisions of the Norwegian Accounting Act and generally accepted accounting principles in Norway. ACCOUNTING PRINCIPLES The consolidated financial statements have been prepared in accordance with the international IFRS standards. CONSOLIDATED FINANCIAL STATEMENTS Revenue from services is recognized as services are rendered. The portion of sales revenue relating to future rendering of services is capitalized as unearned revenue on the sale and recognized thereafter as the service is rendered. SALES REVENUE Current assets and liabilities include items due for payment within one year of the date of acquisition. Other items are classified as non-current assets/liabilities. CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS Current assets are valued at the lower of cost of acquisition and fair value. Current liabilities are recognized at nominal value on the date of commencement. Non-current assets are measured at the cost of acquisition but are written down to fair value if impairment is identified which is not considered to be of a temporary nature. Non-current liabilities are recognized at nominal value on the date of commencement. Costs associated with non-current liabilities are amortized over the duration of the loan using the effective interest method. Trade and other receivables are recognized in the balance sheet at their nominal value, following deductions for provisions for expected losses. Provisions for losses are made on the basis of the individual claims. RECEIVABLES Foreign currency transactions are recognized at the exchange rate prevailing at the transaction date. Foreign currency monetary items are valued using the exchange rate prevailing at the balance sheet date. Currency gains/losses on receivables/liabilities are classified as financial items. ASSETS AND LIABILITIES IN FOREIGN CURRENCY Property, plant and equipment is recognized and depreciated over the asset’s expected useful life. Direct maintenance of property, plant and equipment is recognized under operating expenses as it is incurred, while overheads or improvement costs are added to the cost price of the asset and depreciated in pace with the asset’s own depreciation. If the recoverable amount of the asset is lower than it’s carrying amount, this is written down to its recoverable amount. The recoverable amount is the higher of net realizable value and value in use. Value in use is the present value of future cash flows the asset will generate. PROPERTY, PLANT AND EQUIPMENT In addition to traditional financial instruments such as trade receivables, trade payables and interest-bearing liabilities, the Company also uses forward exchange contracts and interest rate swaps to limit the Company’s currency and interest rate exposure. The effects of these instruments are recognized as they arise, together with the hedged objects. The interest rate instruments are not measured at the fair value on the balance sheet date because the Company uses hedge accounting. The currency instruments are valued at fair value and converted to the exchange rate specified on the balance sheet date. FINANCIAL INSTRUMENTS In the company accounts, the cost method of accounting is used for all shares. All shares are valued at cost in the company accounts. SHARES Share based payment are accounted for in accordance with NRS 15A, applying IFRS 2 under Norwegian Legislation. Senior executives in the Group have from 2015 to 2018 received options to subscribe for shares in the Parent Company. From 2019 the incentive program involve performance share units (PSUs) instead of options. The fair value of share options and PSUs are measured at the grant date and the cost is recognized, together with a corresponding increase in other paid-in capital, over the period in which the performance and/or service conditions are fulfilled. The fair value is calculated using the Black & Scholes model. The employer’s contribution is accrued over the period in which the service conditions are fulfilled, based on the intrinsic value. SHARE-BASED PAYMENT 69 157 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS