Hexagon Annual Report 2019

PENSION EXPENSES Pensions are accounted for in accordance with NRS 6A, applying IAS 19 under Norwegian Legislation. As of 1 January 2018, the company terminated its defined benefit pension plan and the members joined the defined contribution pension plan with effect of the same date. Pension costs and benefit obligation in the defied benefit plan were calculated using the straight-line method, based on the expected final salary. The calculations were based on a number of assumptions, including discount rate, future changes in salary, pensions and national insurance contributions, the expected return on plan assets and actuarial assumptions on mortality and early retirement. Changes in the benefit obligation and plan assets due to the effects of changes and deviations in actuarial assumptions (actuarial gains and losses) were recognized in equity (net after tax). Pension premiums relating to defined contribution plans are recognized as an expense as they are incurred. Tax expense in the income statement includes income tax payable for the period and changes in deferred tax. Deferred tax is calculated at 22% based on the temporary differences between accounting and fiscal values and loss carryforwards at the end of the financial year. TAX Tax-increasing and tax-reducing temporary differences which reverse or may reverse in the same period are offset. Net deferred tax asset is recognized to the extent that it is probable that it can be utilized. Loans are recognized at the initial amount received less directly related transaction costs. In subsequent periods, interest- bearing loans are measured at amortized cost using the effective interest method. Profit and loss are entered in the income statement when liabilities are deducted from the balance and via amortization. Borrowing costs are expensed as they arise. INTEREST-BEARING LOANS AND BORROWING COSTS The cash flow statement has been prepared using the indirect method. Cash & cash equivalents include cash and bank deposits. CASH FLOW STATEMENT Preparation of the annual financial statements in accordance with good accounting practice requires the use of estimates and assumptions by management which influence the income statement and the valuation of assets and liabilities, and disclosures on uncertain assets and obligations at the balance sheet date. USE OF ESTIMATES Contingent losses which are probable and quantifiable, are expensed as incurred. 70 158 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS