English version - Hexagon Composites ASA

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COMROD COMMUNICATION <strong>ASA</strong> – LISTING ON THE OSLO STOCK EXCHANGE Plants under construction is classified as property, plant and equipment and is recognised at the incurred costs associated with the asset. Plants under construction is not subject to depreciation until the asset is taken into use. 7.1.10 Impairment of assets An assessment of impairment losses on assets is made when there is an indication of a fall in value. If an asset’s carrying amount is higher than the asset’s recoverable amount, an impairment loss will be recognised in the income statement. The recoverable amount is the higher of the fair value less costs to sell and the discounted cash flow from continued use. The fair value less costs to sell is the amount that can be obtained from a sale to an independent third party minus the sales costs. The recoverable amount is determined separately for all assets but, if this is impossible, it is determined together with the entity to which the assets belong. With the exception of goodwill, impairment losses recognised in the income statements for previous periods are reversed when there is information that the need for the impairment loss no longer exists or is not as great as it was. The reversal is recognised as revenue or an increase in other reserves. However, no reversal takes place if the reversal leads to the carrying amount exceeding what the carrying amount would have been if normal depreciation periods had been used. 7.1.11 Leasing Finance leases A lease is classified as a finance lease if it transfers to the group substantially all the risks and rewards incidental to ownership of a leased asset. The group presents finance leases in the financial statements as assets and liabilities, at amounts equal the cost price of the asset or, if lower present value of the cash flow to the lease. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, when it can be determined; if not, the company’s marginal borrowing rate in the market is used. Direct costs in connection with leasing activities are included in the asset’s cost price. Monthly lease payments are separated into an interest element and a repayment element Interest cost is allocated to periods during the lease term, so as to produce a constant periodic rate of interest for each period. Assets which are part of a finance lease are depreciated. The depreciation period is consistent with that for depreciable assets which are owned by the group. If there is no reasonable certainty that the group will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term or the depreciation period for depreciable assets owned by the group. If a sale and leaseback transaction results in a finance lease, any gain will be postponed and recognised as revenue over the period of the lease. Operating leases A lease is classified as an operating lease if it does not transfer to the group substantially all the risks and rewards incidental to ownership. Lease payments are classified as an operating expense and recognised as an expense over the lease term. If a sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, any gain or loss is recognised immediately. If the sale price is below fair value, any gain or loss is recognised immediately except that, if the loss is compensated by future lease payments at below market price, it is amortised over the lease term. If the sale price is above fair value, the excess over fair value is amortised over the period for which the asset is expected to be used. 59
COMROD COMMUNICATION <strong>ASA</strong> – LISTING ON THE OSLO STOCK EXCHANGE 7.1.12 Financial instruments IAS 39, Financial Instruments: Recognition and Measurement, states that financial instruments are classified into the following categories: at fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale and other liabilities. Financial instruments held to maturity are included in financial assets, unless the maturity date is within 12 months of the balance sheet date. Financial instruments held for trading are classified as current assets. Available-for-sale financial instruments are also reported as current assets if the management has decided to dispose of the instrument within 12 months of the balance sheet date. All purchases and sales of financial instruments are recognised on the transaction date. Transaction costs are included in the initial measurement. Financial instruments classified as available for sale and held for trading are recognised at fair value at the balance sheet date, without any deduction for costs associated with the sale. A gain or loss arising from a change in the fair value of financial investments classified as available for sale is recognised directly in equity until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in equity is reversed and recognised in profit or loss. Any changes in the fair value of financial instruments classified as held for trading are recognised in the income statement under net financial income/expense. Held-to-maturity investments are recognised at amortised cost. 7.1.13 Interest bearing loans and borrowings All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process. 7.1.14 Intangible assets Intangible assets are recognised if it is probable that the expected future benefits attributable to the asset will flow to the company, and its cost can be measured reliably. Intangible assets are recognised at cost. Intangible assets with an indefinite useful life are not amortised, but an impairment loss is recognised if the recoverable amount is less than the carrying amount. The intangible asset is tested for impairment by comparing its recoverable amount with its carrying amount (a) annually, and (b) whenever there is an indication that the intangible asset may be impaired. Intangible assets with a finite useful life are amortised and tested for impairment. The intangible asset is amortised over its estimated useful life using the straight-line method. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. 7.1.15 Patents and licences Amounts paid for patents and licences are recognised in the balance sheet and amortised on a straightline basis over their useful life. 7.1.16 Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a 60
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