The annual financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway.
Subsidiaries/associates
In the parent company financial statements, subsidiaries and associates are recognised at cost less any necessary impairments. Shares are written down to fair value where any impairment is attributable to causes not deemed to be temporary in nature and where such action is deemed necessary in accordance with generally accepted accounting practice. Impairments are reversed when the basis for the impairment no longer exists.
Dividends and other distributions are recognised in income in the same year that they are proposed in the subsidiary. If the dividend exceeds the share of retained earnings after the acquisition, the excess share is deemed to represent a repayment of the invested capital and the distributions are deducted from the value of the investment in the balance sheet.
Sales revenues
Sales of goods are recognised in income at the time of delivery. Services are recognised in income as they are performed. The share of sales revenues that relates to future services is recognised in the balance sheet as unearned income on the sale, and subsequently recognised as income in line with performance.
Classification and valuation of balance sheet items
Current assets and liabilities relate to items that fall due for payment within one year of the time they are acquired or incurred, and items connected to the circulation of goods. Other items are classified as non-current assets/liabilities.
Current assets are valued at the lower of cost and fair value. Current liabilities are recognised in the balance sheet at their nominal amount at the time they are incurred.
Non-current assets are recorded at cost, but written down to fair value when any impairment is not considered to be of a temporary nature. Non-current liabilities are recognised in the balance sheet at their nominal amount at the time they are incurred.
Receivables
Trade and other receivables are recognised at nominal value in the balance sheet less provisions for expected bad debts. Bad-debt provisions are based on an individual assessment of each receivable. A non-specific provision is also recognised to cover expected bad debts on other trade receivables.
Foreign currency
Monetary items denoted in foreign currency are valued at the rate in force at the end of the financial year.
Current investments
Current investments (shares and interests valued as current assets) are valued at the lower of cost and fair value at the balance sheet date. Dividends and other distributions received from the companies in which investments are made are recognised in income as other financial income.
Property, plant and equipment
Property, plant and equipment are recognised in the balance sheet and depreciated over the expected useful lives of the operating assets. Direct maintenance of operating assets is expensed on an ongoing basis under operating expenses, while improvements or upgrades are added to the operating asset's cost and are depreciated at the same rate as the operating asset. If the recoverable amount of the operating asset is lower than its book value, the operating asset is written down to the recoverable amount. The recoverable amount is the higher of the net recoverable value and the value in use. The value in use is the present value of the future cash flows that the asset is expected to generate.
Research and development
Research and development costs are recognised in the balance sheet to the extent that a future financial benefit can be identified as deriving from the development of an identifiable intangible asset. Where this is not the case, costs are expensed on an ongoing basis. Research and development recognised in the balance sheet is amortised on a straight-line basis over the useful lives of the assets.
Pensions
The company has both defined benefit and defined contribution pension schemes. For defined benefit schemes, the liability recognised is the present value of the defined benefit liability at the balance sheet date, minus the fair value of plan assets, together with adjustments for actuarial gains/losses and costs of pension entitlements in previous periods. The defined benefit liability is calculated by independent actuaries and is measured as the present value of estimated future cash outflows. The cost of providing pensions is charged to the income statement so as to spread the regular cost over the number of years of service of employees. Actuarial gains and losses arising from empirical adjustments, changes in actuarial assumptions and amendments to pension schemes are recognised over the average remaining years of service of the employees concerned. For defined contribution schemes, contributions are paid into pension insurance schemes. Once the contributions have been paid, no further payment liabilities exist. Contributions to defined contribution schemes are charged to the income statement in the period to which the contributions relate.
Taxes
The tax expense in the income statement comprises both taxes payable for the period and changes in deferred tax liabilities/assets. The tax rate for 2015 is 27%, but will be reduced to 25% with effect from 2016. Deferred tax is calculated as 25 per cent of the basis of temporary differences that exist at the end of the financial year between the accounting and tax written-down values, and tax loss carried forward. Tax-reducing and tax-increasing temporary differences that reverse or could reverse in the same period are set off. Net deferred tax assets are recognised in the balance sheet to the extent that it is probable that these can be utilised.
To the extent that group contributions are not recognised in the income statement, the tax effect of the group contributions is recognised directly against the investment in the balance sheet.
Statement of cash flow
The cash flow statement has been prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other current liquid investments.
Use of estimates
The preparation of the annual financial statements in accordance with generally accepted accounting practice requires management to make estimates and assumptions that affect the reported amounts in the income statement, the valuation of assets and liabilities and information on contingent assets and liabilities at the balance sheet date.
Probable and quantifiable contingent losses are expensed on an ongoing basis.