|Note 1 Accounting policies|
The annual financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway.
All amounts are in TNOK, unless stated otherwise.
Revenue from sales of goods is recognised at the time of delivery. Revenue from the sales of services is recognised when the services are executed. The share of sales revenue associated with future service is recorded in the balance sheet as deferred sales revenue and is recognised as revenue at the time of execution.
Classification and valuation of balance sheet items
Assets intended for long -term ownership or use are classified as fixed assets. Assets related to the normal operating cycle, are classified as current assets. Receivables are classified as current assets if they are expected to be repaid within 12 months after the transaction date. Similar criteria apply to liabilities.
Current assets are valued at the lower of cost and fair value. Short-term liabilities are recognised in the balance sheet at nominal value.
Fixed assets are carried at historical cost. Fixed assets whose value will deteriorate are depreciated on a straight line basis over the asset’s estimated useful life. Fixed assets are written down to fair value where this is required by accounting rules.
Nominal amounts are discounted if the interest rate element is significant.
Expenditure on intangible assets is recognised to the extent that future economic benefits from the development of identifiable intangible assets and costs can be measured reliably. Otherwise, the costs are expensed as they arise. Capitalised development is amortised over the useful life.
Fixed assets are recognised in the balance sheet and depreciated on a straight line basis over the estimated useful life, providing the asset has an expected useful life of more than 3 years and a cost price which exceeds TNOK 15. Maintenance costs are charged as they arise as operating expenses, while improvements and additions are added to the acquisition cost and depreciated at the same pace as the asset. The distinction between maintenance and improvements is made with regard to the asset’s relative condition at the original purchase date. Leased assets are recognised as fixed assets if the lease contract is considered as a financial lease.
Subsidiaries and joint ventures
Investments in subsidiaries and joint ventures are valued at cost in the company accounts. The investment is valued at the cost of acquiring the share, providing a write-down has not been necessary.
Group contributions to subsidiaries, with tax deducted, are recognised as increase in the purchase cost of the shares.
Dividends and group contributions are recognised in the same year as they are recognised in the subsidiary/ associated company accounts. If dividends/group contributions exceed retained earnings after acquisition, the exceeding amount is regarded as reimbursement of invested capital and the distribution will reduce the acquisition cost in the balance sheet. Group contributions received are recognised as other financial income.
Impairment of fixed assets
Impairment tests are performed if it is indicated that the carrying amount of a non-current asset exceeds the estimated fair value. The test is performed on the lowest level of fixed assets at which independent cash flows can be indentified. If the carrying amount is higher than both the fair value less selling costs and the recoverable amount (net present value of future use/ownership), the asset is written down to the highest of fair value less selling costs and the recoverable amount.
Previous impairment charges are reversed at a later period if the conditions causing the write-down are no longer present (with the exception of impairment of goodwill).
Trade and other receivables
Trade and other receivables are recognised in the balance sheet at nominal value after deduction of provision for bad debts. The provision for bad debts is estimated on the basis of an individual assessment of each major receivable. An additional general provision is made for the remainder of the receivables based on estimated expected losses.
Short-term investments (shares and investments which are considered current assets) are carried at the lower of average purchase cost and net realisable value on the balance sheet date. Dividends and other distributions received are recognised as other financial income.
The company’s pension schemes meet the requirements of the mandatory Occupatonal Pension Act. The premium is paid through operations and is charged as it arises. Social security costs are charged on the basis of the pension premium paid.
Group bank accounts system – deposit and loan
Grieg Seafod ASA operates as an internal bank for the subsidiaries. Grieg Seafood ASA borrows funds under the agreement from the financial institutions and lends these funds onwards to the group companies. The company has set up a group account system (multi-accounts) in which Grieg Seafood ASA is the legal account holder and where deposits and loans are recognised as intercompany transactions. All group companies are jointly and severally responsible to the financial institutions for the whole amount of the commitment under the scheme.
All foreign currency transaction are translated into NOK at the date of the transaction. All monetary items in foreign currency are translated at the exchange rate on the balance sheet date. Derivatives are stated at fair value and value changes are recognised in the income statement.
The company has a share-based remuneration scheme with settlement in cash. The company’s estimated liability is posted under current or non-current liabilities based on estimated settlement date. The cost for the year is charged in the income statement.
Forward currency contracts
Realised gains are recorded in the income statement as financial income. The fair value of the contracts is stated on the basis of the exchange rate at balance sheet date for 2014.
Interest rate swaps
Interest rate swap contracts are stated at the lowest value principle.
The tax expense in the income statement consists of both taxes payable for the period and changes in deferred tax. Deferred tax is calculated as relevant rate of the temporary differences between the value of assets and liabilities for tax purposes and any allowable loss to be carried forward at year-end in the financial statements. Temporary differences, both positive and negative, are offset within the same period. Deferred tax assets are recorded in the balance sheet when it is more likely than not that the tax assets will be utilised. Deferred tax assets and deferred tax liabilities are presented net in the balance sheet.
Tax on group contributions given, booked as an increase in the purchase price of shares in other companies, and tax on group contribution received booked directly against equity, have been booked directly against tax items in the balance sheet (offset against tax payable if the group contribution has affected tax payable, and offset against deferred taxes if the group contribution has affected deferred taxes).
Cash flow statement
The cash flow statement has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term highly liquid investments which entail no appreciable exchange rate risk and with due date 3 months or less from the purchase date.