The financial assets are recognised in the balance sheet at amortised cost, i.e. the net of gross value and loss reserve. Changes in the loss reserve are recognised in the income statement as other external costs. Accounts receivables Accounts receivable are financial instruments consisting of amounts to be paid by customers for services sold in the day-to-day operations. If payment is expected within one year, they are classified as current assets. If not, they are reported as non-current assets. Accounts payable are initially recognised at fair value and thereafter at amortised cost using the effective interest method. Accounts receivable are subject to a loss provision for expected credit losses. Cash and cash equivalents Cash and cash equivalents include, in the balance sheet as well as in the report on cash flows, cash and bank balances. Cash and cash equivalents are subject to the requirements for loss provision for expected credit losses and provision for expected credit losses is made in accordance with the general method. If the amounts are not deemed to be insignificant, a reserve for expected credit losses is also recognised for these financial instruments. Accounts payable and other liabilities Accounts payable are financial instruments and refer to obligations to pay for goods and services acquired acquired from suppliers in the day-to-day operations. Accounts payable and other liabilities are classified as current liabilities if they fall due within one year. If not, they are reported as non- current liabilities. Accounts payable and other liabilities are initially recognised at fair value and thereafter at amortised cost using the effective interest method. Borrowing Borrowing is initially recognised at fair value, net after transaction costs. Borrowing is then reported at accrued acquisition value, and any difference between the amount received (net after transaction costs) and the repayment amount is reported in the statement of comprehensive income distributed over the loan period, using the effective interest method. Fees paid for loan facilities have been reported as prepaid costs and are expensed during the facility's term. Borrowing is classified as current liabilities unless the Group has an unconditional right to defer payment of the debt for at least 12 months after the end of the reporting period. Leases Leasing agreements are reported in the balance sheet. Lease liability is valued at the present value of lease fees that have not been paid at the time of valuation. Discounting is done with the implicit interest rate of the lease, if this can be easily determined. If this interest rate cannot be easily determined, the lessee's marginal loan interest rate is used. The company applies the relief rules regarding short-term agreements (leasing agreements where the leasing period is less than 12 months) and leasing agreements where the underlying asset is of low value in cases where such occur. Such agreements are not reported in the balance sheet. The valuation of the lease liability initially includes payments for the right to use the underlying asset during the lease period that were not paid before the starting date. The payments can relate to fixed fees, variable leasing fees that depend on an index or price, amounts that are expected to be paid by the lessee according to residual value guarantees, redemption price for an option to buy the underlying asset or penalty fees paid upon termination in accordance with a termination option, if the Group is reasonably certain to exercise these options. Lease liabilities are reported in the balance sheet as leasing liabilities divided into a long-term and a short-term part. After the commencement date, the lease liability is valued by increasing the carrying amount to reflect the interest on the lease liability and decreasing the value to reflect paid lease fees. Revaluation of the carrying amount is made to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. Right of use assets (right to use a leased asset) are reported at cost minus depreciation and any write-downs and taking into account adjustments for any revaluation of the lease debt.
The value of the right of use assets consists of the lease debt, all leasing fees paid on or before the starting date, any initial direct expenses and an estimate of costs for dismantling and disposal of the underlying asset and any restoration costs. Depreciation of right of use assets is made from the starting date to the time that occurs earliest, the end of the useful life or the end of the lease period. If there is a purchase option for a contract that is reasonably likely to be used, the asset is depreciated over the useful life (i.e. does not take into account the lease period). The value of the right of use asset and the period of use are tested when there is an indication that an asset may be impaired. The reported value of the right of use is immediately written off to its recoverable value if the asset's carrying value exceeds its estimated recoverable value. Short-term employee compensation such as salaries, social security contributions, holiday pay and bonuses are expensed in the period when the employees perform the services. Liabilities for salaries and remuneration, including non-monetary benefits and paid absences, which are expected to be settled within 12 months after the end of the financial year, are reported as current liabilities at the undiscounted amount expected to be paid when the liabilities are settled. The cost is recognised as the services are performed by the employees. The debt is reported as a liability regarding employee compensation in the consolidated balance sheet. Pension obligations The Group solely has defined contribution pension plans. A defined contribution pension plan is a pension plan according to which the Group pays fixed contributions to a separate legal entity. The Group does not have any legal or informal obligations to pay additional fees if this legal entity does not have sufficient assets to pay all compensation to employees related to employee service during the current or prior periods. Consequently, the Group has no further risk. The Group's obligations regarding contributions to defined contribution plans are recognised as an expense in the income statement for the year at the rate they are earned by the employees performing services for the Group during the period. Compensation upon termination An expense for compensation in connection with layoffs is only reported if the company is demonstrably obliged, without realistic possibility of withdrawing, of a formal detailed plan to terminate an employment before the normal time. When compensation is offered to encourage voluntary resignation, an expense is reported if it is probable that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated. Employee compensation Short-term compensation Share-based compensation Incentive programmes exist whereby participants have the opportunity to acquire warrants at market value, see also note G8. There is no cost to account for these, as market value is paid.
G1 G2 G3 G4 G5 G6 G7 G8 G9
G10 G11 G12 G13 G14 G15 G16 G17 G18 G19 G20 G21 G22 G23 G24 G25 G26 G27 G28 G29
P1 P2 P3 P4 P5 P6 P7 P8 P9
Financial statements
HEMNET GROUP | ANNUAL AND SUSTAINABILITY REPORT 2021· 49
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