ANNUAL REPORT 2019
Right-of-use assets, which are included under other intangible assets, are measured at cost less any accumulated depreciation and, if necessary, any accumulated impairment. The cost of a right-of-use asset comprises the present value of the outstanding lease payments plus any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs and an estimate of costs to be incurred in dismantling or removing the underlying asset. Lease liabilities, which are included under other liabilities, are measured at the present value of the remaining lease payments, taking into account the incremental borrowing rate. According to IFRS 16, the depreciation of right-of-use assets is recognized within functional costs. The interest due on the lease liability is a component of interest expense. With the introduction of lessee accounting, repayments of lease liabilities and the payments attributable to the interest portion of lease liabilities are allocated to the cash flows from financing activities. In addition, the following principles and practical expedients are considered: – STRAX exercises the exemption for lease agreements with a maximum term of 12 months from the date of provision and low-value assets. Low-value assets are generally defined as leased assets worth a maximum of EUR 5,000. – As a general rule, STRAX separates non-lease components, such as services, from lease payments. 88
– A right-of-use asset is generally recognized at the same amount as the lease liability. Differences may arise from the lease payments made prior to the provision of the leased asset, less any lease incentives received. – A number of leases, particularly for real estate, include extension and termination options. Extension and termination options are taken into account on recognition of the lease liability only if STRAX is reasonably certain that these options will be exercised in the future. When contract terms are being determined, consideration is given to all facts and circumstances that offer an economic incentive for exercising extension options or not exercising termination options. Changes in lease terms arising from the exercise of an extension option or non-exercise – If an existing lease is modified, the lease liability and right-of-use asset must be remea-
STRAX
sured, provided the modification changes the payment profile (pursuant to the interest and principal plan) or the scope (either quantitatively or time-related) of use of the asset. Employment benefits Defined contribution plans The Group only has defined contribution plans. Obligations concerning defined contribution plans are recognized as expenses during the period when the employee provides the service. Provisions Provisions are recognized when the Group has an existing legal or informal obligation as a consequence of an occurred event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and where a reasonable estimation of the amount can be made. When the effect of the timing of the payment is significant, provisions are calculated through discounting future expected cash flows at an interest rate before tax which reflects current market assessments of the time value of money and, if applicable, the risks associated with the provision. Taxes Income taxes consist of current taxes and deferred taxes. Income taxes are recognized in profit or loss, in other comprehensive income or directly in equity. Current taxes are taxes payable or refundable related to the current year, through the application of the tax rates which are decided, or practically decided, at the balance sheet date. This includes adjustments of current taxes pertaining to previous periods. Deferred tax is based on temporary differences between recognized and taxable values of assets and liabilities. The measurement of deferred taxes is based on how the carrying amounts for assets or liabilities are expected to be realized or settled. Deferred taxes are calculated through the application of the tax rates which are decided, or practically decided, at the balance sheet date. Deferred taxes related to deductible temporary differences and tax loss carry-forwards are recognized only to the extent that it is probable that these can be utilized. The value of deferred tax assets is reduced when it is no longer deemed probable that they can be utilized. Tax legislation contains certain allocation clauses governing changes in the ownership structures in companies with tax loss carry-forwards. The allocation clauses mean that current tax loss carry-forwards can be