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Financial reporting for companies listed on the Oslo Stock Exchange
www.pwc.no
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Listed companies have extensive periodic reporting requirements.
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Contents
1 Introduction 4
2 Annual report 6
3 Half-yearly financial report 8
4 Quarterly financial report 10
5 More on “home member state” and third country issuers 11
6 European Union minimum requirements for periodic financial reporting – the Transparency Directive 12
7 Submitting periodic reporting to the Oslo Stock Exchange and the Financial Supervisory Authority of Norway 13
8 Proposal from EU 14
9 Examples of responsibility statements 14
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Being listed on Oslo Børs or Oslo Axess (together the “Oslo Stock Exchange”) comes with requirements to report financial information on a regular basis. A company applying for listing on the Oslo Stock Exchange needs to determine whether Norway – or any other country in the EU or European Economic Area (EEA) – is its “home member state”. Reporting requirements differ among the EU/EEA member states. All companies listed on the Oslo Stock Exchange must have a home state of either Norway or any of the other member states in the EU-/EEA.
In section 5 you will find more information on “home member state”. This publication also addresses briefly the minimum requirements of the EU Transparency Directive which is relevant for companies listed in the EU.
For companies with Norway as their home member state, the following periodic reporting is required to be released to the markets:
• Annual report
• Half-yearly financial report
• Quarterly financial reports (1st, 3rd and 4th quarters)
The following section focuses on the periodic financial reporting requirements for companies with listed shares, and not companies with only listed bonds.
This publication provides an overview of the most important periodic financial reporting requirements for listed companies that have Norway as their home member state.
1 Introduction
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Summary of periodic financial reporting requirements
The company shall ensure that these reports remain publicly available for at least five years.The audit requirements, requirement for responsibility statements and deadlines for the various financial reports are as follows:
The Financial Supervisory Authority in Norway (Finanstilsynet) supervises that the home state issuers file these reports within the relevant deadlines and may sanction late reporting.
Deadline Audit requirement ResponsibilityStatement
Annual report 4 months after year end Yes Yes
Half-yearly report 2 months after quarter end No Yes
Quarterly reports(Q1, Q3 and Q4)
2 months after quarter end No No
An issuer must submit an annual report 4 months after the year end and a quarterly report 2 months after the end of the quarter.
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2 Annual report
According to the Securities Trading Act Section 5-5, the annual report of listed companies is comprised of the following:
• Audited financial statements for the group and parent company
• Board of directors’ report
• Statement from the board of directors and managing director
In addition, the Oslo Stock Exchange requires that the annual report contains a report on corporate governance and social responsibility.
Financial statements
Listed companies with Norway as their home member state are required to prepare financial statements for both the group on a consolidated basis and the parent company on a stand-alone basis.
Companies from outside the EEA that have Norway as their home member state (third country issuers) may, however, apply to Finanstilsynet for an exemption from the obligation to prepare parent company financial statements provided that the consolidated financial statements contain various specific information.
Required accounting standardsThe consolidated accounts are required to be prepared in accordance with IFRS. Third country issuers can also prepare their consolidated accounts in accordance with US Generally Accepted Accounting Standards (GAAP) Japanese GAAP, Chinese GAAP, Canadian GAAP or South Korean GAAP. For third country issuers with financial statements with a period ending prior to December 31, 2014, Indian GAAP is also allowed.
When preparing the parent company accounts, companies can choose between IFRS, so-called ”simplified IFRS”, and Norwegian generally accepted accounting principles (god regnskapskikk-GRS).
Other disclosure requirements in the Norwegian Accounting ActWith respect to the annual report, the notes to the financial statements need to comply with the additional disclosure requirements in Sections 3-1 and 7-1 of the Norwegian Accounting Act. These requirements covering, among others, information on:
• Subsidiaries and associates, including office address and voting rights
• Treasury shares
• Number of employees
• Salary to key employees, individually for CEO, board members
• Fees to auditors
• Loans to key employees, board members and shareholders
These additional disclosure requirements are only applicable to issuers registered in Norway and not third country issuers.
For a detailed checklist of all requirements, please check with your PwC contact.
The board of directors’ report
The board of directors’ report covers both the parent stand- alone and group consolidated financial statements. The requirements for the content of the annual report are stated in the Norwegian Accounting Act Section 3-3a. The directors’ report shall, among other things, include:
• A fair review of the development and results of the enterprise’s operations and position, together with a description of the key risks and uncertainties facing the enterprise. The review shall be a balanced, comprehensive analysis of the developments in and results of the enterprise’s activities and of the enterprise’s position, taking into account the size and complexity of the undertaking.
Financial statements for both the group and the parent are required.
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• A description of the basis for assessing the future development of the enterprise. Enterprises that have specified earnings objectives or other information on expected developments in previous directors’ reports or annual accounts shall state whether the results for the year agree with these expectations and explain any discrepancy.
• Information on financial risks that are of relevance to assessing the enterprise’s assets, liabilities, financial position and results. This information shall include targets and strategies established to manage financial risks, including the strategy for hedging every main type of planned transactions that has been subject to a hedging assessment. A description of the enterprise’s exposure to market risk, credit risk and liquidity risk shall be provided.
• Information regarding the going concern assumption, working environment, gender equality and external environment.
Corporate governanceIn accordance with Section 3-3b of the Norwegian Accounting Act, companies with listed shares are required to set out how they comply with the Norwegian Code of Practice for Corporate Governance (recommendation by the Norwegian Corporate Governance Board (Norsk Utvalg for Eierstyring og Selskaps-styring, NUES) in their annual report or in a document that is referred to in their annual report, or provide an explanation of the reason for any deviation and what alternative solution the company has selected (i.e. to follow the “comply or explain” principle). If the company does not have guidelines, principles, procedures and standards as mentioned, such fact shall be disclosed.
The explanation is required both for Norwegian companies and third country issuers with Norway as their home member state. Foreign companies can comply with either the Norwegian Code of Practice for Corporate Governance (NUES) or the equivalent code of practice that applies in the country where the company is registered.
Social responsibility statementSection 3-3c of the Norwegian Accounting Act requires listed companies to present their approach to and following up of their social responsibility. This requirement is relevant for Norwegian companies and also for third country issuers that have taxable operations in Norway. The report must include a consideration of the following:
• human rights,
• employee rights and social conditions,
• external environment and
• actions taken against corruption
The report is prepared by the board of directors and shall be included in the annual report or another document that is referred to in the annual report.
If the enterprise does not have guidelines, principles, procedures and standards as mentioned, such fact shall be disclosed. The form of the report is similar to the report on Corporate Governance required by the Norwegian Accounting Act Section 3-3b (based on the “comply or explain” principle) above.
Information about shareholder matters In accordance with the Securities Trading Act Section 5-8(a), companies with shares listed on the Oslo Stock Exchange who are subject to the Norwegian Accounting Act must disclose the following shareholders information in their board of directors’ report:
• a description of any provisions of articles of association that restrict the right to trade in the shares of the company,
• a description of who exercises the rights attached to shares in any employee share schemes where authority is not exercised directly by the employees who are covered by the scheme,
• any agreements between shareholders which are known to the company and which restrict the possibilities of trading in or exercising voting rights attached to shares,
• any significant agreements to which the company is a party, the terms of which take effect, alter or terminate as a result of a takeover bid, and a description of those terms. Where disclosure of such agreement would be seriously prejudicial to its business, the company may omit to disclose the agreement. This exception shall not apply where the company is obliged to disclose such information pursuant to other legislation.
Requirements for reporting of payments to governments (country by country reporting)Entities that are engaged in the extractive industry or the logging of primary forests shall prepare and publish an annual report with details of their payments to governments at the country and project level. The main purpose of the statutory provisions is to promote greater transparency to accountability of governments in their management of revenues from the country’s natural resources. For listed companies, the Board shall, in addition to preparing the report, confirm that the report has been prepared in accordance with applicable legal requirements.
The rules on country-by-country reporting apply to companies that meet two of following three requirements;
• Annual sales revenue of 320 million
• Total assets over 160 million
• Average number of employees over 250
For further details refer to the Norwegian Accounting Act §3-3d.
Responsibility statement from the board of directors and managing directorIn accordance with the Securities Trading Act Section 5-5, the annual report shall include a statement on the financial statements and board of directors’ report according to Securities Regulations Section 5-2. The statement shall be given by the board of directors and managing director. Examples of the statement from the board of directors and managing director are presented at the end of this publication.
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In accordance with the Securities Trading Act Section 5-6, listed companies are required to prepare a half-yearly financial report that comprises:
• a condensed set of financial statements for the consolidated group in accordance with IAS 34
• an interim management report and
• a statement from the board of directors and managing director
If the half-yearly financial report has been audited or reviewed by auditors, the audit or review report shall be made public together with the half-yearly financial report. If the half-yearly financial report has not been audited or reviewed by an auditor, the issuer shall make a statement to that effect in its report.It is worth mentioning that for the fourth quarter the company is only required to prepare an ordinary quarterly financial report. The fourth quarter financial report does not need to contain the half-yearly financial report or a statement from the board of directors and managing director.
Interim management report
The requirements are stated in the Securities Trading Act Section 5-6, section 4 as followed:
“The Interim Management Report shall include at least an indication of important events that have occurred during the first six months of the financial year, and their impact on thehalf-yearly financial statements, together with a description of the principle risks and uncertainties for the remaining six months of the financial year. For issuers of shares, the interim management report shall also include major related partiestransactions. ”
In the interim management report, the board of directors must, as when preparing the annual board of directors’ report, make an assessment of what information is material to the reader of the financial information. The report must cover the important events that have occurred during the entire first half of the year, even though events that occurred in the first quarter have already been commented on in the first quarter financial statements.
Important events are events that have or in the future might have a significant impact on the financial statements. Examples of such events may be the acquisition and sale of significant assets or businesses, entering into or lapsing of important contracts, new financing of the business, significant effects of foreign currencies or derivatives, or other non-recurring events or unusual transactions. The description must be sufficient to provide the reader with an understanding of the impact of these events on the financial statements. For businesses that are significantly influenced by seasonal variations, a description of this would contribute to a better understanding of the contents of the financial statements.
As for the board of directors report, the interim management report must contain a description of principal risks and uncertainties. This should be a description of those risks that the business is exposed to and which the directors and management are focused on, rather than general statements about risks in a particular industry. It is logical to look to the requirement for a description of risk factors in the board of directors’ report in the annual report for guidance.
The Securities Regulations Section 5-3 specifies requirements for information about related party transactions. All related party transactions during the six-month period that have had a significant impact on the company’s financial position or results during the period, must be disclosed in the report. Additionally, any changes in related party transactions described in the latest annual report that could have a significant impact on the company’s financial position or results in the period must also be disclosed.
Statement from board of directors and managing director
In accordance with the Securities Trading Act Section 5-6, the half-yearly financial report shall include a statement made by the board of directors and managing director, according to the Securities Regulations Section 5-2. All members of the board of directors as well as the managing director must sign the statement. It is not sufficient that the chairman of the board signs on behalf of the entire board.
3 Half-yearly financial report
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The half-yearly report is required to include a management report and statement from the board of directors and managing director.
The statement must be published as an integral part of the half-yearly financial report and cover the financial information that is presented in the interim financial report. Most listed companies present consolidated figures only. If the company elects to or is required to present accounts for the parent company, the statement would also need to cover this information.
Examples of the statement from the board of directors and managing director are presented at the end of this publication.
The required content of the statement is identical to the corresponding statement to the annual financial statements as far as the statement regarding the financial statements is concerned. However, the statement regarding the board of directors’ report is different from the statement to the interim management report on several points. These differences may be summarized as follows:
Area Statement on interim report Statement on annual reportTopics to be covered Focuses on important events in the accounting
period (six month period) and their impact on the half-yearly financial statements.
Should cover the description and analysis of developments, operations and financial position of the company and the group in the annual board of director's report.
Risk factors Focuses on the main risks and uncertainty factors facing the enterprise in the next accounting periods (the next six month period).
Should cover the description of the main risk factors facing the enterprise – both the next 12 month period and if relevant, beyond that period included in the annual board of directors’ report.
Related party transactions Should cover major transactions with related parties.
No explicit requirement to discuss.
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In accordance with the regulations of the Norwegian Securities Trading Act Section 5-5, publicly listed companies need to prepare a quarterly financial report for each of the four quarters of the year. This means that interim financial statements must also be prepared for the fourth quarter in addition to the annual financial statements.
Companies that are required to prepare consolidated financial statements shall prepare a set of interim financial statements in accordance with IAS 34 Interim Financial Reporting. No parent company financial statements are required.
* Recommended if companies have significant seasonal variations.
Interim financial statements in accordance with IAS 34 consist, at a minimum, of the following:
• a condensed statement of comprehensive income, presented as either:
- a condensed single statement; or
- a condensed separate income statement and a condensed statement of comprehensive income
• a condensed statement of financial position
• a condensed statement of changes in equity
• a condensed statement of cash flows, and
• selected explanatory notes
The following table illustrates the periods required in a quarterly financial report. The example illustrates the statements and accounting periods to be presented for the second quarter of 20X2 (Q2). In the example, YE X1 is the previous year-end. The table applies correspondingly to reporting for the first, third and fourth quarter.
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Q2 X2 YTD X2 Q2 X1 YTD X1 YE X1 Statement of comprehensive income
Yes Yes Yes Yes
Balance sheet Yes Yes
Statement of cash flows Yes
Statement of changes in equity
Yes
Statement of cash flows (last 12 months)
Recommended* Recommended*
Statement of changes in equity (last 12 months)
Recommended* Recommended*
Companies are required to prepare interim financial statements in accordance with IAS 34.
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5 More on “home member state” and third country issuers
As a general rule, Norway is the home member state for (i) Norwegian companies and (ii) companies outside the European Economic Area (EEA) that are listed on the Oslo Stock Exchange (third country issuers). Furthermore, Norway will generally be the host state for EEA-companies (non-Norwegian) applying for listing on Oslo Børs. For companies with Norway as host state, only the reporting requirements in their European home state will be relevant, and Norwegian requirements for periodic financial reporting will not apply. For these companies, the EU Transparency Directive provides minimum requirements for periodic financial reporting. Individual countries can also require additional reporting that these companies need to comply with. Hence, EEA companies with Norway as a host state will need to follow disclosure requirements that are set by their European home state.
In addition to the periodic financial reporting requirements in the Norwegian Securities Trading Act, the Oslo Stock Exchange has its own reporting requirements. Reporting rules for foreign companies listed on the Oslo Stock Exchange are extensive and depend on the country defined as the home state. For further information relating to the reporting requirements for foreign companies listed on the Oslo Stock Exchange, see a separate publication from PwC, ”Financial Reporting for Third Country Issuers Listing on the Oslo Stock Exchange” where this topic is discussed in detail.
Home member state Financial reporting requirements defined
Norway Securities Trading Act Section 5 and related regulations
Another EEA country Periodic financial reporting requirements for that EEA country
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6 European Union minimum requirements for periodic financial reporting – the Transparency Directive
The EU Transparency Directive provides minimum requirements for all EU and EEA countries with respect to periodic financial reporting. The EU Transparency Directive requires an annual report and half-yearly report, which is similar to the Norwegian requirements. Whereas Norwegian law requires full financial statements for the first, third and fourth quarters, the EU Transparency Directive only requires a so-called ”Interim Management Statement” for the first and third quarter and no periodic reporting for the fourth quarter.
A number of EU countries, such as the United Kingdom, have therefore not incorporated requirements for full financial statements for all four quarters into their national legislation.
Interim Management Statement – a short description
According to the Transparency Directive, an issuer of shares is required to make public a statement by its management called an Interim Management Statement for the first and third quarters. The statement shall contain information covering the period between the beginning of the relevant six month period and the date of publication of the statement. Such a statement shall provide:
• an explanation of material events and transactions that have taken place during the relevant period and their impact on the financial position of the issuer and its controlled undertakings, and
• a general description of the financial position and performance of the issuer and its controlled undertakings during the relevant period.
The Interim Management Statement is a minimum requirement as defined in the Transparency Directive. The requirements incorporated in each national legislation could therefore vary. This is the case for Norway, where a full quarterly financial report for the first, third and fourth quarters as described above is required.
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7 Submitting periodic reporting to the Oslo Stock Exchange and the Financial Supervisory Authority of Norway
The Oslo Stock Exchange is designated as the official storage mechanism (OAM), and in accordance with the Securities Trading Act Section 5-12, periodic financial reporting needs to be submitted to the Oslo Stock Exchange. Financial reporting is filed on the website www.newsweb.no, which is also where listed companies report other price sensitive information.
It is not sufficient to file only a stock exchange notice on www.newsweb.no with a link to another web site where the financial reporting is available. The financial reporting itself has to be included, usually as an attachment to the stock exchange notice.
Statutory submission of periodic financial reporting to the Financial Supervisory Authority in Norway (Finanstilsynet) (ref. Securities Trading Act Section 5-12, section 2) is satisfied by filing of the information in the OAM. This applies to the submission of the annual report, the half-yearly financial report and the quarterly financial reports. It is not necessary to submit these reports separately to the Financial Supervisory Authority or to inform them of the reports. Other reporting of financial-related information to the Financial Supervisory Authority that are governed by other laws and regulations are not covered by these regulations and must be sent directly to the Financial Supervisory Authority.
It is not sufficient to file with a link to the company’s website.
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Statements to the half-yearly financial report and the interim management report
Responsibility StatementWe confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 200x has been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true and fair view of the (Company’s and) Group’s assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties transactions.
Place, dateSignatures (Board of Directors and Managing Director)
Statement to the annual report and board of directors’ report
Responsibility StatementWe confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 200x have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors’ Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.
Place, dateSignatures (Board of Directors and Managing Director)
9 Examples of responsibility statements
Below are examples of possible ways to formulate the statement by the board of directors and managing director. We would, however, emphasize that each individual company must formulate the statement in such a manner that it is adequate and appropriate for the company’s actual situation.
The examples shall not be perceived to be a standard template or recommended wording from PwC.
The EU Commission decided to eliminate the requirement to prepare quarterly financial reports for all listed companies. The proposal is to retain the requirement for half-yearly reports. The decision is yet to be incorporated into Norwegian law. This could result in the elimination of the requirements for the quarterly financial report for companies listed on the Oslo Stock Exchange. The Oslo Stock Exchange may, however, decide to retain its own reporting requirements regardless of the EU proposal.
In connection with the proposal to change the rules for quarterly reporting, the European Securities and Markets Authority (ESMA) has been asked to develop detailed rules for content in the board of director’s report and the interim management report.
8 Recent development from EU
The EU has decided to eliminate the requirement for an interim management statement for the first and third quarters.
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Sjur HolseterPhone: +47 952 60 [email protected]
Lori NæssPhone: +47 952 60 [email protected]
Per Fossan-WaagePhone: +47 952 60 [email protected]
Owen LewisPhone: +47 952 60 [email protected]
© 2014 PwC. All rights reserved. In this context, “PwC” refers to PricewaterhouseCoopers AS, Advokatfirmaet PricewaterhouseCoopers AS, PricewaterhouseCoopers Accounting AS, PricewaterhouseCoopers Skatterådgivere AS and PricewaterhouseCoopers Services AS which are member firms of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
