5.18.4 Share-based payment transactions
The share option programme allows Group employees to acquire shares of the Company. The fair value of options is measured at grant date and recognised as an employee expense with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted annually to reflect the estimated number of share options that will be exercised.
5.19 P r o v i s i o n s
A provision is recognised when the Group has a legal or constructive obligation as result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
5.19.1 Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
5.19.2 Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.
5.20 Tr a d e a n d o t h e r p a y a b l e s
Trade and other payables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
5.21 R e v e n u e
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services rendered in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be measured reliably, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
5.21.1 Services rendered
Revenue from services rendered to third parties relate to fixed price contracts and ‘cost plus’ contracts (mainly daily rates or rates per (square) kilometre). This revenue is recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed using the proportion of contract cost incurred for work performed to the reporting date, compared to total contract cost (as this method is most appropriate for the majority of the services provided by the Group), which are mainly based on daily rates for staff and equipment or rates per (square) kilometre for vessels and airplanes.
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5.21.2 Sales of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs of goods can be estimated reliably, and there is no continuing management involvement with the goods.
No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or associated costs. An expected loss on a contract is recognised immediately in profit or loss.
5.21.3 Seismic data
Revenue from the sale of non-exclusive seismic data libraries is recognised in the period when the data has been collected, processing has been completed and data has (substantially) been delivered to the client. Pre-commitments on seismic data library sales are recorded as advance instalments. When data collection has commenced, revenue is recognised based on the stage of completion. Separate (service) components/deliverables, such as annual maintenance fees or training fees, are accounted for over the period in which these services have been delivered to the customer, using a straight line basis over the term of the contract.
5.21.4 Software licences and subscription income
Software licences and subscription income are recognised in the period during which the underlying services have been provided, using a straight line basis over the term of the contract.
5.21.5 Net revenue own service (revenue less third party costs)
Net revenue own service comprise all revenue minus costs incurred with third parties related to the employment of resources (in addition to the resources deployed by the Group) and other third party cost such as charter lease costs and other cost required for the execution of various projects.
5.21.6 Other income
Other income concerns income not related to the key business activities of the Group, such as income from the sale of non-monetary assets and/or liabilities, exceptional and/or non-recurring income.
5.21.7 Government grants
Government grants are initially recognised as deferred income when there is reasonable assurance that they will be received and that the Group will comply with the conditions attached to them. Grants that compensate the Group (partly) for expenses incurred are recognised in the profit or loss on a systematic basis in the same periods in which the expenses are incurred. Grants that (partly) compensate the Group for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset.
5.22 E x p e n s e s
5.22.1 Third party costs
Third party costs are matched with related revenues on contracts and accounted for on a historical cost basis.
5.22.2 Operating lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease.
5.22.3 Net finance costs
Net finance costs comprise interest expense on borrowings calculated using the effective interest rate method, unwinding of the discount on provisions, interest income on funds invested, dividend income and foreign exchange gains and losses.
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