Annual Report 2010 - Falck

64 Falck Annual Report 2010 | Group
Notes to the Group financial statements
Note
1 Accounting policies (continued)
Other non-current employee benefits are similarly recognised
based on an actuarial calculation. All actuarial gains and losses
are recognised immediately in the income statement, however.
Other non-current employee obligations include jubilee
bonuses and non-current severance schemes.
Provisions
Provisions are recognised when, as a consequence of an event
occurring before or on the balance sheet date, the Group has
a legal or constructive obligation and it is probable that an
outflow of resources will be required to settle the obligation.
Provisions for restructuring are recognised when a detailed,
formal plan for the restructuring has been made before or
on the balance sheet date and has been announced to the
parties involved. In connection with acquisitions, provisions
for restructuring costs are only included in the computation of
goodwill if an obligation exists for the entity acquired as of the
date of acquisition.
Provisions are made for onerous contracts when the anticipated
benefits to the Group from a contract are outweighed
by the unavoidable costs under the contract.
When the Group is under an obligation to dismantle an asset
or re-establish the site where the asset has been used, a
provision is made corresponding to the present value of the
expected future costs. The provision is determined based on
current orders and estimated future costs, discounted to their
present value. The discount factor used reflects the general
level of interest rates. The present value of the costs is recognised
in the cost of the item of property, plant and equipment
in question and depreciated with these assets. The increase of
the present value over time is recognised in the income statement
under financial expenses.
Financial liabilities
Debt to credit institutions is recognised at the raising of a loan
as the proceeds received less transaction costs. In subsequent
periods, financial liabilities are measured at amortised cost.
Residual lease commitments from finance leases are recognised
at amortised cost.
Other financial liabilities are measured at amortised cost.
Deferred income
Deferred income primarily represents subscription revenue
relating to several financial periods.
LEASING
For financial reporting purposes, lease liabilities are classified
as either finance or operating lease liabilities.
Leases are classified as finance leases when substantially all
risks and rewards of ownership of the leased asset are transferred.
Other leases are classified as operating leases.
The accounting treatment of assets held under finance lease
and the related liability is described in the sections on property,
plant and equipment and financial liabilities, respectively.
Assets held under operating leases are not recognised in the
balance sheet. Lease liabilities under operating leases are
disclosed as contingent liabilities.
Lease payments concerning operating leases are recognised in
the income statement on a straight-line basis over the term of
the lease.
CASH FLOW STATEmENT
The cash flow statement is presented according to the indirect
method and shows the cash flow from operating activities, the
cash flow from investing activities, the cash flow from financing
activities and cash and securities at the beginning and end
of the year.
The cash flow statement includes cash flows from companies
acquired as from the date of acquisition, and cash flows from
companies divested until the date of divestment.
Cash flow from operating activities
Cash flows from operating activities include revenue less
operating expenses adjusted for non-cash operating items and
changes in working capital.
Cash flows from operating activities are adjusted for cash
flows related to exceptional items and corporation tax.
Cash flow from investing activities
Cash flows from investing activities include cash flows from
the acquisition and divestment of companies, non-controlling
interests and operations and the purchase and sale of
intangible assets, property, plant and equipment and other
non-current assets and the purchase and sale of securities not
included in cash and cash equivalents.
Entering into a finance lease is considered a non-cash transaction.