2012 Annual Report - Italcementi Group

1.18. Share-based payments
The Group has applied IFRS 2 as from January 1, 2004.
Options for the subscription and purchase of shares granted by Group companies to employees and directors
give rise to recognition of a cost classified under employee expense, with a corresponding increase in equity.
In accordance with IFRS 2, only options granted after November 7, 2002, whose rights had not vested at
December 31, 2003, have been measured and recognized at the transition date. Options for the subscription
and purchase of shares are measured at fair value at the grant date and amortized over the vesting period.
Fair value is determined using the binomial method, and taking account of dividends. Future volatility is
determined on the basis of historic market prices, after adjustment for extraordinary events or factors.
The cost of granted options is reviewed on the basis of the actual number of options that have vested at the
beginning of the exercise period.
1.19. Provisions for risks and charges
The Group recognizes provisions for risks and charges when a present or constructive obligation arises as a
result of a past event, the amount of which can be reliably estimated, and use of resources is probable to settle
the obligation. Provisions reflect the best estimate of the amount required to settle the obligation or transfer it to
third parties at the end of the reporting period. If the present value of the financial resources that will be used is
material, provisions are determined by discounting expected future cash flows at a rate that reflects the current
market assessment of the time value of money and, where appropriate, the risks specific to the liability. When
discounting is performed, movements in provisions due to the effect of time or changes in interest rates are
recognized in financial items.
Changes in estimates are recognized in the income statement for the period.
The Group recognizes a separate provision for environmental restoration obligations on land used for quarry
work, determined in relation to the use of the quarry in question.
Pending publication of a standard/interpretation on accounting treatment of greenhouse gas emission
allowances, after the withdrawal of IFRIC 3 by the International Accounting Standards Board, the Group
recognizes a separate provision when emissions are greater than the allowance.
1.20. Loans and borrowings
Loans and borrowings are initially recognized at the fair value of the consideration paid/received less charges
directly attributable to the financial asset/liability.
After initial recognition, loans and borrowings are measured at amortized cost using the effective interest rate
method.
1.21. Trade payables and other payables
Trade payables and other payables are stated at the fair value of the original consideration received.
1.22. Derivatives
The Group uses derivatives such as foreign currency forward contracts and interest-rate swaps and options to
hedge currency and interest-rate risks. Derivatives are measured and recognized at fair value.
The fair value of foreign currency forward contracts is determined on the basis of the current forward exchange
rates for contracts with similar maturity profiles. The fair value of interest-rate contracts is determined on the
basis of discounted flows using the zero coupon curve.
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