Annual report 2006 - Dexia.com

RAPPORT DE GESTION
CONSOLIDATED
FINANCIAL STATEMENTS
COMPTES SOCIAUX
and, in relation to acquisitions, from the difference between
the fair values of the net assets acquired and their tax base.
The rates enacted or substantively enacted at the balancesheet
date are used to determine deferred income tax.
Deferred tax assets are recognized to the extent that it is
probable that future taxable profit will be available against
which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences
arising from investments in subsidiaries, associates and joint
ventures, except where the timing of the reversal of the temporary
difference can be controlled and it is probable that the
difference will not reverse in the foreseeable future.
Deferred tax related to fair value remeasurement of availablefor-sale
investments and cash flow hedges, which are charged
or credited directly to equity, is also credited or charged directly
to equity and is subsequently recognized in the statement of
income together with the deferred gain or loss.
1.28. EMPLOYEE BENEFITS
Employee benefit obligations are measured at the present
value of the estimated future cash outflows using interest
rates of corporate bonds rated AA, which have terms to
maturity approximating to the terms of the related liability
and taking into consideration also actuarial and demographic
assumptions.
Qualified internal and external actuaries carry out valuations
of these obligations. All valuations, assumptions and results
are reviewed and validated by an external actuary for Dexia
that ensures that all calculations are harmonized and calculated
in conformity with IAS 19.
1.28.1. Pension obligations
Dexia operates a number of defined benefit and defined contribution
plans throughout the world, the assets of which are
generally held in separate insurance companies. The pension
plans are generally funded by payments from employees and
by the relevant Dexia companies.
they relate. The obligation of Dexia is limited to the contributions
that Dexia agrees to pay into the fund on behalf of the
employee.
1.28.2. Other post-retirement obligations
Some Dexia companies provide post-retirement health care
benefits to their retirees. The entitlement to these benefits
is usually based on the employee remaining in service up to
retirement age and the completion of a minimum service
period. The expected costs of these benefits are accrued over
the period of employment, using a methodology similar to
that for defined benefit pension plans.
1.28.3. Other long-term benefits
This mainly includes provisions for jubilee premiums that will
be received by employees when they become entitled to this
right.
1.28.4. Termination benefits
A termination benefit provision is only recorded when Dexia
is committed to terminate the employment before the normal
date of retirement or provide benefits as a result of an offer
made in order to encourage voluntary redundancy. Dexia
must have a detailed formal plan and no realistic possibility
of withdrawal.
1.28.5. Equity compensation benefits
Share options are granted to directors and to some employees.
The cost of the option is recognized within expense based
on services received. The fair value of the option is calculated
based on valuation techniques (Black and Scholes adjusted
for departure of employees) and on market data.
Dexia also offers a discount for the capital increases reserved
for its personnel. This discount is taken into expense taking
into account the fact that those equity securities are blocked
for a certain period of time.
1.28.1.1. Defined benefit plans
For defined benefit plans, pension costs are assessed using
the projected units credit method.
Under this method, the cost of providing pensions is charged
to the statement of income so as to spread the regular cost
over the service lives of employees. Net cumulative unrecognized
actuarial gains and losses exceeding the corridor
(greater than 10% of the present value of the gross defined
benefit obligation or 10% of the fair value of any plan assets)
are recognized in income over the average remaining life of
the plan.
The defined obligation is presented net of plan assets as a
liability unless the assets are held by a Group entity in which
case the assets are recorded gross in the related lines of the
assets.
1.28.1.2. Defined contribution pension plans
Dexia’s contributions to defined contribution pension plans
are charged to the statement of income in the year to which
1.28.6. Employee entitlements
Employee entitlements to annual leave and long service leave
are recognized when they accrue to employees. A provision
is made for the estimated liability for annual leave and longservice
leave as a result of services rendered by employees up
to the balance-sheet date.
1.29. PROVISIONS
According to IAS 37, a provision is a liability of uncertain timing
or amount.
Provisions are recognized based on their discounted value
when:
• Dexia has a present legal or constructive obligation as a
result of past events;
• it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
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Dexia / Annual Report 2006