Odfjell SE Annual Report 2012

odfjell group
include cash in hand and in bank, deposits held
at call with banks and other short-term highly
liquid investments with maturities of three
months or less from the date of acquisition.
The amount of cash and cash equivalents
in the cash flow statement does not include
available credit facilities.
2.20 Equity
Paid in equity
(i) Share capital
The portion of the paid-in-capital equalling
number of shares at their nominal value.
(ii) Treasury shares
The value of treasury shares’ portion of share
capital.
(iii) Share premium
The excess value of the total paid-in-capital
not reflected in the nominal value of the
shares. Transaction costs of an equity
transaction are accounted for as a deduction
in share premium, net of any related income
tax benefit.
Other equity
(i) Exchange rate differences
Exchange rate differences arise in connection
with currency differences when foreign
entities are consolidated. When a foreign
operation is sold, the accumulated exchange
differences linked to the entity are reversed
and appear in the net result in the same
period as the gain or loss on the sale is
recognised.
(ii) Fair value and other reserves
The fair value and other reserves include
the total net change in the fair value of the
cash flow hedge and financial investments
available for sale. When the hedged cash flow
matures or is no longer expected to occur,
the net change in fair value is included in
net result. When financial investments are
sold or impaired, the accumulated fair value
adjustments in equity are included in the net
result as gains and losses from financial
investment.
(iii) Retained earnings
The net result attributable and available for
distribution to the shareholders.
Dividends are recorded as a deduction to
other equity in the period in which they are
approved by the shareholders.
Dividend payments are limited to the
regulations in the Norwegian Public Limited
Company Act.
2.21 Dismantling liabilities
If there is legal or constructive obligation
to dismantle a tank terminal at the
end of its useful life, liabilities for future
dismantling expenses are measured at net
present values. The dismantling liability is
capitalized in the asset value. The liabilities
are regularly evaluated, and adjusted when
there are material changes in interest rates,
inflation or in other dismantling expenses.
The adjustments are recognised as financial
expenses.
2.22 Interest bearing debt
Interest bearing debt is classified as noncurrent
liabilities and appears initially as
the amount of proceeds received, net of
transaction costs incurred. In subsequent
periods, transaction costs are deferred and
included in net result over the life of the
underlying debt according to the effective
interest method.
Interest bearing debt is generally noncurrent
liabilities, while instalments within
the next 12 months are classified as current
liabilities.
Interest expenses are recognised as an
expense using the effective interest rate
method.
2.23 Provisions
Provisions are recognised when the Group
has a present legal or constructive obligation
as a result of past events, and it is probable
that an outflow of resources will be required
to settle the obligation. Provisions are based
on best estimates. Provisions are reviewed
on each balance sheet date and reflect the
best estimate of the liability. If the effect of
the time value of money is material, normally
more than twelve months, provisions are
discounted using a current pre tax rate that
reflects the risks specific to the liability.
Where discounting is used, the increase in
the provision due to the passage of time is
recognised as a finance expenses.
2.24 Pension cost and liabilities
The Group operates a number of pension
plans in accordance with the local conditions
and practices in the countries in which it
operates. Such pension plans are defined
benefit plans or contribution plans according
to the customary pension plans prevailing in
the country concerned.
Defined benefit pension plans are pension
plans with retirement, disability and
termination income benefits. The retirement
income benefits are generally a function
of years of employment and final salary
with the Company. Generally the schemes
are funded through payments to insurance
companies as determined by periodic actuarial
calculations. The liability in respect of
defined benefit pension plans is the present
value of the defined benefit obligation at the
balance sheet date less the fair value of
plan assets, together with adjustments for
actuarial gains/losses and past service cost.
The net pension liability is calculated based
on certain estimates with regards to interest
rates, future salary adjustments etc. The
estimates are based on historical experience
and current market conditions. The cost of
providing pensions is included in net result
so as to spread the regular cost over the
vesting period of the employees. The effect
of changes in estimates exceeding 10% of
the highest of pension liabilities and plan
assets is accounted for. Such changes are
amortised over the remaining vesting period.
For defined contribution plans, contributions
are paid to pension insurance plans.
Once the contributions have been paid,
there are no further payment obligations.
Contributions to defined contribution plans
are included in net result in the period to
which the contributions relate.
The Group may at any time make alterations
to the terms and conditions of the pension
scheme and undertake that they will inform
the employees of any such changes.
2.25 Earnings per share
Basic earnings per share amounts are
calculated by dividing net profit for the year
attributable to ordinary equity holders of the
parent company by the weighted average
number of ordinary shares outstanding
during the year.
Diluted earnings per share amounts are calculated
by dividing the net profit attributable
to ordinary equity holders of the parent (after
deducting interest on any dilutive instruments)
by the weighted average number
of ordinary shares outstanding during the
year plus the weighted average number of
ordinary shares that would be issued on
the conversion of all the dilutive potential
ordinary shares into ordinary shares.
27
odfjell annual report 2012