Annual Report 2010 - CDON Group

CDON Group AB
Annual Årsredovisning report 2010 2010
2.18 Employee benefits
2.18.1 Short-term employee benefits
Short-term employee benefits are calculated without discounting and are recognised as a cost when the related services are
rendered.
A provision is reported for the expected cost of bonus payments when the Group has an applicable legal or informal obligation to
make such payments due to services being rendered by employees, and the commitment can be reliably calculated.
2.18.2 Defined contribution pension plans
Defined contribution pension plans are presented as plans for which the Company’s obligation is limited to the charges the
Company undertook to pay. In such cases the size of the employee’s pension depends on (1) the contributions that the Company
pays to the plan or to an insurance company and (2) the contributions’ return on capital. The employee thus bears the actuarial risk
(that the remuneration will be lower than expected) and the investment risk (that the invested assets will not suffice to pay out the
expected remuneration). The Company’s obligations for contributions to defined contribution plans are recognised as an expense in
profit/loss for the year at the rate earned by the employee performing services for the Company over a period.
2.18.3 Benefits compensation
An expense for remuneration paid on termination of employment is only recognised if the Company is demonstrably committed –
without realistic option of withdrawal – to a detailed formal plan to terminate an employment contract before the normal end date.
If benefits are offered to encourage voluntary redundancy, an expense is recognised if it is probable that the offer will be accepted
and that the number of employees who will accept the offer can be reliably estimated.
2.18.4 Share-based compensation
The Group previously had a program for share-based compensation, but it was closed in connection with the Group’s initial public
offering. The effect of the closure of the program was that the earlier provisions for social security costs related to the program
were reversed (see Note 17).
2.19 Provisions
A provision differs from other liabilities because of prevailing uncertainty about payment date or the amount required to settle the
provision. A provision is recognised on the statement of financial position when there is an existing legal or informal obligation due
to a past event, and it is probable that an outflow of economic resources will be required to settle the obligation, and the amount
can be reliably estimated.
The amount allocated to a provision is the best estimate of what is required to settle the existing obligation on the reporting date.
When the payment date has a material impact, provisions are calculated by discounting the expected future cash flow at an interest
rate before tax that reflects (1) current market estimates of the time value of money and (2) where applicable, the risks associated
with the liability.
2.20 Contingent liabilities
A contingent liability is recognised when there is a possible obligation from past events, and the occurrence of the obligation is only
confirmed by one or more uncertain future events, or when there is an obligation that is not recognised as a liability or provision
since it is not probable that an outflow of resources will be required.
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