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Hamon Annual Report 2012
amount as set out above results in an asset, the
amount recognized should be limited to the net total
of unrecognized actuarial losses and past service cost,
plus the present value of available refunds and
reductions in future contributions to the plan.
In the income statement, the current service cost, the
past service cost and the amortization of actuarial
gains/losses are posted as cost of sales, sale and
marketing costs or general and administrative costs,
research and development costs, while the interest
costs and the expected return on the plan assets are
charged to the ‘other financial charges.
The present value of the defined benefit obligation is
determined using the Projected Unit Credit Method.
The discount rate is determined annually by reference
to market yields at the balance sheet date on high
quality corporate bonds with a term similar to the
weighted average payment term of the obligation.
Actuarial gains/losses resulting from the effects of the
differences between the previous actuarial assumptions
and the actuals and from the effects of the changes in
actuarial assumptions are calculated separately for
each ‘defined benefit plan’. When the accumulated
actuarial gains/losses exceed 10% of the greater of
the defined benefit obligation or the fair value of the
plan assets (corridor), the portion in excess is recognized
in the income statement through its amortization over
the average remaining working lives of the employees.
Past service costs due to changes in benefits under the
plan are amortized on a straight-line basis over the average
period until the amended benefits become vested.
Early Retirement Plan
Early retirement plans are treated as post-employment
defined benefit plans.
3.4.8 Provisions for Liabilities and Charges
Provisions are recognized if and only if the Group has
a present obligation (legal or constructive) arising from
a past event, which will probably result in an outgoing
payment for which the amount can be reliably estimated.
Provisions for guarantee are recognized upon the sale
of the product, on basis of the best estimate of the
expenditure necessary for the extinction of the Group’s
obligation. Provisions for restructuring are recognized
only after the Group has adopted a detailed formal
plan that has been publicly announced to the parties
involved before the closing date.
Provisions are measured at their present value where
the effect of the time value of money is material.
3.5 Income Statement Elements
3.5.1 Income
Income is recognized when it is probable that the future
economic benefits attributable to a transaction will flow
to the Group and if its amount can be measured reliably.
Revenues are measured at the fair value of the
counterpart received or to be received and represent
amounts to be received following the supply of goods
or the rendering of services in the course of the
ordinary activities of the Group.
■ Sales revenues are recognized once the delivery has
been made and when the transfer of the risks and
benefits has been completed.
■ Construction revenues are recognized in accordance
with the Group’s accounting methods relating to
construction contracts (see below).
■ Interest revenue are computed based on the time
passed, the outstanding liability and the effective
interest rate, which is the rate that exactly discounts
future cash flows through the expected life of the
financial asset to its net carrying amount.
■ Dividends are recognized when the shareholder’s
right to receive the payment is established.
3.5.2 Construction Contracts
When the outcome of a construction contract can be
estimated reliably, the contract’s revenues and costs are
recognized in proportion to the stage of completion of
the contract activity at the closing date. The contract
stage of completion is determined by dividing the actual
costs incurred at closing date by the total expected
costs to complete the contract.
When the outcome of a construction contract cannot be
estimated reliably, the revenue is recognized only to the
extent that contract costs incurred are expected to be
recoverable. The costs of the contracts are recognized in
the income statement during the period in which they
are incurred.
An expected loss on a construction contract is immediately
recognized as an expense as soon as such loss is probable.
Contract revenues include the initial agreed amount of the
contract, the agreed change orders as well as forecasted
incentive payments and forecasted claims only when it is
probable that the incentives/claims are accepted and
when their amounts can be measured reliably.
Contract costs include the direct costs attributable
to the contracts and the costs relating to the general