Annual Report 2014

Financial report
Consolidated financial statements
Any restructuring provision only includes
the direct expenditure arising from the
restructuring which is necessarily incurred
and is not associated with the ongoing
activities of the Group.
Emission rights The initial allocation
of emission rights granted is recognised
at nominal amount (nil value) and is
subsequently carried at cost. Where the
Group has emitted CO2 in excess of the
emission rights granted, it will recognise
a provision for the shortfall based on the
market price at that date. The emission
rights are held for compliance purposes
only and therefore the Group does not
actively trade these in the market.
Other provisions These captions include
provisions for claims and litigation with
customers, suppliers, personnel, tax
authorities and other third parties. It also
includes provisions for onerous contracts,
for guarantees given to secure debt and
commitment of third parties when they
will not fulfil their obligation and for site
restoration costs. A provision for onerous
contracts is recognised when the expected
benefits to be derived by the Group from
a contract are lower than the unavoidable
cost of meeting its obligations under the
contract. A provision for site restoration
costs in respect of contaminated land is
recognised whenever the Group has a legal
obligation to clean the land or where there
is an intention to sell the land.
Provisions that are expected to be settled
within twelve months after the reporting
date are classified as other current
liabilities. The other provisions are
classified as non-current liabilities.
M - Contingencies
A contingent liability is a possible
obligation that arises from past events and
whose existence will be confirmed only by
the occurrence or non-occurrence of one
or more uncertain future events not wholly
within the control of the entity; or a present
obligation that arises from past events but
is not recognised because:
• It is not probable that an outflow of
resources embodying economic benefit
will be required to settle the obligation,
• Or the amount of the obligation cannot
be measured with sufficient reliability.
Contingent liabilities are not recognised in
the statement of financial position. They
are disclosed in the notes to the financial
statements, unless the possibility of an
outflow of resources embodying economic
benefits is remote. Contingent assets are
not recognised in the financial statements
but are disclosed if the inflow of economic
benefits is probable.
N - Post employment benefits and
other long-term employee benefits
Defined benefits plans Some Group
companies provide pension or medical
plans for their employees which qualify
as defined benefits plans. The net
obligation resulting from these plans,
which represents the amount of future
benefits that employees have earned in
return of their service in the current and
prior periods, are determined separately
for each plan by a qualified actuary
using the projected unit credit method.
The calculations are based on actuarial
assumptions relating to mortality rates,
rates of employee turnover, future salary
levels and medical costs increase which
reflect the economic conditions in each
country or entity.
Discount rates are determined by reference
to the market yields at the reporting date
on high quality corporate bonds or to the
interest rates at the reporting date on
government bonds where the currency
and terms of the bonds are consistent
with the currency and estimated terms
of the defined benefit obligation.
Re-measurements, comprising of
actuarial gains and losses (excluding net
interest), are recognized immediately in
the statement of financial position with a
corresponding debit or credit to retained
earnings through OCI in the period in
which they occur. Re-measurements are not
reclassified to profit or loss in subsequent
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