Annual Report 2014

Etex Annual Report 2014
Financial report
Consolidated financial statements
periods. Past service costs are recognised
in profit or loss on the earlier of:
• The date of the plan amendment
or curtailment, and
• The date that the Group recognises
restructuring-related costs
Net interest is calculated by applying the
discount rate to the net defined benefit
liability or asset.
The Group recognises the following
changes in the net defined benefit
obligation under:
• Service costs comprising current
service costs, past-service costs,
gains and losses on curtailments and
non-routine settlements in operating
income before non-recurring items
• Net interest expense in interest expenses.
The defined benefit liability is the
aggregate of the present value of the
defined benefits obligation reduced by
past service cost not yet recognised and
the fair value of plan assets out of which
the obligations are to be settled directly.
If such aggregate is negative, a net pension
asset is recorded only to the extent that it
does not exceed the present value of any
economic benefits available in the form
of refunds from the plan or reductions in
future contributions to the plan and any
unrecognised past service costs.
Defined contributions plans In addition to
the defined benefits plans described above,
some Group companies sponsor defined
contributions plans based on local practices
and regulations. The Group’s contributions
to defined contributions plans are charged
to the income statement in the period in
which the contributions are due.
Other long term benefits plans Other
long term obligations include the estimated
costs of early retirement for which a
constructive obligation exists at reporting
date.
Short term benefits Short term employee
benefits are measured on an undiscounted
basis and are expensed as the related
service is provided. A provision is
recognised for the amount expected to be
paid under short term cash-bonus plans if
the Group has a present and constructive
obligation to pay this amount as a result of
past service provided by the employee and
the obligation can be measured reliably.
Termination benefits Termination benefits
are recognised as an expense when
the Group is demonstrably committed
without realistic possibility of withdrawal,
to a formal detailed plan to terminate
employment before the normal
retirement date.
O - Employee benefits – Share
based payment transactions
The Group operates various share-based
compensation plans which qualify as
equity-settled transactions with a cash
alternative. In addition to the shares
options, beneficiaries receive put options
which entitle them to a cash payment,
and as management assumes that most
of these put options will be exercised, the
Company accounts for the grants as a cashsettled
transaction. The services received
and the liability incurred are measured
initially at fair value at the grant date using
the Black and Sholes method taking into
account the terms and conditions upon
which the instruments were granted. The
initial fair value is expensed over the period
until vesting. The fair value of the liability is
re-measured at each reporting date up to
and including the settlement. Any changes
in fair value of the liability are recognised
in the income statement.
P - Financial liabilities
Bank loans and other borrowings Bank
loans and other borrowings are recognised
initially at the fair value of the consideration
received, net of transaction costs incurred.
In subsequent periods, bank loans and
other borrowings are stated at amortised
cost, with any difference between costs
and redemption value being recognised in
the income statement, using the effective
interest rate method. Gains and losses are
recognised in the income statement when
the liabilities are derecognised as well as
through the amortisation process.
These liabilities are classified as current
liabilities unless the Group has an
unconditional right to defer settlement
of the liability for at least twelve months
after the reporting date.
Finance lease liabilities Financial
liabilities resulting from a finance lease are
recognised, along with the related assets,
at an amount equal to the fair value of the
leased property or, if lower, the present
value of the minimum lease payments.
The minimum lease payments are
apportioned between the finance charge
and the reduction of the outstanding
liability. The finance charge is allocated to
each period during the lease term so as to
produce a constant periodic rate of interest
on the remaining balance of the liability.
The lease payments due within twelve
months are included in current financial
liabilities.
Q - Trade and other payables
Trade and other payables are initially
recognised at fair value which generally
corresponds with the nominal value. They
are subsequently carried at amortised cost
using the effective interest rate method.
R - Risk Management
The Group has exposure to the following
risks from its business activities and use
of financial instruments in running and
managing its business:
• a. Market risk
• b. Credit risk
• c. Liquidity risk
• d. Capital risk
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