Sisal Annual Report 2011 - Permira

The severance indemnity cost in the current period, charged to the statement ofcomprehensive income under personnel costs, is equal to the sum of the indemnitymatured by the employees working in the period, the finance charge on the presentvalue of the Group’s obligation at the beginning of the year and the gains andlosses caused by changes in the actuarial assumptions. It should be noted that theGroup has decided not to use the “corridor approach” and to recognise gains andlosses arising from changes in actuarial assumptions directly in the statement ofcomprehensive income.The annual discount rate adopted for calculating present value has been determinedon the basis of the average 11-year IBoxx Corporate Index updated to December31, 2011.Stock optionsStock option plans and other initiatives remunerated by equity instruments, if any,are accounted for in accordance with IFRS 2, separating those which will be settledthrough the issue of equity instruments and those which will be settled by paymentsin cash based on the value of the options granted.The fair value is determined at the grant date and causes the cost to be recognised(under personnel costs) over the vesting period of the options granted. When theemployee’s service is remunerated with an equity instrument or when the optionsgranted are on the shares of the Parent, the contra-entry is to an equity reserve(“stock options reserve” included under “Other reserves”). Instead, when the costof the share-based payment transaction is settled in cash, the contra-entry is to apayable account.Translation of amounts in foreign currencyRevenues and costs in currencies other than the functional currency, the Euro, arerecorded at the exchange rate on the transaction date.Monetary assets and liabilities in currencies other than the functional currency aretranslated into the functional currency at the exchange rate at the end of the reportingperiod, with any effect posted to the statement of comprehensive income.Non-monetary assets and liabilities in currencies other than the functional currencymeasured at cost are recorded at the original transaction rate; when the measurementis at fair value or at the recoverable/realizable amount, the exchange rate atthe measurement date is used.62 SISAL ANNUAL REPORT 2011