Annual Report 2009 - Von Roll

50 Financial Reporting 2009 – Consolidated Financial Statements(c) Other employee and social security benefits, accruals for staff-related costsOther employee and social security benefits mainly comprise payments to governmental institutions and others forsocial security, payroll taxes, health insurances and similar. Accruals for staff-related costs comprise accruals forcontractual and anniversary bonuses, unclaimed annual leave entitlement, flexitime balances and similar. Von Rollrecognises accruals where contractually obliged or where there is a past practice that has created a constructiveobligation.Income taxesIncome taxes include all taxes based upon the taxable profit of Von Roll. Other taxes not based on income, suchas property and capital taxes, are included in the relevant position in the income statement.Deferred income tax is provided in full, using the comprehensive liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by thebalance sheet date and that are expected to apply when the related deferred income tax asset is realised or thedeferred income tax liability is settled.Deferred income tax assets for temporary differences and unused tax losses are recognised to the extent that it isprobable that future taxable profit will be available against which the temporary differences can be utilised andrealisable temporary differences can be expected.Deferred income tax on temporary differences arising on investments in subsidiaries and associated companies isprovided, except where the timing of the reversal of the temporary difference is controlled by Von Roll and it isprobable that the temporary difference will not reverse in the foreseeable future.LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classifiedas operating leases. Payments made under operating leases (net of any incentives received from the lessor) arecharged to the income statement on a straight-line basis over the period of the lease.Business segmentsReportable business segments are determined on the basis of the management approach. External segmentreporting is then carried out on the basis of the internal Group organisation and management structure as well asinternal financial reporting to the chief operating decision maker. At Von Roll, this position is held by the Board ofDirectors of Von Roll Holding AG.The primary segmentation is by business segment, and the secondary is by geographical segment. A businesssegment is a group of assets and operations engaged in providing products or services that are subject to risks andreturns which are different from those of other business segments. A geographical segment is engaged in providingproducts and services within a particular economic environment that are subject to risks and returns which aredifferent from those of segments operating in other economic environments.Intra-segment transfers and transactions are entered into under normal commercial terms and conditions thatwould also be available to unrelated third parties (at arm’s length).Financial risk factorsVon Roll’s activities are exposed to a variety of financial risks: market risk (including currency risk, interest rate riskand price risk), credit risk, liquidity risk and cash flow risk. Von Roll’s overall risk management programme focuseson the unpredictability of financial markets and seeks to minimise potential adverse effects on Von Roll’s financialperformance. Von Roll uses derivative financial instruments to hedge certain risk exposures, where appropriate.Financial risk management is carried out according to the principles and guidelines issued by the Board of Directorsand the Executive Management. Risk management is monitored by Corporate Finance and Auditing and continuouslyreconciled with each operational entity (please refer to Von Roll Holding AG – annual financial statements compiledin accordance with the Swiss Commercial Code: Note 10). It covers identified financial risk factors as describedin the previous paragraph.