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Wavin Annual Report 2010 | page 89and that the Group will comply with conditions associated with the grant. Grants that compensate the Group for expensesincurred are recognised in the income statement on a systematic basis in the same periods in which the expenses arerecognised. For grants that compensate the Group for the costs of an asset we refer to note 3(e).(t) ProvisionsA provision is recognised in the balance sheet when the Group has a legal or constructive obligation as a result of a pastevent, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. If the effect is material,provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current marketassessments of the time value of money and, where appropriate, the risks specifi c to the liability.(i)WarrantiesFor products or services sold, a provision is recognised based on actual claims received and on historical data regardingwarranty costs, which were not provided for on an individual claims basis. The product liability insurance cover is taken intoaccount when determining the provision. Claims honoured are charged against the provision.(ii) RestructuringA provision for restructuring is recognised when a formal restructuring plan is approved and the restructuring has eithercommenced or has been announced publicly.(iii) TaxThe tax provision is recognised for identifi ed tax exposures in the Group.(iv) OthersThe other provisions mainly consist of provisions for the obligation to take back returnable packaging, quarry restorations andfor environmental commitments. A provision for site restoration is recognised when there is a legal or constructive obligationto reduce or solve pollution of land, air, water etc. All environmental provisions are based on expert reports.(u) Deferred tax liabilitiesLong term tax liabilities resulting from temporary differences between fi nancial statements and fi scal valuations per fi scal entityare recognised as deferred tax liability as long as they are expected to result in a cash outfl ow. No deferred tax liabilities aretaken into account when it is probable that no profi t taxes will be paid due to available losses carried forward.(v) Trade and other payablesTrade and other payables are recognised initially at fair value. Subsequent to initial recognition, trade and other payables aremeasured at amortised cost using the effective interest method.(w) RevenueRevenue is derived from the goods and services sold and delivered during the year net of rebates and discounts and net ofsales tax. Revenue from the sales of goods is recognised in the income statement when the signifi cant risks and rewards ofownership have been transferred to a third party, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably and there is no continuing management involvement with the goods. The timing ofthe transfers of risks and rewards depends on the individual delivery conditions. For the revenue of sales of goods theseconditions are generally met at the time the product is delivered to the customer. Revenue from services rendered isrecognised in the income statement in proportion to the stage of completion. If it is probable that discounts will be grantedand the amount can be measured reliably, then the discount is recognised as a reduction of revenue at the same time thesales are recognised.(x) Cost of salesCost of sales comprises the manufacturing costs of the goods sold and delivered, and any inventory write downs to lower netrealisable value. Manufacturing costs include items as:• the costs of raw materials and supplies, energy, packaging and other materials;• depreciation and the costs of maintenance of the assets used in production;• salaries, wages and social charges for the personnel involved in manufacturing.(y) Research and development expensesResearch and other not capitalised development expenses are charged to income as incurred. Amortisation of capitaliseddevelopment costs is charged on a straight-line basis over the estimated useful life.