Annual report 2012 - Comrod

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Annual report 2012 28/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesForeign entitiesAssets and liabilities at foreign entities with afunctional currency that is different from thepresentation currency of the Group are convertedinto Norwegian kroner using the exchange ratein the balance sheet date. Income and expensesfrom foreign entities are converted into Norwegiankroner using the weighted average exchange rate(if the average does not provide a reasonableestimate of the cumulative effects of using thetransaction rate, the transaction rate is used).Exchange differences are recognized in othercomprehensive income.Translation differences arising from the conversionof net investments in foreign entities, and fromrelated hedging instruments, are specified astranslation differences in equity. Translationdifferences in equity are taken to the incomestatement on the disposal of the foreignoperations.2.19 Employee benefitsDefined benefit pension plansThe Group’s Norwegian companies offer theiremployees defined benefit pension plans. Thedefined benefit liability is the net total of thediscounted value of future pension benefitsaccrued at the balance sheet date, minus thefair value of plan assets. The discount rate isequivalent to interest on a 10-year governmentbond plus an additional amount to take intoconsideration the bond’s term to maturity. Thevaluation is carried out by a qualified actuary andthe benefits are attributed using the projected unitcredit method.There are different schemes for the various groupcompanies. Pension benefits are dependenton age, length of service and salary. The netretirement benefit expense for the period (grossexpense less estimated return on pension assets)is included in the item Payroll & social securityexpenses. Employer’s contributions are included inthe figures and are calculated on the basis of thegross retirement benefit liability.The Norwegian group companies participatein the unfunded LO/NHO program where allemployees may choose to retire early retirementfrom 62 years (AFP). This scheme was closedin February 2010 and it was only possible tostart early retirement under the old scheme untilDecember 31, 2010. The gain on the terminationof the arrangement is recognised in 2010 as areduction of payroll and social security expensesin the income statement. The remaining provisionis related to two elements; individuals who areearly retirees in the old scheme and a provisionrelated to an estimate of premiums for the comingthree years.As a replacement for the old pension scheme, itis established a new pension scheme. The newpension scheme is, unlike the old, not an earlyretirement scheme, but a scheme that provides alifelong addition to the regular pension. Employeescan choose to use the new pension scheme fromthe age of 62, also next to stand in the job, and itprovides additional vesting at work until the age of67. The new pension scheme is a defined benefitmulti-employer pension plan, financed throughpremiums that are determined as a percentage ofsalary. The new AFP pension scheme has effectsin the Group’s accounts from 2011.28
Annual report 2012 29/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesThe Group’s companies in France have obligationsrelating to termination benefits for employees.Liabilities are calculated on the basis ofassumptions as length of service, discount rates,salary increases and retirement age. Allowance ismade for social security costs related to the scheme.2.20 Government grantsGovernment grants, including the SkatteFUNN taxincentive scheme, are recognized when there isreasonable assurance that the Group will complywith the incentive conditions attaching to them,and that the grants will be received. Grants areentered as deductions against the expense thatthe grant is intended to cover.Grants relating to assets are capitalized andrecognized as income on a systematic basis overthe useful life of the asset. Investment grants arerecognized as a reduction of the purchase price.2.21 TaxesCurrent income taxCurrent income tax assets and liabilities for thecurrent and prior periods are measured at theamount expected to be recovered from or paid tothe taxation authorities. The tax rates and tax lawsused to compute the amount are those that areenacted or substantively enacted by the balancesheet date.Current income tax relating to items recogniseddirectly in equity is recognised in equity and not inthe income statement.Deferred income taxDeferred income tax is provided using the liabilitymethod on temporary differences at the balancesheet date between the tax bases of assets andliabilities and their carrying amounts for financialreporting purposes.Deferred income tax liabilities are recognised forall taxable temporary differences, except:• where the deferred income tax liability arisesfrom the initial recognition of goodwill or of anasset or liability in a transaction that is not abusiness combination and, at the time of thetransaction, affects neither the accounting profitnor taxable profit or loss; and• in respect of taxable temporary differencesassociated with investments in subsidiaries,associates and interests in joint ventures,wherethe timing of the reversal of the temporarydifferences can be controlled and it is probablethat the temporary differences will not reverse inthe foreseeable future.Deferred income tax assets are recognised for alldeductible temporary differences, carry forward ofunused tax credits and unused tax losses, to theextent that it is probable that taxable profit will beavailable against which the deductible temporarydifferences, and the carry forward of unused taxcredits and unused tax losses can be utilisedexcept• where the deferred income tax asset relating tothe deductible temporary difference arises fromthe initial recognition of an asset or liability ina transaction that is not a business combinationand, at the time of the transaction, affectsneither the accounting profit nor taxable profitor loss; and• in respect of deductible temporary differencesassociated with investments in subsidiaries,associates and interests in joint ventures,deferred income tax assets are recognised only29
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Annual report 2012 - Comrod

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