ETX-10829_Etex-AR2017_WEB_2018_DEF2 (2)

6.1
Financial report
Consolidated financial statements
Etex Annual Report 2017
Financial report
Consolidated financial statements
Litigation provisions
Litigation provisions mainly include estimated future outflows relating to, various direct and indirect tax litigations, litigations with
customers, former employees, suppliers and other parties.
Other provisions
Other provisions include mainly estimated future outflows for environmental obligations and restructuring.
The Group meets all obligations imposed by relevant laws with respect to land decontamination and site restoration. Where requested,
necessary expenses are made and provision for future estimated costs are set-up. At 31 December 2017, these provisions amount to
€26,734 thousand (€24,705 thousand in 2016).
Restructuring provisions relate mainly to restructuring of companies in Germany. Further information is disclosed under note 4.
Note 20 – Commitments and contingencies
Health claims
There has been a history of bodily injury claims resulting from exposure to asbestos being lodged against subsidiaries of the Group for a
number of years. The Group’s approach is to provide for the costs of resolution which are both probable and reliably estimable (refer to
note 19 on provisions). At present the provision for the costs which are both probable and can be reliably estimated cover up to 25 years
of estimated gross costs. Whilst further claims are likely to be resolved beyond this timeframe, the associated costs of resolution are not
able to be reliably estimated and no provision has been made to cover these possible liabilities, which are considered contingent.
Legal claims
In the ordinary course of business, the Group is involved in lawsuits, claims, investigations and proceedings, including product liability,
commercial, environment and health and safety matters, etc. The Group operates in countries where political, economic, social and legal
developments could have an impact on the Group’s operations. The Group is required to assess the likelihood of any adverse
judgements or outcomes to these matters, as well as potential ranges of probable losses. The effects of such risks which arise in the
normal course of business are not foreseeable and are therefore not included in the accompanying consolidated financial statements.
Guarantees
At 31 December 2017, the Group issued the following guarantees to third parties:
In thousands of EUR 2016 2017
Guarantees issued after business disposals 123,540 119,201
Guarantees issued by the Group to cover the fulfilment of Group companies obligations 873,530 684,517
Guarantees issued by Third Parties to cover fulfilment of the Group companies obligations 457 556
Secured debt 55,038 50,508
Guarantees issued by the Group to cover the fulfilment of Group companies’ obligations consists mainly of the joint and several cross
guarantees provided by the group and its affiliates relating to our outstanding syndicated credit facility (€600 million), commercial paper
program (€200 million), Schuldschein loan (€300 million), as well as securities issued to guarantee other commitments (€435 million).
The values disclosed in the above table are based on outstanding amounts.
Secured debt includes mortgages and pledges provided in Japan, Brazil and Romania to cover local credit facilities in 2017.
Commitments
In the ordinary course of business, the Group enters into purchase commitments for goods and services and capital expenditures, buys
and sells investments and Group companies or portions thereof. At 31 December 2017 Etex had purchase commitments of €11,632
thousand (€4,298 thousand in 2016). Commitments are mainly related to a new machine in Indonesia and a new production line in
Argentina.
Commitments relating to operating leases are disclosed in Note 23.
Note 21 – Employee benefits
Defined contribution plans
For defined contribution plans Group companies pay contributions to pensions funds or insurance companies. Once contributions have
been paid, the Group companies have no further significant payment obligation. Contributions constitute an expense for the year in which
they are due. In 2017, the defined contribution plan expenses for the Group amounted to €13,595 thousand (10,354 thousand in 2016).
Defined benefit plans
Some Group companies provide defined benefit pension plans to their employees as well as defined benefit medical plans and early
retirement plans.
Etex Annual Report 2017 p. 45
Etex Annual Report 2017 p. 46
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