Annual Report 2010 - AdP

2.18 Dividends payable
Dividends are recognized as liabilities when declared.
2.19 Investment grants
Investment grants are recognized when there is reasonable certainty that the subsidy will be received and that AdP Group will
comply with obligations related to receiving it. Investment grants related to acquiring and/or constructing tangible and/or intangible
assets are included in non-current liabilities and are credited in the income statement using the same method that is used to amortize
the underlying assets.
The other grants are deferred and recognized in the consolidated income statement during the same period of the costs they are
supposed to offset.
2.20 Provisions, assets and contingent liabilities
Provisions are only recognized when there is an underlying obligation, resulting from past events, which may require allocation of
internal resources to pay, and whose amount can be estimated reliably. Whenever any of the criteria is not met, or the existence of
the obligation is conditional upon the occurrence (or non-occurrence) of certain future event, AdP Group shall state such fact as a
contingent liability, unless the assessment of the requirement for outflow of resources for payment of this obligation is considered
remote. When there is a high number of similar obligations, the probability of generating an outflow of internal resources is determined
jointly. The provision is recognized even if the probability of outflow of internal resources regarding an element included in the same
class of obligations is low.
Provisions are measured at present value, at the balance sheet date, on the basis of the best estimate of the Board of Directors
regarding the expense necessary to fulfil the obligation (note 26). The discount rate used to determine the present value reflects the
current market expectation for the discount period and for the provision risk in question.
There are no provisions recognized for future operational losses.
Contingent assets and liabilities
Contingent assets and liabilities are not recognized in the financial statements, but are disclosed in the attached notes. In cases where
the possibility of an outflow of resources that incorporate economic benefits is remote, or if the influx of economic benefits is not
likely, the respective contingent liabilities or contingent assets are not disclosed.
2.21 Employee benefits
EPAL and EGF offer a system of social benefits for their workers that involves retirement pension supplements (old age or disability),
additionally supporting the responsibilities ensuing from pre-retirement. The Company’s pension benefits system is based on two
types of pension plans with defined contribution and defined benefits.
Defined contribution
Under this pension plan, the Company’s only monetary obligation is to make fixed contributions to a separate entity (fund). These
contributions are recognized as an expense from the period they pertain to.
Defined benefit
A defined benefit plan is a pension plan that defines the pension benefit amount that an employee will receive upon retirement,
normally depending on one or more factors, such as age, years of service and remuneration.
The obligation of the defined benefits plan is calculated annually by independent actuaries, using the projected unit credit method.
The present value of the defined benefit obligation is determined by the deduction of the future benefits payments, applying the
interest rate for high quality bonds in the same currency that the benefits will be paid and with maturities that are similar to the
accepted responsibility.
The liability recognized in the balance sheet in relation to the defined benefits plan is the present value of the benefit obligation
defined at the balance sheet date, deducted by the fair value of the assets of the plan, together with adjustments related to the cost
of past services.