Axactor Annual Report 2016

Defined contribution retirement plans are retirement plans where the company’s payment obligations are limited to the fixed contributions and where the fees already have been undertaken. The retirement of the individual employee is dependent on the fees paid to the retirement plan or an insurance company by the employer, and the return of capital invested in the retirement insurance. Consequently, it is the employee that holds the risk of return (that the return will be lower than expected) and the risk of the investment (the risk that the invested pension provision will not be sufficient to cover expected retirement compensation in the future). The obligations of the Company related to payments of defined contribution retirement plans are expensed in the income statement as they are earned by the employee for services conducted on behalf of the employer during the period. For defined benefit plans, the pension obligations do not cease until the agreed pensions have been paid. Defined benefit plans typically defines an amount of pension benefit that an employee will receive on retirement, usually depend- ent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by inde- pendent actuaries using the projected unit credit method. The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes and curtailments and settlements. Past-service costs are recog- nised immediately in income. The interest cost is calculated by applying the discount rate to the balance of the defined benefit obligation. This cost is included in employee benefit expense in the income statement. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Share-based compensation The group operates an equity-settled compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the option is recognises as an expense (payroll expenses) over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted: ·· Including any market performance conditions (e.g., an entity's share price). ·· Excluding the impact of any service and non-market performance vesting conditions. ·· Including the impact of any non-vesting conditions. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corre- sponding adjustment to equity. The fair value of the options has been estimated at grant date and is not subsequebtly changed. When the options are exercised, and the Company elects to issue new shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. 2.8 Leasing Leasing is classified as either finance or operating lease. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line-basis over the period of the lease. If the Group, as the lessee bear the risks and rewards of the leased assets, it is classified as finance lease. The leased assets are recognized in the balance sheet as a fixed asset and the estimated present value of the future lease payments is recognized as a liability. 2.9 Provisions and contingent liabilities Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably esti- mated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of the money and the risks specific to the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Restructuring provisions are recognised only when the rec- ognition criteria for provisions are fulfilled. The Group has a constructive obligation when a detailed formal plan identifies the activities concerned, the location and number of employ- ees affected, a detailed estimate of the associated costs, and an appropriate timeline. Furthermore, the employees affected have been notified of the plans main features. 2.10 Classifications Fixed assets and long-term liabilities consists of items expected to be settled more than twelve months after the balance sheet date. Current assets and current liabilities consists of amounts that are expected to be settled within twelve month. 2.11 Taxes Income taxes consists of current tax and deferred tax. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax Axactor AB | Annual report 2016 34