Page 77 - EVRY Annual Report 2012

Annual Accounts Group 77
Accounts receivable
Accounts receivable are recognised in the statement of financial position at nominal value after a deduction for possible
losses. A provision for estimated losses is included in the presentation of comprehensive income when a loss causing
event takes place and there is objective evidence that the value of the asset is impaired.
Equity
The nominal value of holdings of own shares is reported in the statement of financial position as a deduction to share
capital. The purchase price in excess of nominal value is charged to share premium. Gains or losses on transactions in
own shares are applied directly to equity. If own shares are sold at a price in excess of cost price, the surplus is recognised
as other paid-in equity. Realised losses related to sales of own shares are recognised against retained earnings.
Transaction costs in relation to equity transactions are charged to equity after deducting tax.
The fair value reserve includes cumulative net changes in fair value of financial instruments until the investment is
disposed of.
Share based payments
The group has issued equity-settled share-based payments to certain key employees and the group’s executive manage-
ment. Such payments include both the closed share option program and a grant of a fixedmonetary compensation
where the participant is required to invest the net amount into shares in the parent company. Equity-settled share-
based payments are measured at fair value when they are granted and are charged to profit and loss on a linear basis over
the vesting period. For the share option plans fair value is measured using the Black-Scholes pricing model.
The group also has given employees the opportunity to purchase the group’s ordinary shares at a discount to the current
market value and to be granted bonus shares. The Board of Directors decides such employee share ownership grants
from time to time. Discounts in the employee share ownership program are recorded as salaries and personnel costs
when the discount is given to the extent that the discount is vested. Non-vested discounts, including bonus shares, are
recorded as an expense based on the estimate of the discount related to shares expected to vest, on a straight-line basis
over the vesting period.
Social security tax on options and other share-based payments is recorded as a liability and is recognised over the esti-
mated vesting period. The social security tax is calculated with the appropriate tax rate on the difference betweenmarket
price and exercise price at the measurement date. If the difference betweenmarket price and exercise price is negative,
no provision is made for social security tax.
Liabilities
On initial recognition, liabilities are stated at fair value after deducting transaction costs, but thereafter liabilities is stated
at amortised cost using the effective interest method. In addition, if fair value hedging is used, the liability that is hedged
it also adjusted for gains and losses that can be attributed to the risk that has been hedged. When the liability is repaid, in
whole or part, the difference between the book value of the liability and the amount repaid is recognised in the profit and
loss account.
Pension liabilities
Liability in respect of contractual pension arrangements in the group is valued as the present value of the future pension
benefits for which entitlement has been earned at the date of the statement of financial position, and is calculated on the
basis of assumptions about discount rates, the investment return on pension assets and expected growth in earnings and
pensions. Pension calculations use the K2005 table for mortality risk, which is reinforced by 10% for men and 15 % for
women. The risk table for disability, IR02, corresponds with the estimated risk of disability in the group. Pension assets
are valued at fair value on the accounting period date. In cases where there is not sufficient information available from
the pension scheme’s administrator on the company’s assets and liabilities in the scheme, the scheme is treated as a
defined contribution scheme. Costs incurred in relation to the group’s pension arrangements are reported as salary costs
in the accounts.
The starting point for calculating pension costs in respect of the group pension schemes is linear application of pension
entitlement earned against the likely accumulated pension liability at the time the pension is first drawn. The cost of
pensions is calculated on the basis of the discounted pension entitlement earned at the beginning and end of the year and
the pension rights accrued during the year, less the return on the assets provided to fund pensions. Significant changes
to the pension schemes, including scheme closures and changes that cause the issue of paid-up policies, are recognised
in the accounts in the accounting period when such change takes place, including a proportionate share of the unam-
ortised difference due to changes in estimates. The effect of any changes in the pension scheme that leads to the issue of
fully paid-up policies is recognised in the period the change is made. The effect of other changes in the pension scheme
is amortised over the expected average remaining service period. The effect of any changes in estimates, changes in as-
sumptions and calculation differences that exceed 10%of the higher of pension liabilities or pension assets is amortised
over the average remaining service period. In the case of pension schemes where all members are retired, the amortisa-
tion factor is set at one year so that any differences in excess of the ‘corridor’ are amortised in full in the following year.