Page 78 - EVRY Annual Report 2012

Annual Accounts Group 78
The group has established a compensation scheme for employees in connection with the closure of a defined benefit
pension scheme. The size of the compensation and the profile for its accrual are calculated on the basis of a standard set
of calculation parameters at the time of the change to the pension arrangements. The accrual formula and profile for the
compensation scheme are used as the basis to make provisions in the accounts so that the total compensation earned to
date by employees at any time is provided for as a liability in the consolidated statement of financial position.
Employees in the group’s Norwegian companies are members of an AFP scheme, which is a multi-company defined ben-
efit scheme, and is financed by premium payments determined as a percentage of salary. There is no reliable measure-
ment and allocation of liabilities and asset between the companies that participate in the scheme. The scheme is there-
fore treated for accounting purposes as a defined contribution pension scheme and the premiums paid are recognised as
costs through profit and loss.
Provisions
A provision is recognised in the accounts only when the company is subject to a liability that is a consequence of an
event that has already happened and where it is likely (i.e. more likely than not) that in order to reduce or discharge the
liability the company will have to apply financially measurable resources, and the liability can be reasonably estimated.
Provisions are evaluated at the end of each accounting period and adjusted to reflect the available information about the
provision. Where the information available is insufficient, a best estimate is used. If the time period to the date at which
the liability may lead to payment has a material effect on the calculation, the provision will represent the discounted
present value of the future liability. Increases in liability caused solely by the lapse of time are reported as an interest
expense.
Provisions for restructuring costs only include direct expenses linked to the restructuring which are both necessary for
the implementation of the restructuring and which do not relate to the continuing ordinary activities of the company.
Such provisions are recognised in the accounts when the company has a detailed plan for the restructuring in question
that identifies which business areas will be affected, the locations affected, the functions and estimated number of em-
ployees due to receive termination payments, the costs that will be incurred and a time plan for implementation. There
must be a real expectation by the parties affected that the company will implement the restructuring. This means either
that implementation of the restructuring programhas commenced or that the main elements have been disclosed to the
affected parties.
Contingent assets and liabilities
A contingent asset is defined as a possible asset, that arises from past events, and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the
entity. Contingent assets are not included in the annual accounts, but information is provided if there is a reasonable
certainty that the benefit in question will accrue to the group.
Contingent liabilities comprise:
- a possible obligation arising as a result of past events where the obligation depends on some uncertain future
event
- a present obligation that is not recognised in the accounts since it is not probable that the obligation will result in
a payment being made
- liabilities that cannot be measured reliably
Contingent liabilities are not recognised in the accounts with the exception of contingent liabilities acquired as part of
the purchase of a business. Continent liabilities acquired as part of the purchase of a business are recognised in the ac-
counts at fair value even if the liability is not likely to crystallise. The group’s material contingent assets and liabilities as
of 31 December 2011 are shown in note 26 to the consolidated accounts.
Cash flow statement
The cash flow statement is presented using the indirect method. The group’s activities are divided into operational,
financing and investment activities. Investment in new business or sale of business is classified as cash from/to invest-
ments, in the cash flow statement, and amounts to the purchase price/sales price less transferred cash and cash deposits
at the transaction date.
The cash flow statement includes businesses disposed of up to the date of disposal.
Use of estimates
A key accounting estimate is an estimate that is important for the presentation of the group’s financial position and
profit, and that requires subjective and complex evaluation by the company’s management, typically as the result of
the need to determine such estimates based on assumptions about future outcomes that are subject to uncertainty. The
group keeps such estimates under constant review on the basis of historical results and experience, consultation with
experts, trends, forecasts and other methods that the group considers reasonable in specific circumstances including
evaluating how such factors may change in the future.