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B.16 TRADE AND OTHER PAYABLES
Trade and other payables are initially recognised at fair value and subsequently valued on the basis of the amortised cost
method.
B.17 BORROWINGS FROM BANKS AND OTHER LENDERS
Borrowings from banks and other lenders are initially
recognised at fair value, less directly attributable costs.
Subsequently, they are measured at amortised cost, using
the effective interest method. If the estimated expected cash
flows should change, the value of the liabilities is recalculated
to reflect this change using the present value of the expected
new cash flows and the effective internal rate originally
established. Borrowings from banks and other lenders are
classified as current liabilities, except where the Group has an
unconditional right to defer their payment for at least twelve
months after the reporting date.
Borrowings from banks and other lenders are derecognised
when they are extinguished and when the Group has
transferred all the risks and costs relating to such instruments.
Purchases and sales of financial liabilities are accounted for at
the settlement date.
B.18 EMPLOYEE BENEFITS
Pension plans
The Group operates both defined contribution plans and
defined benefit plans.
A defined contribution plan is a plan under which the Group
pays fixed contributions to third-party fund managers and
to which there are no legal or other obligations to pay further
contributions should the fund not have sufficient assets
to meet the obligations to employees for current and prior
periods. In the case of defined contribution plans, the Group
pays contributions, voluntarily or as established by contract,
to public and private pension insurance funds. The Group has
no obligations subsequent to payment of such contributions,
which are recognised as personnel costs on an accrual basis.
Prepaid contributions are recognised as an asset which will be
repaid or used to offset future payments, should they be due.
A defined benefit plan is a plan not classifiable as a defined
contribution plan. In defined benefit plans, the total benefit
payable to the employee can be quantified only after the
employment relationship ceases, and is linked to one or
more factors, such as age, years of service and remuneration;
the related cost is therefore charged to the period’s income
statement on the basis of an actuarial calculation. The liability
recognised for defined benefit plans corresponds to the present
value of the obligation at the reporting date, less the fair value
of the plan assets, where applicable. Obligations for defined
benefit plans are determined annually by an independent
actuary using the projected unit credit method. The present
value of a defined benefit plan is determined by discounting
the future cash flows at an interest rate equal to that of high-
quality corporate bonds issued in the liability’s settlement
currency and which reflects the duration of the related pension
plan. Actuarial gains and losses arising from the above
adjustments and the changes in actuarial assumptions are
recorded directly in equity.
Past service costs resulting from a plan amendment are
recognised immediately in the income statement in the period
the plan amendment occurs.
Other post-employment obligations
Some Group companies provide medical benefit plans for retired
employees. The expected cost of these benefits is accrued over
the period of employment using the same accounting method
as for defined benefit plans. Actuarial gains and losses arising
from the valuation and the effects of changes in the actuarial
assumptions are accounted for in equity. These liabilities are
valued annually by a qualified independent actuary.
Termination benefits
The Group recognises termination benefits when it can be
