CONSOLIDATED FINANCIAL STATEMENTS >
EXPLANATORY NOTES
146
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
B.19 PROVISIONS FOR RISKS AND CHARGES
B.20 REVENUE RECOGNITION
Provisions for risks and charges are recognised for losses
and charges of a definite nature, whose existence is certain
or probable, but the amount and/or timing of which cannot
be determined reliably. A provision is recognised only
when there is a current (legal or constructive) obligation
for a future outflow of economic resources as the result of
past events and it is likely that this outflow is required to
settle the obligation. Such amount is the best estimate of
the expenditure required to settle the obligation. Where
the effect of the time value of money is material and the
obligation settlement date can be estimated reliably, the
provisions are stated at the present value of the expected
outlay, using a rate that reflects market conditions, the
variation in the cost of money over time, and the specific risk
attached to the obligation.
shown that the termination of employment complies with
a formal plan communicated to the parties concerned that
establishes termination of employment, or when payment of
the benefit is the result of voluntary redundancy incentives.
Termination benefits payable more than twelve months after
the reporting date are discounted to present value.
Share-based payments
Stock options are valued on the basis of the fair value
Revenue is recognised at the fair value of the consideration
received for the sale of goods and services in the ordinary
course of the Group’s business. Revenue is recognised net of
value-added tax, expected returns, rebates and discounts.
Revenue is accounted for as follows:
(a) Sales of goods
Revenue from the sale of goods is recognised when the risks
and rewards of the goods are transferred to the customer;
this usually occurs when the goods have been dispatched or
delivered to the customer and the customer has accepted
them.
Increases in the provision due to changes in the time value of
money are accounted for as interest expense. Risks for which
the emergence of a liability is only possible but not remote
are indicated in the disclosures about commitments and
contingencies and no provision is recognised.
Any contingent liabilities accounted for separately when
allocating the cost of a business combination, are valued
at the higher of the amount obtained using the method
described above for provisions for risks and charges and the
liability’s originally determined present value.
Further details can be found in Note 29. Contingent liabilities.
The provisions for risks and charges include the estimated
legal costs to be incurred if such costs are incidental to the
extinguishment of the provision to which they refer.
determined on their grant date. This value is charged to the
income statement on a straight-line basis over the option
vesting period with a matching entry in equity. This recognition
is based on an estimate of the number of stock options that
will effectively vest in favour of eligible employees, taking into
consideration any vesting conditions, irrespective of the market
value of the shares.
(b) Sales of services
The sale of services is recognised in the accounting period in
which the services are rendered, with reference to the progress
of the service supplied and in relation to the total services still
to be rendered.
In both cases, revenue recognition depends on there being
reasonable assurance that the related consideration will be
received.
The method of recognising revenue for construction contracts
is outlined in Section B.13. Construction contracts.
