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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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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 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.
Equity-settled share-based payments
Stock options are valued on the basis of the fair value 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