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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
DEFINED CONTRIBUTION PLANS
Defined contribution plans are post-employment benefit plans under
which an entity pays fixed contributions into a separate entity (a fund)
and has no legal or constructive obligation to pay further contributions if
the fund does not hold sufficient assets to pay all of the benefits relating
to the services rendered by employees prior to retirement.
The actuarial risk (that benefits will cost more than expected) and the
investment risk (that plan assets will be insufficient to meet expected
benefits) is not borne by the employer entity.
Contributions to government plans and other defined contribution plans
are recognised as an expense for the period in which they are due.
No provision is recorded as the Group’s obligation is limited to its
contributions to the plans.
DEFINED BENEFIT PLANS
All post-employment benefit plans other than defined contribution plans
correspond to defined benefit plans. Under defined benefit plans the
entity’s obligation is to provide the agreed benefits to current and former
employees. The employer entity may either:
●
pay contributions to a separate entity (a fund), but must pay further
contributions (or pay unfunded benefits) if the fund does not hold
sufficient assets to pay all of the benefits relating to the services
rendered by employees; or
●
pay the benefits itself, funding them out of its own assets.
Consequently, under defined benefit plans the employer entity bears
both the actuarial risk and the investment risk.
In accordance with IAS 19, “Employee Benefits”, actuarial valuations
of post-employment benefit obligations under defined benefit plans are
made using the projected unit credit method, based on assumptions for
mortality rates, staff turnover and future salary projections.
The net defined benefit liability recognised at the reporting date
corresponds to the present value of the defined benefit obligation –
i.e.
the present value of expected future payments required to settle
the obligation resulting from employee service in the current and prior
periods – less the fair value of plan assets.
Actuarial gains and losses are recognised in other comprehensive
income.
Deferred taxes
Deferred taxes are recognised using the liability method for temporary
differences between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements.
Deferred tax liabilities are recognised for all taxable temporary
differences, apart from in the exceptional cases referred to in IAS 12.
Deferred tax assets are recognised for the carryforward of unused tax
losses and unused tax credits and deductible temporary differences
only to the extent that it is probable that the Group will have sufficient
future taxable profit against which the unused tax losses, tax credits or
temporary differences can be utilised.
The following elements are taken into account when estimating whether
the Group will have sufficient future taxable profit to recover deferred
tax assets:
●
forecasts of future taxable profits;
●
non-recurring expenses included in past losses and which will not be
incurred again in the future;
●
past history of taxable profit for prior years.
A deferred tax liability is recognised for taxable temporary differences
relating to equity-accounted investees even if it is probable that there
will be undistributed profits (as the Group does not control the investee
it cannot determine its profit distribution policy), unless there is an
agreement requiring that that the profits of the equity-accounted investee
will not be distributed in the foreseeable future.
When a deferred tax asset or liability relates to an item that is recognised
directly in equity, then the related deferred tax is also recognised directly
in equity.
Deferred tax assets and liabilities are offset only when the Group has
a legally enforceable right to set off current tax assets against current
tax liabilities and the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority.
Deferred tax assets and liabilities are not discounted.
Stock options – Share-based payment
In accordance with IFRS 2, “Share-based Payment”, when the Group
receives services from employees as consideration for share-based
payments the fair value of the employee services received in exchange
for the grant of the share-based payments is recognised as an expense.
The total amount to be expensed is determined by reference to the fair
value of the benefits granted to the employees concerned under stock
option plans or free share/performance share plans. The expense is
recognised on a straight-line basis over the vesting period. For stock
options, the fair value of the options is determined using the Black &
Scholes pricing model.
Although the share-based payment expense – which is recognised as a
non-recurring expense in the consolidated income statement – reduces
profit for the period, it has no impact on total equity.
ASSYSTEM
FINANCIAL REPORT
2015
86