Annual Report Gorenje Group 2009

(iii) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the
Company from a contract are lower than the unavoidable cost of meeting its obligations under the
contract. The provision is measured at the present value of the lower of the expected cost of
terminating the contract and the expected net cost of continuing with the contract. Before a provision is
established, the Company recognises any impairment loss on the assets associated with that contract.
(iv) Provisions for retirement benefits and jubilee premiums
In accordance with the statutory requirements, the collective agreement, and the internal regulations,
the Company is to pay to its employees jubilee premiums and retirement benefits. For these
obligations, long-term provisions are created. Other retirement obligations do not exist.
Provisions are created by discounting, at the reporting date, the estimated future payments of
retirement benefits and jubilee premiums. The obligation is calculated separately for each employee by
estimating the costs of retirement benefits and the costs of all expected jubilee premiums until
retirement. The selected annual discount rate is 5.40%, which is the rate of return on long-term
entrepreneurial bonds in euro area. The calculation has been performed by a certified actuary using
the projected unit method.
l) Revenue
(i) Revenue from the sale of products
Revenue from the sale of products, merchandise and materials in the course of ordinary activities is
measured at the fair value of the consideration received or receivable, net of returns, trade discounts
and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and
possible return of goods can be estimated reliably, there is no continuing management involvement
with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will
be granted and the amount can be measured reliably, then the discount is recognised as a reduction of
revenue as the sales are recognised.
The transfer of risks and rewards varies depending on the individual terms of the contract of sale. For
sales of goods, usually transfer occurs when the product is received at the customer's warehouse;
however, for some international shipments transfer occurs upon loading the goods onto the relevant
carrier.
(ii) Revenue from services rendered
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion
of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of
work performed.
(iii) Royalties (trademarks)
Royalties are recognised in profit or loss in accordance with terms of the relevant agreement; the sale
generated on individual geographical area is used as the basis.
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Annual Report Gorenje Group 2009