Annual Review 2012 - Luxottica
Annual Review 2012 - Luxottica
Annual Review 2012 - Luxottica
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Consolidated financial statements - NOTES<br />
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contributions into a separate entity. The Group has no legal or constructive obligations to<br />
pay further contributions if the fund does not hold sufficient assets to pay all employees<br />
the benefits relating to employee service in the current and prior periods.<br />
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically,<br />
defined benefit plans define an amount of pension benefit that an employee will receive<br />
upon retirement, usually dependent on one or more factors such as age, years of service<br />
and compensation. The liability recognized in the consolidated statement of financial<br />
position in respect of defined benefit pension plans is the present value of the defined<br />
benefit obligation at the end of the reporting period less the fair value of plan assets,<br />
together with adjustments for unrecognized past-service costs. The defined benefit<br />
obligation is calculated annually by independent actuaries using the projected unit credit<br />
method. The present value of the defined benefit obligation is determined by discounting<br />
the estimated future cash outflows using interest rates of high-quality corporate bonds<br />
that are denominated in the currency in which the benefits will be paid and that have terms<br />
to maturity approximating the terms of the related pension obligation.<br />
Actuarial gains and losses due to changes in actuarial assumptions or to changes in<br />
the plan’s conditions are recognized as incurred in the consolidated statement of<br />
comprehensive income.<br />
For defined contribution plans, the Group pays contributions to publicly or privately<br />
administered pension insurance plans on a mandatory, contractual or voluntary basis. The<br />
Group has no further payment obligations once the contributions have been paid. The<br />
contributions are recognized as employee benefits expenses when they are due. Prepaid<br />
contributions are recognized as an asset to the extent that a cash refund or a reduction in<br />
future payments is available.<br />
Provisions for risks<br />
Provisions for risks are recognized when:<br />
• the Group has a present obligation, legal or constructive, as a result of a past event;<br />
• it is probable that the outflow of resources will be required; and<br />
• the amount of the obligation can be reliably estimated.<br />
Provisions are measured at the present value of the expenditures expected to be required<br />
to settle the obligation using a pre-tax rate that reflects current market assessments of the<br />
time value of money and the risks specific to the obligation. The increase in the provision<br />
due to passage of time is recognized as interest expense. Risks that are possible are<br />
disclosed in the notes. Risks that are remote are not disclosed or provided for.<br />
Share-based payments<br />
The Company operates a number of equity-settled, share-based compensation plans,<br />
under which the entity receives services from employees as consideration for equity<br />
instruments (options). The fair value of the employee services received in exchange for<br />
the grant of the options is recognized as an expense. The total amount to be expensed is<br />
determined by reference to the fair value of the options granted.