Annual report - HSE

5.5.7.10 Provisions for jubilee and termination benefits
In accordance with legal regulations, collective agreements and internal rules, the Group
companies are obliged to pay jubilee benefits to employees and termination benefits
on their retirement for which provisions are created. There are no other existing pension
liabilities.
Provisions are created in the amount of estimated future payments for termination and
jubilee benefits discounted at the end of the financial year. The calculation is prepared
for each employee by taking into account the costs of termination benefits on retirement
and costs of all expected jubilee benefits until retirement. The calculation with the use of
projected unit is prepared by actuary for all companies. Payments for termination benefits
on retirement and jubilee benefits decrease the created provisions.
5.5.7.11 Other provisions
Provisions are recognised when the Group has a legal or constructive obligations arising
from past events, which can be reliably assessed, and when it is likely that that an outflow
of resources embodying economic benefits will be required to settle the liability.
The amount of the provision must be equal to the present value of the expenditure
expected to be required to settle the liability. Since provisions are intended for covering
probable, but not certain obligations, the amount recognised as a provision is merely the
best estimate of the expenditure needed for the settlement of obligation existing on the
date of the statement of financial position. In reaching the best estimate of a provision, the
risks and uncertainties that inevitably surround the events and circumstances are taken into
account.
Provisions are directly decreased by costs or expenses, for which they were created to
cover. This means that in the financial year such costs or expenses do not appear in the
profit or loss anymore.
If the expected liabilities do not occur, the amount of created provisions is reversed and
recognised under other operating revenue.
5.5.7.12 Other assets and liabilities
Other assets include long-term and short-term deferred costs and accrued revenue.
Deferred costs or expenses represent the amounts incurred but not yet charged against
the profit or loss. Accrued revenue is revenue that is taken into account in the profit or loss,
although it has not been charged yet.
Other liabilities include long-term and short-term accrued costs and deferred revenue.
Accrued costs are amounts that have not occurred yet, but they will in the future and are
already influencing the profit or loss.
5.5.7.13 Contingent liabilities and assets
Contingent liability is:
• a possible liability arising from past events and whose existence is confirmed solely by
the occurrence or non-occurrence of one or more uncertain future events that the Group
does not fully control; or
• a present obligation arising from past events, which is not recognised, since it is not
probable that the outflow of resources embodying economic benefits will be required to
settle the obligation or the amount of obligation cannot be reliably measured.
The Group’s contingent liabilities include the guarantees granted.
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Annual Report HSE 2012
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A contingent asset is a possible asset arising from past events and whose existence is
confirmed solely by the occurrence or non-occurrence of one or more uncertain future
events that the Group does not fully control.
Contingent assets comprise the amounts of lawsuits in which the Group acts as plaintiff.
Contingent assets and liabilities are not recognised in the consolidated statement of
financial position.