CFE - 2006 annual report - Vinci

) Defined benefit plans
For defined benefit plans, the pension accounting costs are assessed separately for each plan using the projected unit credit
method. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement
and measures each unit separately.
Under this method, the cost of providing pensions is charged to the income statement so as to spread the regular cost over the
service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plans at least
every three years. The amounts charged to the income statement consist of current service cost, interest cost, the expected return
on any plan assets, actuarial gains or losses and past service costs.
The pension obligations recognized in the balance sheet are measured as the present value of the estimated future cash outflows
using interest rates of high quality corporate bonds, which have terms to maturity approximating the terms of the related liability,
adjusted for the unrecognised actuarial gains and losses and less any past service costs not yet recognized and the fair value of
any plan assets.
The recognition of actuarial gains and losses is determined separately for each defined benefit plan. Actuarial gains and losses
comprise the effects of differences between the previous actuarial assumptions and what has actually occurred and the effects of
changes in actuarial assumptions.
All actuarial gains and losses exceeding a corridor of 10% of the higher of the fair value of plan assets and the present value of the
defined benefit obligations are recognized in the income statement over the average remaining service lives of employees partici-
pating in the plan. Otherwise, the actuarial gain or loss is not recognized.
Past service costs are recognized as an expense over the average period until the benefits become vested, unless they are already
vested following the introduction of or changes to a defined benefit plan, in which case the past service costs are recognized as an
expense immediately.
Where the calculation results in a benefit to the company, the recognized asset is limited to the net total of any unrecognised
actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contribu-
tions to the plan.
The expected charges of these benefits are written-off during the active career of the employee by applying similar accounting
methods as the one’s used for defined benefits plan. Independents qualified actuaries realize the calculation of these obligations.
2. Bonus
Bonuses received by company employees and management is based on financial key indicators. The estimated amount of the
bonus is recognized as an expense in the year.
S. Interest-bearing borrowings
Interest-bearing borrowings are recognized initially at cost, less attributable transaction costs. Any difference between
this net value and the redemption value is recognized in the income statement over the period of borrowings on an effective
interest rate basis.
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