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Jotun Annual Report 2014

24 JOTUN GROUP Note 3 continues PAYROLL EXPENSES Ordinary salary Bonus Benefits in kind Pension cost Total Shares owned by members of the Board of Directors and the Group Management are specified in note 17. External auditor remuneration (NOK thousand) 2014 2013 Statutory audit 10 435 8 864 Other attestation services 102 291 Tax services 2 590 2 233 Other services 2 247 1 652 Total 15 374 13 040 Note 4 PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS The Group has both defined contribution and defined benefit pen-sion plans. In the defined contribution plans, the cost is equal to the contributions to the employees’ pension savings in the accounting period. The future pension will be determined by the amount of the contributions and the return on the pension savings. In the defined benefit plan, the company is responsible for paying a pension to the employee based on pensionable salary. The cost for the accounting periods shows the employees’ pension entitlement of the agreed future pensions in the accounting year. The majority of the Jotun Group’s pension plans are defined contribution plans. Defined contribution plans Defined contribution plans comprise arrangements whereby the company makes annual contributions to the employees’ pension plans, and where the future pension is determined by the accounts of the contributions and the return on the pension plan assets. Em-ployees in the Jotun Group are mainly covered by pension plans that are classified as contribution plans. Costs associated with defined contribution plans are specified in note 3 Payroll expenses. Defined benefit plans The Jotun Group has pension plans that are classified as funded benefit plans and unfunded benefit plans, recognised in the groups balance sheet. A large part of the group’s benefit plans are in Norway and the United Kingdom of Great Britain and Northern Ireland, about 80 per cent of the total net obligation as at 31 December 2014. Norway The schemes in Norway are closed for new members. The existing arrangements are a define pension benefit scheme of up to 60 per cent of final salary at retirement, limited up to twelve times the social security basic amount (G). As of 31 December the basis amount (1G) is NOK 88 370. The pen-sion liability of the company is linked to changes in Norwegian social security benefits. Other schemes with net pension obligation include the contractual-pension scheme (AFP) and end financing of old AFP scheme (early retirement). In addition comes unfunded pension obligations related to social security benefits. Other schemes with net pension obligations include the related to old-age pensions, early retirement for Jotun Group’s senior executives and book liabilities related to contribution-based plans for employees who earn more than twelve times the social security basic amount (G). United Kingdom The defined benefit schemes in the UK are closed for all members. The net pension obligation represent defined benefit plans related to employees that entered this scheme prior to close. Contribution schemes are established for new employees. Middle East and South East Asia In other countries like Indonesia, Thailand and Oman there are pen-sion schemes, based on the final salary principle. These are included in net pension obligations. Other severance schemes Obligations indicated under “Other severance schemes” (see below) comprise mainly statutory obligations to employees in its companies elsewhere in the world. The obligations fall due for payment when employees leave a Jotun company. The size of the obligations depend on how many years the employees have worked in the company, among other things. Assumptions relating to the defined benefit plans “The discount rate is fixed at the rate on high quality corporate bonds with the same lifetime as the pension liabilities. For the Schemes in UK the iBoxx Sterling Corporates AA 15+ index is used as basis for the discount rate. The index showed an annual yield on its corporate bonds of 3.6 per cent pa at 31 December 2014. However, the average term of the collection of bonds within the iBoxx index is significantly shorter than the term of the liabilities of the Scheme, consequently the discount rate has been adjusted accordingly. In countries where there is no deep market in such bonds, the market yields on 10 years government bonds are used, adjusted for actual lifetime of the pension liabilities. The discount rate related to the Schemes in Norway is based on the assumption that there exists no deep market for high quality corporate bonds in Norway.“ Remuneration to Board of Directors (NOK thousand) Board of Directors 2 340 - - - 2 340 Corporate assembly 113 - - - 113 Total 2 453 - - - 2 453


Jotun Annual Report 2014
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