JOTUN GROUP
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15 Cash and cash equivalents
Cash includes cash in hand and cash deposits in banks.
Cash equivalents are short-term liquid investments that can
immediately be converted into a known amount of cash and
have a maximum term to maturity of three months.
16 Post-employment benefits
Post-employment benefits are recognised in accordance with
IAS 19 Employee Benefits. Defined contribution plans represent
the majority of the Group’s pension plans. However, the Group
also has a few, remaining defined benefit plans with net
pension obligations, as further described in note 5.
Defined contribution plans
The pension cost related to the Group’s defined contribution
plans is equal to the annual contribution made to the employee’s
individual pension accounts in the accounting period. Annual
contributions are corresponding to an agreed percentage of the
employee’s salary in accordance with local pension arrangements.
In Norway, the rate is 5 per cent of annual basic salary, limited
upwards to twelve times the social security basic amount. In
addition, 18.1 per cent of annual basic salary between 7.1-12
times the social security basic amount. The pension contributions
are charged to expenses as they are incurred. The return on the
pension funds will affect the size of the employees’ pension, and
the risk of returns lies with the employees.
Defined benefit plans
In the defined benefit plans, the company is responsible for
paying an agreed pension to the employee based on his or her
final pay. Defined benefit plans are valued at the present value
of accrued future pension obligations at the end of the reporting
period. Pension plan assets are valued at their fair value.
The capitalised net liability is the sum of the accrued pension
liability minus the fair value of the associated pension fund asset.
Actuarial gains and losses are recognised in other
comprehensive income. Introduction of new or changes to
existing defined benefit plans that will lead to changes in
pension liabilities are recognised in the statement of income as
they occur. Gains or losses linked to changes or terminations of
pension plans are also recognised in the consolidated income
statement when they arise.
Other severance schemes
Other severance schemes comprise mainly of obligations
related to pension schemes for employees in the Norwegian
companies with an annual basic salary exceeding 12 times
the basic amount (G). In addition, minor statutory obligations
to employees in a few other countries are also included.
Obligations related to other severance schemes are recognised
as non-current liabilities.
17 Provisions
A provision is, in general, recognised when the Group has an
obligation, either legal or constructive, as a result of a past
event, it is probable that a financial settlement will take place
and the size of the amount can be reliably estimated. The
amount recognised is the best estimate of the expenditure
required. If the effect is material, the future cash flows will
be discounted using a pre-tax interest rate reflecting the risks
specific to the obligation.
18 Contingent liabilities and assets
Contingent liabilities are not recognised in the annual accounts.
Significant contingent liabilities are disclosed, with the exception
of contingent liabilities that are unlikely to be incurred.
Contingent assets (unless virtually certain) are not recognised in
the annual accounts, but are disclosed if the possible inflow of
economic benefits is probable.
19 Events after the reporting period
New information regarding the company’s financial position at
the end of the reporting period and that becomes known after
the reporting period, is recorded in the annual accounts. Events
after the reporting period that do not affect the company’s
financial position at the end of the reporting period, but which
will affect the company’s financial position in the future, are
disclosed if significant.