JOTUN A/S
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Contingent liabilities
Contingent liabilities are not recognised in the annual accounts.
A contingent liability is a present obligation that arises from
past events but is not recognised because it is not probable
(less likely than not) that an outflow of resources embodying
economic benefits will be required to settle the obligation or the
amount of the obligation cannot be measured with sufficient
reliability.
Product liability claims and disputes
Jotun A/S is, through its ongoing business, involved in product
liability claim cases and disputes in connection with the
company’s operational activities. Provisions have been made to
cover the expected outcome of disputes in cases where negative
outcomes are likely and reliable estimates can be made. In
evaluating the size of the provisions, expected insurance cover
is considered separately. Jotun acknowledges the uncertainty
of the disputes, but believes that these cases will be resolved
without significant impact on the company’s financial position.
A lawsuit related to a claim in the Fort Hills oil sands mining
project in Alberta, Canada, has been served against Jotun A/S
and Chokwang Jotun Ltd, where Fort Hills Energy LP is seeking
CAD 182 million (NOK 1.2 billion) in damages. The numbers
are undocumented. In addition, reservations are made from
the plaintiff for any potential additional costs. These possible
records are to be proven at trial.
Contractual obligations and guarantees
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Jotun contests the customer’s claim, and as a result of this
position, no provision has been performed for a negative
outcome of a lawsuit.
Environmental matters
A number of production facilities and product storage sites
have been inspected regarding environmental conditions in the
soil. For clean-up projects where implementation is considered
to be probable and for which reliable estimates have been
done provisions are made accordingly (ref. note 9). Due to
uncertainties inherent in the estimation process, it is possible
that such estimates could be revised in the near term. In
addition, conditions which could require future expenditures
may be determined to exist for various sites. The amount of
such future costs is not determinable due to the unknown
timing and extent of corrective actions which may be required.
All of Jotun’s activities are carried out in accordance with local
laws and regulations, and Jotun HSE requirements. These laws
and regulations are subject to changes, and such changes may
require that the company makes investments and/or incurs costs
to meet more stringent emission standards or to take remedial
actions related to e.g. soil contamination.
Purchase obligations
Jotun A/S contractual purchase obligations are mainly related to
ongoing investments in new headquarter and R&D centre and
upgrade of the factory. Out of the total ongoing investment
program NOK 504 million is contractual committed capital
expenditures (CAPEX) at year-end. For purchase of raw materials
there are no actual commitments for Jotun A/S. In general, these
contracts can be terminated more or less without penalties.
Other obligations
Jotun A/S has guarantees covering tax withholding and other
guarantees for subsidiaries amounted to approximately NOK
219 million in 2018 (2017: NOK 290 million).