3.9 Contingent liabilities
Product liability claims and disputes
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. The Group contests the customer’s claim, and as a result of this position, no provision has been
made for a negative outcome of a lawsuit.
Environmental matters
The Group is through its operation exposed to environmental and pollution risk. Several production
facilities and product warehouse sites have been inspected regarding environmental conditions in the
soil. For sites where clean-up costs are probable and reliable estimates of the costs have been made,
provisions are recorded accordingly. Due to uncertainties inherent in the estimation process, it is
possible that such estimates could be revised in the near term. In addition, further expenditures may
arise as the full scope of conditions at some sites has yet to be determined. The related amount of
potential, future costs is not determinable due to the unknown timing and extent of corrective actions
which may be required.
Jotun’s activities are carried out in accordance with local laws and regulations, and the Group’s HSE
requirements. Changes in laws and regulations may require the Group to make investments and incur
costs to meet future compliance requirements.
Accounting policy
As stated in Note 3.8, contingent liabilities are potential liabilities that do not meet the recognition
criteria for provisions and are hence not recorded in the balance sheet. IFRS accounting standards,
however, require disclosure of such information in the notes.
3.10 Contractual obligations and guarantees
Back to Notes for the Group
Purchase obligations
The Group’s contractual purchase obligations are mainly related to investments in new plants and
buildings. There is a substantial investment programme ongoing in the Group. Out of the total ongoing
investment programme, NOK 1 343 million is contractually committed capital expenditure (CAPEX)
at year-end. These contractual commitments mainly relate to projects in Egypt, Dubai, Vietnam and
Norway. For purchase of raw materials there are no actual commitments for the Group. In general,
these contracts can be terminated without significant penalties.
Other obligations
Jotun A/S has guarantees covering tax withholding and other guarantees for its subsidiaries. These
amounted to approximately NOK 208 million in 2019 (2018: NOK 219 million).
A subsidiary in China, Jotun Coatings (Zhangjiagang) Co. Ltd., has used bank drafts to pay some of its
suppliers. The issuing bank(s) is obligated to make unconditional payment to the supplier (or bearer) on
a designated date. If unforeseen events occur and the issuing bank(s) is not able to meet its obligation,
then Jotun would still hold the final obligation towards its suppliers. Unsettled bank drafts totalling
NOK 448 million (2018: NOK 553 million) have been used as payment as of 31 December 2019.
JOTUN GROUP
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