13 — Provisions
We record a provision when the Group has a present obligation (legal or constructive) as a result of a past event for which it is probable that an outflow of resources embodying economic benefits (that can be reliably determined) will be required to settle the obligation.
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Onerous contracts |
We record a provision for onerous contracts equal to the excess of the unavoidable costs of meeting the obligations under the contract over the economic benefits expected to be received under it, as estimated by the Group.
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Pension, post-employment benefits and other post-employment benefits |
We record obligations for contributions to defined contribution pension plans as an expense in the income statement as incurred. We do not record any provision for such plans as we have no further obligation.
Our net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. We perform the calculation by using the projected unit credit method.
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That benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. |
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Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Interest is recorded in the profit and loss. |
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Unvested past services costs are recognized immediately if the benefits have vested immediately following the introduction of, or changes to, a pension plan. |
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We record actuarial gains and losses on defined benefits plans directly in equity. |