Page 23 - awe30062_compressed

Diahuebs 30 di Juni 2022

Notes to the Abbreviated Financial Statements (continued)

Company to actuarial risks such as investment risk, interest rate are recognised in other comprehensive income. On - fixed lease payments (including in-substance fixed pay-
risk and longevity risk. derecognition, debt securities gains and losses accumulat- ments), less any lease incentives;
ed in other comprehensive income are reclassified to the - variable lease payments that depend on an index or rate,
Starting 2008 all employees entering in service are eligible to a statement of income. initially measured using the index or rate at the commence-
defined contribution plan. The company adopted for 2011 and ment date;
beyond a defined contribution plan. This means that a fixed (e) Commission income - lease payments in an optional renewal period if the Company
amount for future pension obligations will be applied for the em- Commissions are recognized on the accrual basis when the is reasonably certain to exercise an extension option; and
ployees and that there is no back office costs anymore. The ac- services have been provided. - penalty payments for early termination of a lease unless the
crued rights of the employees of a defined benefit plan up till Company is reasonably certain not to terminate early.
2010 remain intact. The assets are held in a separate trustee-ad- (f)Fee income
ministered fund. The Company’s contributions to the defined con- Fees are earned from the management of the assets of the The lease liability is subsequently measured by increasing the car-
tribution pension plans are charged to the statement of income in segregated funds and deposit administration funds and rying amount to reflect interest on the lease liability (using the
the year to which they relate. from general policy administration and surrenders. Fees are effective interest method) and by reducing the carrying amount to
recognized in the period in which the services are ren- reflect lease payments made.
(b) Post retirement medical benefit obligations dered. The Company remeasures the lease liability when there is a
The Company provides post-retirement medical benefits to its change in future lease payments arising from a change in an index
permanent employees who retire from active service, their spous- Leases or rate, or if the Company changes its assessment of whether it
es and their dependents. The entitlement to these benefits is At inception of a contract, the Company assesses whether a con- will exercise an extension or termination option. Extension and
based on the employee remaining in service up to retirement age tract is, or contains a lease. A contract is, or contains, a lease if the termination options are included in a number of leases across the
or leaving service due to ill health. The expected costs of these contract conveys the right to control the use of an identified asset Company. These are used to maximise operational flexibility in
benefits are accrued over the period of employment, using a for a period of time in exchange for consideration. To assess terms of managing the assets used in the Company’s operations.
methodology similar to that for defined benefit plans. External whether a contract conveys the right to control the use of an The majority of extension and termination options held are exer-
qualified actuaries carry out a valuation of these obligations. Post identified asset, the Company assesses whether: cisable only by the Company and not by the respective lessor.
retirement medical benefit obligations are fully recognized in Fa- When the lease liability is remeasured, a corresponding adjust-
tum Holding N.V., the parent company, and the expenses are allo- - the contract involves the use of an identified asset. This may ment is made to the carrying amount of the right-of-use asset, or
cated to the subsidiaries. be specified explicitly or implicitly, and should be physically is recorded in the statement of income if the carrying amount of
distinct or represent substantially all of the capacity of a the right-of-use asset has been reduced to zero.
(c) Bonus plans physically distinct asset. If the supplier has a substantive Variable lease payments that do not depend on an index or a rate
The Company recognizes a liability and an expense for bonuses substitution right, then the asset is not identified; are not included in the measurement of the lease liability and the
based on a formula that takes into consideration the profit attrib- - the Company has the right to obtain substantially all of the right-of-use asset. The related payments are recognised as an
utable to the Company’s shareholder after certain adjustments. economic benefits from use of the asset throughout the pe- expense in the period in which the event or condition that triggers
The Company recognizes a provision where contractually obligat- riod of use; and those payments. The Company does not have any variable lease
ed or where there is a past practice that has created a constructive - the Company has the right to direct the use of the asset. The payments that do not depend on an index or a rate.
obligation. Company has this right when it has the decision-making The Company applies the short-term lease recognition exemption
rights that are most relevant to changing how and for what to its short-term leases i.e., those leases that have a lease term of
Provisions purpose the asset is used. 12 months or less from the commencement date and do not con-
Provisions are made when the Company has a present legal or tain a purchase option. It also applies the lease of low-value assets
constructive obligation as a result of past events, for which is more The Company as a lessee to leases that are considered to be low value. The Company rec-
likely than not that an outflow of resources will be required to The Company mainly leases office space used in its operations. ognises the lease payments associated with these leases as an
settle the obligation, and the amount has been reliably estimated. Rental contracts for these leases are typically made for fixed peri- expense on a straight line basis over the lease term.
Provisions are not recognized for future operating losses. Where ods of a year but may have extensions options, which is described
there are a number of similar obligations, the likelihood that an below. Some contracts contain lease and non-lease components, The Company as a lessor
outflow will be required in settlement is determined by consider- which are accounted for as separate components based on the The Company leases out its investment property. The Company
ing the class of obligations as a whole. A provision is recognized stand-alone prices stated in the contracts. has classified these leases as operating leases, because they do
even if the likelihood of an outflow with respect to any one item not transfer substantially all of the risks and rewards incidental to
included in the same class of obligations may be small. Lease terms are negotiated on an individual basis and contain a the ownership of the assets. Rental income arising is accounted
wide range of different terms and conditions. The lease agree- for on a straight-line basis over the lease term and is included in
Revenue recognition ments do not impose any covenants and the leased assets may other income in the statement of income.
Revenue comprises the fair value for services rendered. Revenue not be used as security for borrowing purposes.
is recognized as follows: Dividend distribution
The Company applies a single recognition and measurement ap- Dividend distribution to the Company’s shareholder is recognized
(a) Premium income proach to all leases, except for short-term leases and leases of as an appropriation in the Company’s financial statements in the
Premium income is recognized on the accrual basis in low-value assets. At lease commencement date, the Company period in which the dividends are approved by the Company’s
accordance with the terms of the underlying contracts. recognises a right-of-use asset and a lease liability in the state- shareholder.
ment of financial position.
(b) Investment income The right-of-use asset is initially measured at cost, which compris- Finance charges
Interest income is recognised using the effective interest es the initial measurement of the lease liability, any initial direct Finance charges are recognized as an expense in the period in which
method. Interest income is calculated by applying the costs incurred by the Company, an estimate of any costs to dis- they are incurred except to the extent that they are capitalized
effective interest rate to the gross carrying amount of finan- mantle and remove the asset at the end of the lease, and any when directly attributable to the acquisition, construction or produc-
cial assets, except for: lease payments made in advance of the lease commencement tion of an investment property or in developing properties for sale.
> Purchased or originated credit-impaired financial assets, date (net of any incentives received). Subsequent to initial mea-
for which the original credit-adjusted effective interest rate surement, the right-of-use asset is depreciated on a straight-line Comparative information
is applied to the amortised cost of the financial asset. basis from the lease commencement date to the earlier of the end Where necessary, comparative data have been adjusted to conform
> Financial assets that are not purchased or originated of the useful life of the right-of-use asset or the end of the lease with changes in presentation in the current year.
credit-impaired but have subsequently become credit- term. If the Company is reasonably certain to exercise a purchase
impaired, for which interest option, the right-of-use asset is depreciated over the underlying 3. Critical accounting estimates and judgments in applying
Dividend income is recognised when the right to receive asset’s useful life. The Company also assesses the right-of-use accounting policies
payment is established. asset for impairment when such indicators exist. The Company
does not revalue any of its right-of-use assets. The Company makes estimates and assumptions that may affect
(c) Rental Income the reported amounts of assets and liabilities during the succeeding
Rental income is recognised in the statement of income on The lease liability is initially measured at the present value of the financial year. Estimates and judgments are continually evaluated
the accrual basis. lease payments that are not paid at the lease commencement and based on historical experience and other factors, including
date, discounted using the interest rate implicit in the lease. If the expectations of future events that are believed to be reasonable
(d) Realised and unrealised investment gains and losses interest rate implicit in the lease cannot be readily determined, the under the circumstances. A source of estimation uncertainty that
Realised and unrealised gains and losses on investments lessee’s incremental borrowing rate is used, being the rate the originated in 2020 and continues to affect the Company into
measured at amortised cost or fair value through profit or individual lessee would have to pay to borrow the funds neces- 2021 is the ongoing Covid-19 pandemic. While uncertainty re-
loss are recognised in the statement of income in the peri- sary to obtain an asset of similar value to the right-of-use asset in mains about the speed of the economic recovery, the trajectory
od in which they arise. a similar economic environment with similar terms, security and has undoubtedly been positive, with the development and distri-
Unrealised gains and losses on investment securities mea- conditions. Lease payments included in the measurement of the bution of vaccines and the gradual reopening of economies world-
sured at fair value through other comprehensive income lease liability comprise the following: wide. Further positive developments include increased tourism for
23