(20a) Defined contribution plans
Commitments for contributions to defined-contribution pension plans are recognised as an expense in the statement of profit or loss when they are due.
(20b) Defined benefit plans
The Group’s net obligation in respect of defined-benefit pension plans is calculated separately for each plan by estimating the amount of future pension benefit that employees have earned in return for their service in the reporting period and in previous periods. The discounted present value of these pension benefits is determined, and is reduced by the fair value of the plan assets. The discount rate is the market yield at the reporting date on high-quality corporate bonds of which the term is consistent with the term of the Group’s pension plans. The calculation is performed by a qualified actuary using the projected unit credit method. This method takes into account future salary increases resulting from employee career opportunities and general salary increases, including adjustments for inflation.
If the entitlements under a plan are changed, or a plan is curtailed, the resulting change in entitlements relating to past service, or the gain or loss on the closure, as the case may be, is recognised directly in the statement of profit or loss.
Actuarial gains and losses are recognised directly as other comprehensive income that will never be reclassified to the statement of profit or loss.
If the result of the calculation is a potential asset for the Group, recognition of the asset is limited to the present value of the economic benefits available as possible future refunds from the plan or lower future contributions. When calculating the present value of the economic benefits, possible minimum financing obligations that apply are taken into account.
(20c) Long-term employee benefits
The Group’s net liability in respect of non-current employee benefits, other than pension plans, is the amount of future benefits that employees have accrued in return for their service in the reporting period and in previous periods, such as long-service payments, bonuses and incentives. The liability is calculated using the projected unit credit method and is discounted to determine its present value. The discount rate is the market yield at the reporting date on high-quality corporate bonds of which the term is consistent with the term of the Group’s pension plans. Actuarial gains and losses on these benefits are recognised in the statement of profit or loss.
(20d) Severance payments
Severance payments are recognised as an expense if the Group has shown that it is committed to terminating the employment contract of an employee or group of employees before the normal retirement date, by producing a detailed, formal plan, without there being a realistic option of the plan being withdrawn.
(20e) Share-based payments to be settled in equity instruments
Part of the remuneration of the members of the Executive Board is the Bonus Investment Share Matching Plan, which provides members of the Executive Board the opportunity to purchase depositary receipts for shares in Royal Heijmans N.V. For each depositary receipt purchased, a conditional depositary receipt is awarded pursuant to the Share Matching Plan. Provided that they hold those depositary receipts for three years (performance-related condition) and are still in service at the end of that period (service-related condition), the Group will award one bonus depositary receipt for each depositary receipt in which the members of the Executive Board invested, a so-called matching share.
On the grant date, the fair value of the equity-settled share-based payments is recognised as an expense in the statement of profit or loss with a corresponding increase in equity. During the vesting period – up to the date on which all conditions have been met – a periodic review takes place to determine the extent to which the associated service-related and/or performance-related conditions will be met, so that the final recognised amount is based on the number of awards that meet the conditions on the vesting date.
(20f) Share-based payments to be settled in cash
The Group has share-based payments that are settled in cash (share appreciation rights or SARs). The fair value of the amount due to employees, which is settled in cash, is recognised as an expense with a corresponding increase in the provision over the period in which the employees become unconditionally entitled to payment. This provision is included in the balance of other provisions. The liability is remeasured periodically including on the settlement date based on the fair value of the award. Any changes in the liability are recognised in the statement of profit or loss.