Short-term employee benefits are recognised as an expense in the statement of profit or loss in the period in which the related services are provided by employees. A liability is recognised for the amount expected to be paid if, at the reporting date, the Group has a present obligation as a result of services provided by employees in the past and this obligation can be reliably estimated.
(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 for long-term employee benefits, excluding pension plans, is the amount of future benefits, such as long-service awards, bonuses and gratuities, that employees have accrued in return for their services in the reporting period and prior periods. 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
Within the Group, share-based payments to be settled in equity instruments are made in respect of the remuneration of the members of the Executive Board. The obligation is remeasured periodically (during the period in which the members of the Executive Board acquire an unconditional right to payment) and at the settlement date. For this purpose, an estimate is made of the number of instruments that will ultimately become unconditional (q-component), taking into account the estimate of the extent to which the related service and/or performance-related conditions will be met. This number is multiplied by the fair value (p-component) based on the closing price of the Royal Heijmans N.V. share at the grant date and allocated to the service period elapsed. The change in the fair value of the grant is recognised in the statement of profit or loss with a corresponding change in equity.
(20f) Share-based payments to be settled in cash
Within the Group, there are share-based payments to be settled in cash in the form of share appreciation rights or SARs. A change in the fair value of the grant is recognised in the statement of profit or loss with a corresponding change in the related provision. The provision is remeasured periodically (during the period in which employees acquire an unconditional right to payment) and at the settlement date on the basis of the fair value of the grant; in doing so the fair value of the share is determined on the basis of the closing price of the Royal Heijmans N.V. share at the review date.