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The liability recognised in the statement of financial position
in respect of defined benefit retirement plans is the present value
of the defined benefit obligation at the end of the reporting period
less the fair value of plan assets. The defined benefit obligation is
calculated annually by independent actuaries using the projected unit
credit method. The present value of the defined benefit obligation
is determined by discounting the estimated future cash outflows
using market yield of government bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to
maturity approximating to the terms of the related retirement liability.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged
or credited to the Fund in other comprehensive revenues and
expenses in the period in which they arise.
Past-service costs are recognised immediately in revenues
and expenses.
2.14.2 Termination benefits
Terminationbenefitsarepayablewhenemploymentisterminated
by the Group before the normal retirement date, or whenever
an employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits when it is
demonstrably committed to either: terminating the employment
of current employees according to a detailed formal plan without
possibility of withdrawal; or providing termination benefits as a
result of an offer made to encourage voluntary redundancy. Benefits
falling due more than 12 months after the end of the reporting
period are discounted to their present value.
2.15
Provisions
Provisions for environmental restoration, restructuring costs
and legal claims are recognised when: the Group has a present legal
or constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Restructuring provi-
sions comprise lease termination penalties and employee termination
payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole.
A provision is recognised even if the likelihood of an outflow
with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of the
expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as interest expense.
2.16
Lease-where a Group is the lessee
Leases of assets under which all the risks and benefits of
ownership are effectively retained by the lessor are classified
as operating leases.
Payments made under operating leases are recognised in the
statement of comprehensive revenues and expenses on a straight-
line basis over the term of the lease. Lease incentives granted
are recognised in the statement of comprehensive revenues and
expenses as an integral part of the total rental income. Contingent
rentals are charged to the statement of comprehensive revenues
and expenses for the accounting period in which they are incurred.
When an operating lease is terminated before the lease
period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the
period in which termination takes place.