FINANCIAL AND ACCOUNTING INFORMATION When the benefits of a plan are improved (reduced), 3.13 Provisions the portion of the increased (decreased) benefit A provision is recognized in the balance sheet relating to past service by employees is recognized when the Group has a present legal or constructive immediately as an expense (income) in the income obl igation as a result of a past event, when it is statement. The current and past service costs as probable that an outflow of economic benefits will wel l as administrative costs paid from registered be required to settle the obligation and when the pension plans’ assets are presented in the amount can be estimated reliably. income statement as part of the distribution and administrative expenses. The net interest expenses If the effect of time value is material, provisions are (income) relating to the discounting of the net determined by discounting the expected future funded position (defined benefit obligation less plan cash flows at a rate that reflects current market assets) is presented in net financial expenses in the assessments of the time value of money and, when income statement. appropriate, the risks specific to the liability. Remeasurements of net defined benefit obligation Provision for restructuring including (i) actuarial gains and losses, (ii) actual A restructuring is a program that is planned and return on plan assets including administrative controlled by management that materially changes expenses al located to manage plan assets and either the scope of the business or the manner in (iii) changes in the effect of the asset ceiling are which that business is conducted. recognized in other comprehensive income. A provision for restructuring is recognized when Other long-term benefits the Group has approved a detai led and formal Long-term benefits mainly include jubilees or long restructuring plan, and the restructuring either has service leaves. The Group’s net obligation in respect commenced or has been announced publicly. Future of long-term benefits, other than post-employment operating losses are not provided for. Restructuring 5 plans, is the amount of future benefit that employees expenses are presented in “Other expenses” (see have earned in return for their service in the current note 3.16). Restructuring costs principal ly include and prior periods. The value of the obl igation is personnel costs (severance payments, early determined using the projected unit credit method. retirement costs, notice period not worked), branch This amount is discounted at the rate based on high closure costs, and indemnities for the breach of non- quality corporate bonds with maturity dates close cancellable agreements. to those of the Group’s obligations prevailing on the Onerous contracts balance sheet date. A provision for onerous contracts is recognized Actuarial gains and losses are immediately when the expected benefits to be derived from a recognized in the income statement as part of the contract are lower than the unavoidable cost of distribution and administrative expenses. meeting its obligations under the contract. 3.12 Share-based payments Provisions for disputes and litigations Bonus share programs, qualified as equity-settled, Provisions for disputes and l itigation include al low Group employees to receive shares of the estimated costs for risks, disputes, litigation and third parent company of the Group. The fair value of party claims, and the probable costs associated with bonus shares allocated is recognized as a personnel warranties given by the Group in the context of the expense with a corresponding increase in other disposal of non-current assets or subsidiaries. reserves in equity over the period during which the These provisions also include costs of personnel employees become unconditionally entitled to the disputes and tax litigation. A provision is not made for options (the vesting period). The expense is based tax assessments received or in course of preparation on fair value estimate of the equity instruments in when there is a reasonable probabil ity that the accordance with conditions of granting. Group will succeed in convincing the authority of its position. Fair value of bonus shares is measured at grant date using an appropriate model depending on the Any accepted assessment is recorded as a liability characteristics of the plans. when the amount can be reasonably estimated. REXEL 2017 – REGISTRATION DOCUMENT 227