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4.9 Provisions and contingencies
When preparing the financial statements the Company's directors made a distinction between:
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Provisions: credit balances covering present obligations arising from past events with
respect to which it is probable that an outflow of resources embodying economic benefits that
is uncertain as to its amount and/or timing will be required to settle the obligations; and
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Contingent liabilities: possible obligations that arise from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of one or more future
events not wholly within the Company's control.
The financial statements include all the provisions with respect to which it is considered that it
is more likely than not that the obligation will have to be settled. Contingent liabilities are not
recognised in the financial statements, but rather are disclosed, unless the possibility of an
outflow in settlement is considered to be remote.
Provisions are measured at the present value of the best possible estimate of the amount
required to settle or transfer the obligation, taking into account the information available on
the event and its consequences. Where discounting is used, adjustments made to provisions
are recognised as interest cost on an accrual basis.
The compensation to be received from a third party on settlement of the obligation is
recognised as an asset, provided that there are no doubts that the reimbursement will take
place, unless there is a legal relationship whereby a portion of the risk has been externalised
as a result of which the Company is not liable; in this situation, the compensation will be taken
into account for the purpose of estimating the amount of the related provision that should be
recognised.
4.10 Termination benefits
Under current legislation, the Company is required to pay termination benefits to employees
terminated under certain conditions. Therefore, termination benefits that can be reasonably
quantified are recognised as an expense in the year in which the decision to terminate the
employment relationship is taken. The accompanying financial statements do not include any
provision in this connection, since no situations of this nature are expected to arise.
4.11 Environmental assets and liabilities
Environmental assets are deemed to be assets used on a lasting basis in the Company's
operations whose main purpose is to minimise environmental impact and protect and improve
the environment, including the reduction or elimination of future pollution.
In view of the business activities carried on by the Company, it does not have any
environmental liability, expenses, assets, provisions or contingencies that might be material
with respect to its equity, financial position or results. Therefore, no specific disclosures
relating to environmental issues are included in these notes to the financial statements.
4.12 Business combinations
Business combinations are accounted for by applying the acquisition method, for which the
acquisition date is determined and the cost of the combination is calculated, and the
identifiable assets acquired and the liabilities assumed are measured at their acquisition-date
fair value.