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ePaper created 2015-05-06, 08:22:31 | version 1.38.0
63HERAEUS | FINANCIAL REPORT 2014 | CONSOLIDATED FINANCIAL STATEMENTS m) Other provisions In accordance with IAS 37, other provisions are recognized when the Group has a current legal or constructive obligation to a third party as the result of a past event, an outflow of resources is prob- able, and the amount of the obligation can be reliably estimated. Provisions are recognized for the most likely amount of settlement or for the expected value of settlement if different outcomes are equally probable. Estimates are reviewed and adjusted periodically. If the time value of money is material, provisions that will not result in an outflow of resources until after the following year are recognized at the present value of the expenditure estimated to be needed to meet the obligation. n) Provisions for pensions and similar obligations Provisions for pensions and similar obligations are accounted for in accordance with IAS 19. Defined benefit obligations are recognized and measured separately for each defined benefit plan using the projected unit credit method. This method takes into account expected increases in salaries and pensions in the future in addition to the pensions and vested pension rights known at the balance sheet date. The actuarial assumptions regarding discount rates, increases in salaries and pensions, staff turnover and rises in healthcare costs on which the calculation of the defined benefit obligation is based are determined for each country taking into account the economic conditions in each case. The interest rates used to discount defined benefit obligations are based on market yields on high-quality bonds denominated in the same currency and for the same duration as the defined benefit obligations. If defined benefit obligations are funded by assets held by a legally independent entity (e.g. held in an investment fund or benefit obligations are covered by external assets) that may only be used to meet the pension obligations incurred, and are beyond the reach of any creditors, the assets are de- ducted from the defined benefit obligations, which are recognized as a net liability. The funds held by the Heraeus Group’s German companies and some of its companies abroad qualify as plan assets and are therefore offset against defined benefit obligations. The calculation of the net liability arising from each defined benefit pension plan at each balance sheet date is based on reports provided by qualified actuaries.