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Past-service costs are recognized immediately in the income statement.
The net interest rate is calculated by the discount rate being applied to defined benefit plans and to the fair value of plan assets.
This expense is included in the personnel costs in the income statement.
Actuarial gains and losses as a result of experience-based adjustments and changes in actuarial assumptions are recognized
in other comprehensive income in the period in which they arise.
b) Termination benefits
Employees receive compensation on termination before normal retirement age or when they voluntarily accept termination in
exchange for these benefits. The Group recognizes 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.
c) Variable remuneration
Annual variable remuneration is based on meeting set targets determined on an annual basis. These targets are related to the
performance of the Company. The Group recognizes costs as and when earnings occur.
Leasing
Leasing is classified as operating leasing when the risks and benefits of ownership are retained by the lessor. All leasing agreements
within the Group are classified as operating leases. Operating lease payments are recognized in the income statement on
a straight-line basis over the period of the lease.
Product development
Product development work is an integral part of production relating to process improvement measures that is expensed on a
continuous basis as a part of the product cost as it arises. Research and development expenses are those related to work whose
purpose is primarily to optimize the attributes and function of oils and speciality fats, either for the finished product in which these
oils and fats are ingredients or to improve the efficiency of the production process of the finished product.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets
of the acquired subsidiary on the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill recognized separately is allocated to cash-generating units for the purpose of annual impairment testing. Goodwill
is allocated to the cash-generating units that are expected to benefit from the acquisition. Goodwill is recognized at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the remaining carrying amount of goodwill
relating to the entity sold.
When acquiring operations where cost is less than the net value of the acquired assets, borrowings, and any contingent
liabilities, the difference is recognized directly in the income statement.
Other intangible assets
Other intangible assets include such assets as capitalized expenditure on IT, patents and trademarks. These assets have a
defined useful life and are carried at cost less accumulated amortization and impairment losses. The cost associated with
maintaining an intangible asset is recognized as part of the carrying value or as a separate asset only when it is probable that
the future economic benefit associated with the asset will flow to the Group and the cost of the asset can be reliably measured.
Other expenditures are expensed as they arise. Other intangible assets are amortized using the straight-line method over their
estimated useful lives, normally 5 to 10 years.
Property, plant and equipment
Land and buildings comprise mainly factory buildings and offices. All property, plant and equipment is carried at cost, less
accumulated depreciation. Acquisition cost includes expenditure that is directly attributable to the acquisition of an asset.
Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the assets will flow to the Group and the cost of the asset can
be measured reliably. All other repairs and maintenance are expensed in the financial period in which they arise.
Land is not depreciated. Depreciation of other property, plant and equipment is allocated on a straight-line basis over the
estimated useful lives of the assets to reduce their cost to residual values. Depreciation periods of between 3 and 15 years
are used for plant and machinery, equipment, tools, fixtures and fittings. Industrial buildings and research laboratories are
depreciated over 20 and 25 years, respectively, and office buildings over 50 years. When an asset’s carrying amount may
not be recoverable, the asset is immediately impaired to its recoverable amount.
Assets’ residual value and useful life are reviewed at the end of every reporting period and adjusted as required.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the
income statement.
Impairment of non-financial assets
Assets with indefinite useful lives are tested for impairment annually rather than being amortized. All assets are assessed in
terms of impairment whenever events or changes in circumstances indicate that an asset’s carrying amount exceeds its recoverable
amount. Impairment reflects the excess of an asset’s carrying amount over its recoverable amount. The recoverable amount
is either the asset’s fair value less any selling costs or its value in use, whichever is greater. For the purposes of assessment,
assets are grouped on the basis of the lowest level at which there are separate identifiable cash flows (cash-generating units).
Assets, other than financial assets and goodwill, for which impairment loss was previously recognized, are tested at the end of
every reporting period to ascertain whether any reversal should be made.
Inventories
Inventories are stated at cost or net selling price, whichever is lowest. Cost is calculated using the first-in-first-out principle (FIFO)
or weighted average prices. The nature and area of use of the product determines the method used. The cost of finished goods
and work in progress includes direct material costs, direct labor and other direct manufacturing costs and a reasonable allocation
of indirect manufacturing expenses based on normal production capacity, excluding borrowing costs. Net selling price is the
estimated sale price in the ordinary course of business, less costs of completion and applicable variable costs to sell.