Page 78 - Annual Report 2010

ANNUAL REPORT 2010

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contributions from staff and the corresponding liability is recorded in “Other liabilities”.

Health insurance scheme

The Fund has subscribed to a health insurance scheme with an insurance company for the benefit of staff at retire-ment age, financed by contributions from the Fund and its employees. The entitlement is of a defined benefit type and is based on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of this benefit are accrued over the period of employment, using a methodology similar to that for defined benefit pension plans. Health insurance liabilities are determined based on actuarial calculations calculated annually by qualified external actuaries.

2.7.2 Short-term employee benefits

Employee entitlements to short-term benefits are recog-nised when they accrue to employees. A provision is made for the estimated liability for any outstanding short-term benefit entitlement as a result of services rendered by employees up to the date of the statement of financial position.

2.7.3 Other long-term employee benefits

An accrual for other long- term employee benefit costs relating to the year is included in the profit or loss under the heading “Staff costs”, resulting in a provision for the estimated liability at the date of the statement of financial position.

2.8 Other liabilities and provisions

Other liabilities are classified according to the substance of the contractual arrangements entered into. Trade paya-bles are non-interest bearing liabilities and are stated at amortised cost.

Provisions are recognised when the Fund has a present obligation, legal or constructive, as a result of a past event, and it is probable that the Fund will be required to settle that obligation.

2.9 Interest and similar income

Interest income and similar income is recognised in the profit or loss for all interest -bearing instruments on an accrual basis using the effective interest method based on the purchase price including direct transaction costs. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net car-rying amount of the financial asset.

2.10 Income from investment in shares

and other variable income securities

Income from investment in shares and other variable income securities includes capital repayments which are recognised when EIF’s right to receive payment is established.

2.11 Net result from guarantee operations

Net result from guarantee operations mainly includes:

„„ Guarantee premiums received;

„„ Interest income on the discounting of the expected premium inflows and any amortisation of the finan-cial guarantees;

„„ Changes in estimates of provisions for financial guarantees accounted for under IAS 37.

2.12 Commission income

This heading is mainly made up of fees and commis-sions on mandates and advisory activities and excludes guarantee premiums.

Fees and commissions are recognised on an accrual ba-sis when the service has been provided. Port folio and management advisory and service fees are recognised based on the applicable service contracts, usually on a pro-rata basis. Asset management fees related to invest-ment funds are recognised over the period in which the service is provided.