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Annual report 2011
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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 re-
lating to the year is included in the profit or loss under the
heading “Staff costs”, resulting in a provision for the estimat-
ed 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
payables 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 dividends and repay-
ments which are recognised when EIF’s investment cost is
fully reimbursed.
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 financial
guarantees;
■
Downgrade / upgrade;
■
Changes in estimates of provisions for financial guar-
antees accounted for under IAS 37.
2.12 Commission income
This heading is mainly made up of fees and commissions
on mandates and advisory activities and excludes guar-
antee 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.
2.13 Leases
The leases entered into by EIF as a lessee or a lessor are
operating leases under which all the risks and benefits of
ownership are effectively retained by the lessor. Payments
or receipts made under operating leases are recognised
to the profit or loss in other administrative expenses or
other operating income on a straight- line basis over the
period of the lease.
When an operating lease is terminated before the lease
period has expired, any payment required to be made to
the lessor by way of penalty is recognised as an expense
in the period in which termination takes place.