Actuarial gains and losses arising from experience

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Actuarial gains and losses arising from experience adjust- ments and changes in actuarial assumptions are charged or credited to comprehensive income in the period in which they occur. Past service costs are recognised immediately in the income statement. Net pension assets are recognised to the extent that the LEGO Group is able to derive future economic benefits in the way of refunds from the plan or reductions of future contributions. Provisions Provisions are recognised when the LEGO Group identifies legal or constructive obligations as a result of past events and it is probable that it will lead to an outflow of resources that can be reliably estimated. In this connection, the LEGO Group makes the estimate based upon an evaluation of the individual, most likely outcome of the cases. In cases where a reliable estimate cannot be made, these are disclosed as contingent liabilities. Further provisions for restructuring expenses are only recognised when the decision is made and announced before the balance sheet date. Provisions are not made for future operating losses. Provisions are measured at the present value of the estimated obligation at the balance sheet date. Other liabilities Other liabilities are measured at amortised cost unless specifically stated otherwise. Cash flow statement The consolidated cash flow statement shows cash flows for the year broken down by operating, investing and financing activities, changes for the period in cash and bank overdrafts and cash and bank overdrafts at the beginning of the year. Cash flows from operating activities are calculated indirect- ly as operating profit adjusted for non-cash items, financial expenses paid, income taxes paid and changes in working capital. Cash flows from investing activities comprise payments relating to acquisitions and disposals of activities, intangible assets, property, plant and equipment, fixtures and fittings as well as fixed asset investments. Furthermore, they comprise interest and dividends received. Cash flows from financing activities comprise proceeds from borrowings, repayment of interest-bearing debt and dividend paid to shareholders. Cash and cash equivalents comprise cash that can readily be converted into cash reduced by short-term bank debt. Financial highlights Economic value added (EVA) is calculated as adjusted profit before income tax less (average invested capital x WACC). Adjusted profit before income tax is calculated as profit before income tax adjusted for income and expenses of a non-recurring nature and interest expenses. Financial ratios, except average invested capital, have been calculated in accordance with the “Guidelines and Financial Ratios 2015”, issued by the Danish Society of Financial Analysts. Average invested capital is calculated as intangi- ble assets, property, plant and equipment and net working capital excluding current tax, deferred tax and special items.
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