27. Provisions

The development of provisions is as follows:

 

Provisions for guarantees

Provisions for guarantees include provisions due to circumstances where a final agreement has not yet been reached and provisions based on experience (customer claim quota, amount of damage, etc.). Future price increases are considered if material. The increase as of December 31, 2022, mainly resulted from a single item in the Americas region due to production defects from previous years.

 

Provisions for restructuring

Provisions for restructuring are recognized in the amount of the expected future cash outflows. Provisions are recognized when a detailed restructuring plan, which has been approved by management and publicly announced or communicated to employees or their representatives, is available. Only expenses directly attributable to the restructuring measures are used to measure the amount of the provision. Expenses related to future operating business are not taken into account.

The additions to provisions for restructuring in the prior fiscal year result from the measures under the ‘Get on track’ program. The accruals include personnel restructuring measures for which provisions can be recognized, resulting in severance payments. In the current fiscal year, EUR 12.4 million were paid out of the provisions (2021: EUR 8.1 million) .

Provisions for severance payments include expected severance payments for NORMA Group employees due to circumstances where a final agreement has not yet been reached. The provisions will be paid out in the following fiscal year and are therefore reported under current provisions.

 

 

Provisions for partial retirement

Employees at NORMA Group in Germany can in general engage in an early retirement contract (‘Altersteilzeit’). In the first phase, the employee works 100% (‘Arbeitsphase’). In the second phase, he / she is exempt from work (‘Freistellungsphase’). The employees receive half of their pay for the total early retirement phase as well as top-up payments (including social security costs paid by the employer). The duration of the early retirement is a maximum of six years.

Accounting for early retirement is based on actuarial valuations taking into consideration assumptions such as a discount rate of 3.32%  p. a. (2021: -0.09% p. a.) as well as the 2018 G life-expectancy tables by Dr. Klaus Heubeck. For signed early retirement contracts, a liability has been recognized. The liability includes top-up payments (‘Aufstockungsbeträge’) as well as deferred salary payments (‘Erfüllungsrückstände’). The expected payments out of the early retirement provisions amount to EUR 840 thousand for fiscal year 2023.

 

Other personnel-related provisions

Other personnel-related provisions are as follows:

The NOVA-LTI, the ESG-LTI as well as the STI for the members of the Management Board are variable remuneration components based on the share price of NORMA Group. A detailed description can be found in  NOTE 25 ‘SHARE-BASED PAYMENTS’.

The LTI for Management (Long-Term Incentive Plan) is a variable remuneration component based on the share price of NORMA Group. A detailed description can be found in  NOTE 25 ‘SHARE-BASED PAYMENTS’.

The provisions for anniversaries were measured using an actuarial interest rate of 3.81% p. a. (2021: 0.77% p. a.) and on the basis of the 2018 G mortality tables of Prof. Dr. Klaus Heubeck in accordance with actuarial principles.

Other personnel-related provisions mainly include payable income tax and social security contributions in foreign countries.

 

Other non-personnel-related provisions

Provisions for outstanding invoices include expected obligations for the audit and advisory services. There are uncertainties regarding the amount and timing of the outflows. However, it is expected that this results in payments within a year.

Other provisions mainly include obligations for other taxes.