Econocom - 2020 annual report

06 consolidated financial statements

notes to the consolidated financial statements

Provisions 16. The Group recognises provisions when it has a legal or constructive obligation towards a third party as a result of past events which is likely to result in an outflow of resources that can be measured reliably. The amount recognised represents the best estimate of the expenditure expected to be required to settle the present obligation, taking into account the risks and uncertainties known at the reportingdate. Long-term provisions Long-term provisions cover risks which are not reasonably expected to materialise for several years, and concern social risks. They are discounted if required. Contingent liabilities Other than the general risks described in note 19, the Group did not identify any material risks not provisioned in its financial statements. Provisions for restructuring and social risks Provisions for restructuring and social risks in the amount of €4.9 million cover future costs related particularly to the ongoing transformation of the Digital Services & Solutions business line, on the one hand, and litigation with former employees, on the other.

Short-term provisions Short-term provisions primarily correspond to provisions for claims related to the Group’s normal operating cycle and which are expected to be settled within 12 months. They mainly include: provisions for social risks (including risks • arising from reorganisation measures); tax and legal risks (disputes in progress • with customers, suppliers, agents or tax authorities); deferredcommissions,(calculatedcontract- • by-contract based on the residual value of leased assets, less any residual commercial value of thecontractsconcerned); other provisions. • Provisions for tax, legal and commercial risks This item includes provisions for legal and commercial risks in the amount of €18.6 million, which mainly cover the risks related to ongoing litigation with customers. Provisions for other risks Provisions for other risks (€20.0 million) cover a wide variety of risks.

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2020 annual report