G24 Other provisions

 

Warran­ties

Restruc­turing

Employee benefits

Environ­mental obligations

Legal disputes

Other obligations

Total

Balance at January 1, 2020

445

1,595

622

398

208

618

3,885

Provisions made during the year

225

2,088

285

67

62

367

3,094

Provisions used during the year

–157

–846

–296

–11

–32

–204

–1,545

Unutilized provisions reversed during the year

–70

–232

–54

–2

–16

–73

–447

Reclassifications

2

15

–16

1

7

–16

–7

Business combinations

1

0

4

0

0

4

9

Translation differences

–23

–44

–17

–23

–32

–61

–200

Balance at December 31, 2020

423

2,576

529

431

196

635

4,790

of which current

313

2,188

182

61

162

474

3,381

of which non-current

110

388

346

369

34

161

1,409

 

 

 

 

 

 

 

 

Balance at January 1, 2021

423

2,576

529

431

196

635

4,790

Provisions made during the year

262

75

460

48

82

333

1,261

Provisions used during the year

–185

–1,048

–333

–39

–39

–275

–1,919

Unutilized provisions reversed during the year

–86

–278

–42

–26

–25

–76

–533

Reclassifications

6

14

28

0

0

–28

20

Business combinations

1

16

20

0

7

105

149

Translation differences

21

34

15

11

8

49

139

Balance at December 31, 2021

444

1,389

676

425

230

742

3,907

of which current

335

1,175

269

52

205

480

2,516

of which non-current

109

214

407

373

25

262

1,390

Accounting principles

Provisions

A provision is recognized in the balance sheet when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, the provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The provisions are mainly related to warranty commitments, restructuring, environmental obligations, long-term incentives and legal disputes and claims, such as value-added tax issues, and customer and supplier claims relating to ongoing or finished projects.

Warranties

A provision for warranties is recognized when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities.

Restructuring

A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

Employee benefits

A provision for personnel-related benefits is recognized in accordance with agreements entered for long-term incentive programs, local bonus programs, part-time pensions and other personnel obligations.

Environmental obligations

An environmental provision is recognized when there is a legal obligation for a clean up.

Site restoration

Provision for costs for restoring contaminated land is made in accordance with the Group’s published environmental principles when there is a legal requirement or other binding commitment to restore established contaminated land and when the cost can be measured with reasonable precision. Site restoration is included in environmental obligations.

Legal disputes

Legal disputes include provisions for claims which, at the balance sheet date, had not been closed.

Other obligations

Other obligations include provisions for onerous contracts and obligations within the scope of Sandvik Försäkring AB’s operations. Provisions classified as current are expected to result in an outflow of resources within twelve months from the balance sheet date.

Termination benefits

When employment is terminated, a provision is recognized only when the entity is demonstrably committed either to terminate the employment of an employee or a group of employees before the normal retirement age or provide termination benefits as a result of an offer made to encourage voluntary redundancy. In the latter case, a liability and an expense are recognized if it is probable that the offer will be accepted and the number of employees that will accept the offer can be reliably estimated.

Critical estimates and key judgments

Disputes

Sandvik is party to a number of disputes and legal proceedings in the ordinary course of business. Management consults with legal experts on issues related to legal disputes and with other experts internal or external to the Company on issues related to the ordinary course of business. It is management’s best estimate that neither the Parent Company, nor any subsidiary, is involved in legal proceedings or arbitration that may be deemed to have a materially negative effect on the business, the financial position or results of operations.