FINANCIAL STATEMENTS Consolidated financial statements as of December 31, 2017 3 10.3 Employee benefits Accounting policies Employee benefits Employee benefits are recognized as required by IAS 19, which applies to all payments made for services rendered, except for share-based payment, which is covered by IFRS 2. All employee benefits, whether paid in cash or in kind, short term or long term, must be classified into one of the following four main categories: > short-term benefits, such as salaries and wages, annual vacation, mandatory and discretionary profit-sharing schemes and Company contributions; > post-employment benefits: these relate primarily to supplementary pension payments in France, and private pension schemes elsewhere; > other long-term benefits, which include paid vacation, long-service payments, and some deferred payment schemes paid in monetary units; > severance pay. Measurement and recognition methods vary depending on the category of benefit. Short-term benefits The Company recognizes an expense when it uses services provided by its employees and pays agreed benefits in return. Post-employment benefits In accordance with generally-accepted principles, the Group makes a distinction between defined contribution plans and defined benefit plans. “Defined contribution plans” do not generate a liability for the Company, and therefore are not provisioned. Contributions paid during the period are recognized as an expense. Only “Defined benefit plans” generate a liability for the Company, and are therefore measured and provisioned. The classification of a benefit into one or other of these categories relies on the economic substance of the benefit, which is used to determine whether the Group is required to provide the promised benefit to the employee under the terms of an agreement or an implicit obligation. Post-employment benefits classified as “Defined benefit plans” are quantified actuarially to reflect demographic and financial factors. The amount of the commitment to be provisioned is calculated on the basis of the actuarial assumptions adopted by the Company and by applying the projected unit credit method. The value of any hedging assets (plan assets and redemption rights) is deducted from the resulting figure. According to IAS19R, the actuarial gain or loss is recognized in Equity. Long-term benefits These are benefits other than post-employment benefits and severance pay, which are not payable in full within twelve months of the end of the financial year in which the employees concerned provided the services in question. The actuarial measurement method applied is similar to that used for post-employment defined benefit plans, and the actuarial gains or losses are recognized immediately. Furthermore, any gain or loss resulting from changes in the plan, but deemed to apply to past services, is recognized immediately. Severance pay Employees receive severance pay if their employment with the Group is terminated before they reach the statutory retirement age or if they accept voluntary redundancy. Severance pay falling due more than twelve months after the balance sheet date is discounted. KLÉPIERRE 2017 REGISTRATION DOCUMENT 115