Annual report 2012

25. Provisions

EUR thousand 31 Dec 2011 Utilisation and reversal Formation 31 Dec 2012
Provisions for probable payments resulting from legal actions 24,037 -1,174 2,300 25,163
Provisions for retirement benefits and jubilee premiums 7,657 -217 298 7,738
Provisions for estimated costs of base stations removal 3,469 0 281 3,750
Other provisions 389 -291 143 241
Provisions for restructuring of the Company 6,445 -5,158 558 1,845
Total 41,997 -6,840 3,580 38,737

Provisions for probable payments resulting from legal actions

Provisions for probable payments resulting from legal actions are created on the basis of the estimation of the actions' outcome. The date of payment cannot be determined. Legal actions relate to claims for damages from the alleged abuse of the Company’s monopolistic position in the marketing of internet services, actions by service providers (competitors) due to opposition to prices, damages relating to the cancellation of contracts, claims relating to damages that occurred during the performance of the activity (violation of property rights), compensation relating to workplace injuries, and other claims.

The Competition Protection Office of the Republic of Slovenia began several ex officio processes to determine an alleged abuse of Telekom Slovenije's dominant position on the market. The Competition Protection Office may impose a fine up to 10% of the annual turnover of the Company. Therefore, the Company made provisions in the amount of EUR 1,992 thousand. Provisions are created solely under the principle of prudence (legal and business) and increased by EUR 2.300 thousand in 2012.

As at 31 December 2012, the amount of damages claimed was EUR 614,379 thousand (2011: EUR 647,720 thousand).

Proti družbi so bile vložene tožbe v skupnem znesku 614.379 tisoč evrov (v letu 2011 647.720 tisoč evrov).

Provisions for estimate costs of the removal of base stations

Provisions were created in the amount of the estimated costs of removal, discounted to present value by using the discount rate of 4.70% p.a. (2011: 5% p.a.), which equals the 2012 year-end yield on 10-year guilt-edged bonds from euro area issuers, increased by a local risk premium.

Provisions for retirement benefits and jubilee premiums

Provisions for termination benefits on retirement are based on actuarial calculations. The calculations applied the discount rate of 4.70%, whereas the rate of fluctuation takes account of the age interval ranging from 0% to 3% (2011: discount rate of 4.80%, rate of fluctuation ranging from 0% to 3%). Liabilities reported by the Company are equal to the present value of estimated future payments. The Company has no other retirement-related liabilities.