ING Direct 2013 Annual Report Download - page 121

Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be
complied with. When the grant relates to an expense item, the grant is recognised over the period necessary to match the grant on a
systematic basis to the expense that it is intended to compensate. In such case, the grant is deducted from the related expense in the profit
and loss account.
Earnings per ordinary share
Earnings per ordinary share is calculated on the basis of the weighted average number of ordinary shares outstanding. In calculating the
weighted average number of ordinary shares outstanding:
• Own shares held by group companies are deducted from the total number of ordinary shares in issue;
• The computation is based on daily averages; and
• In case of exercised warrants, the exercise date is taken into consideration.
The non-voting equity securities are not ordinary shares, because their terms and conditions (especially with regard to coupons and voting
rights) are significantly different. Therefore, the weighted average number of ordinary shares outstanding during the period is not
impacted by the non-voting equity securities.
Diluted earnings per share data are computed as if all convertible instruments outstanding at year-end were exercised at the beginning of
the period. It is also assumed that ING Group uses the assumed proceeds thus received to buy its own shares against the average market
price in the financial year. The net increase in the number of shares resulting from the exercise is added to the average number of shares
used to calculate diluted earnings per share.
Share options with fixed or determinable terms are treated as options in the calculation of diluted earnings per share, even though they
may be contingent on vesting. They are treated as outstanding on the grant date. Performance-based employee share options are treated
as contingently issuable shares because their issue is contingent upon satisfying specified conditions in addition to the passage of time.
Fiduciary activities
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals,
trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these financial
statements, as they are not assets of the Group.
STATEMENT OF CASH FLOWS
The statement of cash flows is prepared in accordance with the indirect method, classifying cash flows as cash flows from operating,
investing and financing activities. In the net cash flow from operating activities, the result before tax is adjusted for those items in the
profit and loss account, and changes in balance sheet items, which do not result in actual cash flows during the year.
For the purposes of the statement of cash flows, Cash and cash equivalents comprise balances with less than three months’ maturity from
the date of acquisition, including cash and non-restricted balances with central banks, treasury bills and other eligible bills, amounts due
from other banks and amounts due to banks. Investments qualify as a cash equivalent if they are readily convertible to a known amount of
cash and are subject to an insignificant risk of changes in value.
Cash flows arising from foreign currency transactions are translated into the functional currency using the exchange rates at the date of
the cash flows.
The net cash flow shown in respect of Loans and advances to customers relates only to transactions involving actual payments or receipts.
The Addition to loan loss provision which is deducted from the item Loans and advances to customers in the balance sheet has been
adjusted accordingly from the result before tax and is shown separately in the statement of cash flows.
The difference between the net cash flow in accordance with the statement of cash flows and the change in Cash and cash equivalents in
the balance sheet is due to exchange rate differences and is accounted for separately as part of the reconciliation of the net cash flow and
the balance sheet change in Cash and cash equivalents.
Notes to the consolidated annual accounts of ING Group continued
119ING Group Annual Report 2013
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information