ANNUAL REPORT 2011 REGISTRATION DOCUMENT - Saft

6 Notes
2011 CONSOLIDATED FINANCIAL STATEMENTS
to the Consolidated Financial Statements
Each technology is amortised by the straight-line method on the
basis of their estimated useful lives and commercial prospects.
The periods used are:
� Lithium-ion 21 years
� Primary Lithium 11 years
� Nickel-Cadmium 11 years
� Nickel-Metal Hydride 7 years
� Other Technologies 4 years
Research and Development costs
Research and Development expenditure is recognised as an
expense in the year in which it is incurred, except for some
development costs that are capitalised as an intangible asset
in accordance with IAS 38 when all of the following six criteria
are strictly met:
� the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
� the intention to complete the intangible asset and use or sell
it;
� the ability to use or sell the intangible asset;
� the existence of a market for the output of the intangible
asset;
� the availability of adequate technical, fi nancial and human
resources to complete the development; and
� the ability to measure the expenditure attributable to the
intangible asset during its development reliably.
The cost of a capitalised development project is the sum of
expenditure incurred from the date when the project fi rst meets
the six criteria listed above. Development expenditure initially
recognised as an expense is not capitalised in subsequent
periods.
Capitalised development costs are amortised over:
� the useful life (of a process) or the commercial life (of a
product), if this can be determined; or
� the useful life of the underlying technology.
Amortisation of capitalised development costs does not start
until the related product begins to be sold.
Capitalised development costs are generally amortised over
a period of between 3 and 21 years. These periods are
reviewed annually, and any adjustments required as a result of
these reviews are recognised prospectively.
Billable Research and Development expenditure incurred under
a contract with a customer is included in long-term contract
work in process.
134 / SAFT - ANNUAL REPORT 2011
2.9 GOODWILL
In accordance with IFRS 3 “Business combinations”, at the
acquisition date, the difference between the acquisition cost of
the subsidiary and the Group’s interest in its net assets stated at
fair value, is accounted for as goodwill.
Goodwill is not amortised but is tested for impairment as soon
as an indication of potential impairment appears and at least
on an annual basis.
Goodwill is allocated to the Cash Generating Units (CGUs)
or groups of CGUs to which it relates to carry out impairment
tests. In accordance with IAS 36 “Impairment of assets”,
the methodology used by the Group to identify potential
impairments primarily involves comparing the recoverable
amount of each CGU or group of CGUs with the carrying
amount of their respective assets.
The recoverable amount is the higher of the fair value less exit
costs or the value in use determined as the present value of
future cash fl ows associated with the CGU.
Recoverable amounts of CGUs are determined on the basis of:
� projections of cash fl ows generated by operations for the
relevant CGU over its three-year business plan, plus a
terminal value;
� discounting such projected cash fl ows at the Group’s
Weighted Average Cost of capital (WACC).
Any impairment losses identifi ed are charged to the income
statement in the operating profi t. Impairment losses recognised
against goodwill may not be reversed.
Main assumptions and estimates used for these calculations by
the end of 2011 are described in Note 10.
2.10 PROPERTY, PLANT AND EQUIPMENT
In accordance with IAS 16 “Property, Plant and Equipment”
assets are only capitalised if the cost of the asset can be
measured reliably and it is probable that the future economic
benefi ts attributable to the asset will fl ow to the Group.
Items of property, plant and equipment are derecognised
when the risks and rewards incidental to ownership of the asset
are transferred or when there is no future economic benefi t
expected from the asset’s use of sale.
Any gain or loss arising from the derecognition of an asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is recognised
in the income statement in the period in which the asset is
derecognised.
Items of property, plant and equipment are initially recognised
at historical cost of acquisition or production.
Property, plant and equipment costs may include, if applicable,
borrowing costs when the asset is eligible under IAS 23 R
(asset requiring a long preparation period before it can be
used or sold).