ANNUAL REPORT 2011 REGISTRATION DOCUMENT - Saft

6
2011 CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
In accordance with IAS 18 “Revenue recognition”, revenue
from the sale of goods and equipment are recognised when
there is a formal agreement with the customer, the amount
of revenue can be reliably measured, it is probable that the
economic benefi ts associated with the transaction will fl ow
to the Group, and the Group has transferred substantially all
the risks and rewards of ownership to the purchaser. If the
contract requires formal acceptance of the goods, equipment
or services by the customer, revenue recognition is in principle
deferred until the date of such acceptance.
Revenue is measured at the fair value of the consideration
received or receivable. Where payment is deferred and the
effect on fair value is material, this effect is taken into account
by discounting the future payments.
For products sold through distributors, revenue is recognised on
delivery to the distribution network. Product returns, estimated
in accordance with contractual commitments and statistics on
past sales, are recognised at the same date.
Construction contracts
IAS 11 defi nes a “Construction contract” as a contract
specifi cally negotiated for the construction of an asset or
a combination of assets that are closely interrelated or
interdependent in term of their design, technology and function
or their ultimate purpose of use.
Group sales from constructions contracts are primarily for the
construction or design of specifi c batteries, mainly in military
applications and satellites.
In accordance with IAS 11, in recognising revenue and profi ts
on construction contracts the Group applies the percentage of
completion method based on contractually-agreed milestones
(determined on the basis of costs incurred compared with total
estimated contract costs).
Probable losses on completion are recognised immediately.
In the event of uncertainty regarding customer acceptance, or
in the case of relatively short-term contracts, revenue is only
recognised up to the amount of recoverable costs.
Work in process on long-term contracts is recorded at
production cost and does not include any administrative or
selling expenses.
Movements in contract penalties (late delivery or noncompliance)
are recognised as a deduction from revenue.
Partial payments received under construction contracts are
recognised as a liability in the balance sheet under “Prepayments
on long-term contracts” for the portion of such payments
corresponding to work not yet carried out. The amount of costs
incurred, plus recognised gains and less recognised losses (in
particular provisions for losses to completion), is calculated
individually for each contract. If this amount is positive, it is
recorded as an asset under “Long-term contract receivables”.
If negative, it is recorded as a liability under “Prepayments on
long-term contracts”.
2.24 COST OF SALES
Cost of sales mainly includes:
� the cost of production, which includes the acquisition cost
of raw materials and other components used in production,
direct production costs (mainly salaries), and indirect
production costs that are attributable to the production of
the goods sold;
� depreciation of property, plant and equipment and
amortisation of intangible assets;
� depreciation of deferred grants related to assets;
� provisions for product returns; and
� direct selling costs (freight, packaging and sales
commissions).
2.25 GROSS PROFIT
Gross profi t is calculated as net revenue less cost of sales.
2.26 OPERATING PROFIT (LOSS)
Operating profi t is made up of gross profi t, administrative and
selling expenses, Research and Development expenses, other
operating income/expenses and restructuring costs.
Other operating income and expenses consists primarily of:
� gains or losses on forward contracts for purchases and
sales of commodities, where the hedging contracts do not
satisfy the IAS 39 criteria for hedge accounting;
� gains or losses on available-for-sale securities;
� gains or losses on disposals of investments, of property,
plant and equipment, and of intangible assets;
� income and expenses that are non-recurring during the
Group’s day-to-day operations. They are characterised by
their unusual nature and/or amount.
Operating profi t excludes net fi nancial expense and income
tax expense.
2.27 FINANCIAL INCOME AND EXPENSES
Financial income and expenses include interest income and
expense, changes in the fair value of held-for-trading and
available-for-sale fi nancial assets, impairment losses on
other non-current fi nancial assets, foreign exchange gains
and losses, changes in the fair value of fi nancial instruments
(excluding hedges of non fi nancial assets and liabilities) and
other fi nancial income and expenses.
SAFT - ANNUAL REPORT 2011 / 139