Financial Report and Registration Document 2010 - Groupe Seb

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4 NOTES COMPANY FINANCIAL STATEMENTS TO THE COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTE 0 SIGNIFICANT EVENTS OF THE YEAR SEB S.A. prepaid a €117 million loan originally repayable in annual instalments of €23.4 million until September 2014. On 15 July 2010, SEB S.A. recapitalised its subsidiaries Groupe SEB Moulinex for €49.8 million, SEB Développement for €9.8 million and Groupe SEB Alliance for €0.1 million. NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1. PRINCIPLES The Company fi nancial statements have been prepared in line with the principle of prudence and in compliance with the preparation and presentation rules set out in French law and France’s Plan Comptable Général of 1999. 1.2. INTANGIBLE ASSETS Intangible assets are stated at acquisition cost, excluding transaction costs and interest expense. They mainly consist of patents amortised over periods ranging from three to ten years. 1.3. SHARES IN SUBSIDIARIES AND AFFILIATES Shares in subsidiaries and affiliates are stated at the lower of cost and net realisable value. Cost corresponds to acquisition cost, except for shares acquired before 31 December 1976 and included in the legal revaluation, which are stated at valuation. Net realisable value is determined based on the Company’s equity in the investee’s net assets, market value or the investee’s earnings outlook. 1.4. OWN SHARES SEB S.A. shares held by the Company are classified as follows: shares bought back for allocation on exercise of existing or future stock options are classified under ‘Marketable securities; all other SEB S.A. shares held by the Company – mainly under the liquidity contract – are classified under “Other non-current assets”. At the year-end, an impairment loss is recognised whenever the shares’ purchase price is lower than the average share price for the last month of the year. 1.5. CASH AND CASH EQUIVALENTS AND FINANCIAL INSTRUMENTS SEB S.A. manages cash and cash equivalents and currency risk on behalf of the Group. The Company meets the short-term financing needs of virtually all Group subsidiaries. A daily bank balance reporting system has been set up to monitor the fi nancing needs of the French, German, Spanish, Italian, Hungarian, Austrian, Swiss and Hong Kong subsidiaries. Current account advances to and from the cash pool pay interest at the overnight rate for the currency concerned plus 0.15 bps. Commercial paper is issued in euros under a €600 million programme rated A2 by Standard & Poor’s and is converted into the functional currency of the subsidiaries concerned outside the euro zone by means of swaps, thereby limiting the Company’s exposure to currency risks on these financing transactions. A provision may be set aside to cover the unhedged portion of the risk. SEB S.A. fixes the exchange rates for intercompany import and export transactions on behalf of its subsidiaries. Net currency positions (arising when exports exceed imports) are hedged by forward foreign exchange contracts, allowing the hedged transactions to be recognised directly in the subsidiary’s local currency at the hedging rate. The unrealised gain or loss, i.e. the difference between the hedging rate and the closing rate, is recognised in the financial statements of SEB S.A. at the period-end. Any unrealised losses arising on such transactions are recognised on the assets side of the balance sheet under “Conversion losses” and lead to the recognition of a provision for contingencies. Unrealised gains are recognised in liabilities under “Conversion gains” without affecting profit for the year. The contango or backwardation is recorded in the income statement when the swap expires. 122 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB
4 COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS 1.6. CONVERSION AND MEASUREMENT OF CASH AND SHORT-TERM BANK LOANS IN FOREIGN CURRENCY Cash and short-term bank loans denominated in foreign currency at the period-end are converted into local currency at the exchange rate on the last business day of the period, and conversion differences are recognised in profit for the period under “Exchange gains” or “Exchange losses”. 1.7. INCOME TAX SEB S.A. and its French subsidiaries fi le a consolidated tax return under the group relief system provided for in Article 223-1 et seq. of the General French Tax Code (Code Général des Impôts). No group relief agreement has been signed and each member of the tax group therefore calculates the income tax charge or benefit they would have paid or received if they had been taxed on a stand-alone basis. As the parent company, SEB S.A. recognises in its income statement any tax savings or additional tax expense arising on the consolidation of the French subsidiaries’ taxable results. Tax savings resulting from group relief for tax losses incurred by companies in the tax group are initially recognised by SEB S.A. and are transferred back to the companies concerned when they return to profit. NOTE 2 MOVEMENTS IN NON-CURRENT ASSETS 2.1. INTANGIBLE ASSETS During the year, SEB S.A. acquired the right to use the 3 D CLIP patent for €0.2 million. The licence is amortised on a straight-line basis over three years. 2.2. PROPERTY, PLANT AND EQUIPMENT There were no material acquisitions, disposals or retirements of property, plant and equipment during the period. 2.3. NON-CURRENT FINANCIAL ASSETS (in € millions) 2009 Additions Disposals 2010 Shares in subsidiaries and affiliates 755.8 59.7 815.5 Loans to subsidiaries and affiliates 790.3 0.5 22.9 767.9 Own shares 0.0 0.3 0 0.3 Other investments 0.4 0.0 0.3 0.1 TOTAL COST 1,546.5 60.5 23.2 1,583.8 Provisions for impairment of shares in subsidiaries and affiliates (71.4) (34.8) (36.6) Provisions for impairment of other investments 0.0 0 0 0.0 TOTAL PROVISIONS (71.4) 0.0 0.0 (36.6) TOTAL CARRYING AMOUNT 1,475.1 60.5 58.0 1,547.2 (in € millions) 2008 Additions Disposals 2009 Shares in subsidiaries and affiliates 736.8 19 755.8 Loans to subsidiaries and affiliates 1,106.4 157.3 473.4 790.3 Own shares 21.9 21.9 0.0 Other investments 0.4 0.4 Other non-current financial assets - - TOTAL COST 1,865.5 176.3 495.3 1,546.5 Provisions for impairment of shares in subsidiaries and affiliates (46.4) (25.0) 0 (71.4) Provisions for impairment of own shares (8.4) (8.4) 0.0 TOTAL PROVISIONS (54.8) (25.0) (8.4) (71.4) 4 TOTAL CARRYING AMOUNT 1,810.7 151.3 486.9 1,475.1 Loans to subsidiaries and affiliates include advances by the parent company SEB S.A. to its subsidiaries under the Group’s financial policy (see Note 1.5). The decrease of €22 million was due to a decline in intercompany current account advances (€15.6 million) and the repayment of the long-term loan made to Groupe SEB Iberica (€7.1 million). The revaluation reserve in shareholders’ equity relates mainly to non-current financial assets. At 31 December 2010, the Company held 1,980,698 SEB S.A. shares acquired at an average price of €31.14 per share (before impairment). The shares are being held mainly for allocation on exercise of stock options (39,596 under the 2003 plan, 213,596 under the 2004 plan, 158,333 under the 2005 plan, 280,497 under the 2006 plan, 571,050 under the 2007 plan, 988,200 under the 2008 plan, 370,250 under the 2009 plan and 412,592 under the 2010 plan). In 2010, SEB S.A. bought back 264,329 shares on the market at a weighted average price of €56.54 and sold 1,433,074 shares on the market at an average price of €33.76. GROUPE SEB FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 123
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FINANCIAL REPORT AND REGISTRATION D
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GROUP PROFILE AND KEY FIGURES 2010
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GROUPE SEB IN 2010 1 GROUPE SEB IN
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1 GROUPE SEB IN 2010 MILESTONES IN
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1 GROUPE SEB IN 2010 BUSINESS SECTO
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1 GROUPE SEB IN 2010 INDUSTRIAL STR
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1 GROUPE SEB IN 2010 MANAGEMENT REP
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1 GROUPE SEB IN 2010 RISK MANAGEMEN
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1 GROUPE SEB IN 2010 SOCIAL PERFORM
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1 GROUPE SEB IN 2010 ENVIRONMENT PE
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CORPORATE GOVERNANCE 2 CORPORATE GO
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2 CORPORATE GOVERNANCE ORGANIZATION
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2 CORPORATE GOVERNANCE GROUP MANAGE
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2 CORPORATE GOVERNANCE CHAIRMAN’S
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2 CORPORATE GOVERNANCE STATUTORY AU
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CONSOLIDATED FINANCIAL STATEMENTS 3
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3 CONSOLIDATED FINANCIAL STATEMENTS
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Page 137 and 138: ANNUAL GENERAL MEETING 5 ANNUAL GEN
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Page 165 and 166: NOTES GROUPE SEB FINANCIAL REPORT A
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