Financial Report and Registration Document 2010 - Groupe Seb

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CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The assumptions used – which mainly concern impairment tests on
non-current assets – and the sensitivity of reported amounts to changes in
these assumptions are presented in the relevant notes to these consolidated
financial statements, in accordance with IAS 36.
Estimates are adjusted following any change in the circumstances on which
they were based or when any new information comes to light. Actual results
may differ from these estimates and assumptions.
The main estimates and assumptions used to prepare the consolidated
financial statements concern the measurement of pension and other
post-employment benefit obligations (Note 22.1), deferred taxes (Note 1.4.9),
property, plant and equipment (Note 1.4.3), intangible assets (Notes 1.4.1 and
10), investments in associates and other investments, impairment of current
assets (Notes 1.4.5 and 1.4.6), short and long-term provisions (Notes 1.4.10
and 1.4.11), certain financial instruments (Note 1.4.4 – Derivative instruments)
and share-based payments (Note 1.4.10).
1.4. ACCOUNTING POLICIES AND VALUATION
METHODS
The financial statements of Group companies are prepared in accordance
with local generally accepted accounting principles. They are restated where
necessary to comply with Group accounting policies.
The notes to the consolidated financial statements include analyses of assets
and liabilities by maturity where disclosure of this information is required
under IFRS.
The methods used to measure intangible assets, property, plant and
equipment, inventories and trade receivables are described below.
1.4.1. Intangible assets
A) DEVELOPMENT COSTS
Under IAS 38 – Intangible Assets, research costs are recognised as an
expense and development costs are recognised as an intangible asset when
the Group can demonstrate (IAS 38, paragraph 57):
its intention to complete the development project;
that it is probable that the expected future economic benefits attributable
to the asset will flow to the Group;
its ability to measure reliably the cost of the asset.
Development costs that do not fulfi l the above criteria are expensed as
incurred.
In the consolidated fi nancial statements, qualifying development costs
incurred after the advance design phase and before the manufacturing phase
are recognised as intangible assets.
Development costs are amortised on a straight-line basis over three to
five years, corresponding to the same useful life as that applied to specific
tooling.
B) OTHER INTANGIBLE ASSETS
Software licences and internal software development costs are recognised as
intangible assets when it is probable that they will generate future economic
benefits. They are amortised by the straight-line method over periods ranging
from three to five years. Other software licences and software development
costs are expensed as incurred.
Patents, licences and trademarks with a finite useful life are amortised over
the shorter of the period of legal protection and their expected useful life,
not to exceed fifteen years.
Trademarks with an indefinite useful life are not amortised but are tested
for impairment.
C) GOODWILL
Goodwill, corresponding to the excess of the Group’s interest in net fair value
of the identifiable assets and liabilities acquired in a business combination
over the consideration transferred, is recognised in the balance sheet as
an asset under “goodwill”. The consideration transferred is measured as
the fair value of assets transferred, equity instruments issued and liabilities
incurred by the acquirer to the former owner on the acquisition date, plus any
contingent consideration. In the case of a business combination achieved in
stages, the difference between the carrying amount of the previously held
interest and its acquisition-date fair value is recognised directly in profit or
loss on the acquisition date.
For each business combination, any non-controlling interest in the acquiree
may be measured either at fair value on the acquisition date (full goodwill
method) or at the non-controlling interest’s proportionate share of the
acquiree’s identifiable net assets (partial goodwill method).
The fair values provisionally attributed to identifiable assets and liabilities,
non-controlling interests measured at fair value and the various components
of the consideration transferred may be adjusted for a period of twelve
months after the acquisition date. After that period, any adjustments are
recognised prospectively in profit or loss with no adjustment to goodwill.
Goodwill is not amortised but is tested for impairment at least once a year.
For impairment testing purposes, goodwill is allocated to a Cash-Generating
Unit (CGU), defined as the smallest identifiable group of assets that generates
cash infl ows that are largely independent of the cash infl ows from other
assets or groups of assets
The method used to test CGUs for impairment is described in Note 1.4.3.
When a CGU is found to be impaired, an impairment loss corresponding
to the difference between the carrying amount of the goodwill and its
recoverable amount is recognised in “Other operating expense”. Impairment
losses on goodwill are not reversible.
Negative goodwill is recognised directly in the income statement for the
period of acquisition and attributed in full to the acquirer.
1.4.2. Property, plant and equipment
Property, plant and equipment are initially recognised at cost and are
depreciated by the straight-line method over their estimated useful lives.
Maintenance and repair costs are expensed as incurred.
The main useful lives are as follows:
buildings:
10 to 40 years;
plant and machinery:
10 years;
office equipment:
3 to 10 years;
vehicles:
4 to 5 years;
tooling:
1 to 5 years.
Each significant part of an item of property, plant and equipment with a useful
life that is different from that of the asset to which it belongs is depreciated
separately. Useful lives are reviewed at regular intervals and the effect of
any adjustments – corresponding to a change in accounting estimates – is
applied prospectively.
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GROUPE SEB
FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010
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