Financial Report and Registration Document 2010 - Groupe Seb

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CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At the inception of each hedge, the hedging relationship is formally
documented, specifying in particular the Group’s risk management objective
and strategy for undertaking the hedge. The initial documentation also
includes details of how the Group will assess the hedging instrument’s
effectiveness. In subsequent periods, the hedging instrument’s actual
effectiveness in offsetting the exposure to changes in the hedged item’s
fair value is also fully documented.
Hedge accounting is discontinued prospectively when the derivative
instrument ceases to be a highly effective hedge or when it expires or is
sold, terminated or exercised.
Changes in the fair value of derivative instruments that do not qualify for
hedge accounting are recognised in profit.
1.4.5. Inventories
Raw materials and goods purchased for resale are measured at purchase
cost, using the weighted average cost method.
Work-in-progress and finished products are measured at cost, including raw
materials and labour and a portion of direct and indirect production costs.
In accordance with IAS 2, inventories are measured at the lower of cost,
determined as explained above, and net realisable value.
Net realisable value corresponds to the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated
costs necessary to make the sale (mainly distribution costs).
The carrying amount of inventories does not include any borrowing costs.
1.4.6. Trade receivables
Trade receivables are measured at the lower of their nominal amount – which
approximates fair value due to their short maturity – and their estimated net
realisable value. Provisions for impairment are determined on the basis of
the age of the receivables, taking into account any identified recovery risks.
1.4.7. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and
short-term investments in money market instruments. These instruments
have maturities of less than three months; they are readily convertible into
known amounts of cash and are not exposed to any material price risk.
The consolidated statement of cash flows is presented using the indirect
method and cash fl ows are analysed between operating, investing and
financing activities.
IAS 7 has been amended following the publication of IAS 27R. The aggregate
cash flows arising from obtaining or losing control of a subsidiary are
classifi ed as investing activities while cash fl ows arising from changes
in ownership interests in a fully consolidated subsidiary are classifi ed as
financing activities. Transactions with jointly controlled entities or entities
accounted for by the equity method continue to be classified as investing
activities.
1.4.8. Treasury stock
Treasury stock is deducted from equity at cost. Any gains or losses arising
from the purchase, sale, issue or cancellation of treasury stock are recognised
directly in equity without affecting profit.
1.4.9. Income taxes
Income tax expense reported in the income statement corresponds to current
tax for the period and changes in deferred taxes.
In accordance with IAS 12 – Income Taxes, deferred taxes are recognised for
temporary differences between the carrying amounts of assets and liabilities
and their tax base. They are determined using tax rates (and tax laws) that
have been enacted or substantively enacted by the balance sheet date.
Temporary differences include:
a) taxable temporary differences, which are temporary differences that will
result in taxable amounts in determining taxable profit (tax loss) of future
periods when the carrying amount of the asset or liability is recovered or
settled; and
b) deductible temporary differences, which are temporary differences that will
result in amounts that are deductible in determining taxable profit (tax loss)
of future periods when the carrying amount of the asset or liability is
recovered or settled.
Deferred tax assets are recognised for deductible temporary differences and
tax loss carryforwards to the extent that it is probable that future taxable
profits will be available against which they can be utilised.
Previously unrecognised deferred tax assets at the date of a business
combination or during the twelve-month fair value measurement period are
subsequently recognised as an adjustment to profit or loss provided they
meet the recognition criteria.
In accordance with IAS 12, deferred tax assets and liabilities are not
discounted.
1.4.10. Employee benefits
A) PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
In some countries, the Group is required to pay length-of-service awards to
employees on retirement or pension benefits under formal pension plans.
The Group also pays contributions to government-sponsored pension
schemes in its various host countries. The accounting treatment of these
pension and other post-employment benefit plans depends on the type of
plan, as follows:
Defined contribution plans
Contributions to these plans are recognised as an expense for the period
to which they relate.
Defined benefit plans
In accordance with IAS 19 – Employee Benefits, obligations under defined
benefit plans are calculated annually by qualified actuaries using the
projected unit credit method based on final salaries. The projected unit credit
method sees each period of service as giving rise to an additional unit of
benefit entitlement and measures each unit separately to build up the final
obligation, which is then discounted.
The actuarial assumptions used to calculate the obligation include
staff turnover rates, mortality rates, the discount rate and the expected
retirement age.
The assumptions vary according to local laws and regulations in the host
countries concerned.
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GROUPE SEB
FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010
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