Financial Report and Registration Document 2010 - Groupe Seb

3 NOTES
CONSOLIDATED FINANCIAL STATEMENTS
TO THE CONSOLIDATED FINANCIAL STATEMENTS
Actuarial gains and losses arising from the effects of changes in actuarial
assumptions and experience adjustments on plan obligations and assets are
recognised in profit by the corridor method. Under this method, the portion
of the net cumulative unrecognised actuarial gains and losses that exceeds
the greater of 10% of the present value of the defined benefit obligation and
10% of the fair value of any plan assets at that date is amortised over the
remaining service lives of the employees concerned.
A provision is recorded in the balance sheet for any unfunded obligations,
corresponding to defined benefit obligations not covered by plan assets, net
of unrecognised gains and losses.
For plans that have a surplus – corresponding to the excess of plan assets
over the defined benefit obligation – an asset is recognised only when the
criteria specified in IAS 19 are fulfilled.
B) OTHER LONG-TERM BENEFIT PLANS
Certain subsidiaries pay jubilees to employees who have completed a certain
number of years service or offer employees “time savings accounts”. The cost
of these long-term benefits is calculated on an actuarial basis and recognised
in profit over the service lives of the employees concerned. Actuarial gains
and losses are recognised immediately in profit during the period in which
they are generated, as their deferral is not allowed under IFRS.
Pension and other post-employment benefit costs are classified as operating
expenses, except for the interest cost, which is included in other financial
income and expense in accordance with the alternative treatment allowed
under IAS 19.
In accordance with IFRS 1 – First-Time Adoption of IFRS, cumulative
actuarial gains and losses at 1 January 2004 were included in provisions
for pensions and other post-employment benefit obligations at that date by
adjusting equity. Groupe SEB has elected not to use the option available
in the amended version of IAS 19 whereby entities may recognise actuarial
gains and losses under defined benefit pension plans directly in equity as
from 1 January 2006.
C) SHARE-BASED PAYMENTS
Stock option plans are measured and recognised in accordance with
IFRS 2 – Share-Based Payment. Stock options represent a benefit for the
grantee and, accordingly, are treated as part of the Group’s compensation
costs. Option grants are not cash-settled, and the benefit is therefore
recognised as an expense over the vesting period by adjusting equity,
for an amount corresponding to the fair value of the underlying equity
instruments. Stock options granted to employees of Group subsidiaries
that are exercisable for SEB S.A. shares are deemed to be equity-settled
share-based payments.
Fair values are determined using the Black & Scholes option pricing model.
This model takes into account the option exercise price and period, market
data at the grant date (risk-free interest rate, share price, volatility, expected
dividends) and grantee behaviour assumptions.
IFRS 2 has been applied only to stock options granted after 7 November
2002 that had not yet vested at 1 January 2005. As allowed under IFRS 1,
options granted prior to 7 November 2002 have not been restated.
1.4.11. Provisions
In accordance with IAS 37 – Provisions, Contingent Liabilities and
Contingent Assets, a provision is recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount
of the obligation.
A) PROVISIONS FOR WARRANTY COSTS
The Group provides a warranty on its products. The estimated costs of the
warranty are accrued at the time of sale, based on historical data.
This item also includes provisions for product recalls, which are set up when
the recall is decided.
B) PROVISIONS FOR CLAIMS AND LITIGATION
As a general principle, all known claims and litigation involving the Group
are reviewed by management at each period-end. All necessary provisions
have been recorded to cover the related risks, as estimated after obtaining
advice from outside legal advisors.
C) RESTRUCTURING PROVISIONS
The Group is considered as having a constructive obligation when
management has a detailed formal plan for the restructuring, has raised a
valid expectation in those affected that it will carry out the restructuring by
starting to implement that plan or announcing its main features and no inflow
of economic benefits is expected that would offset the costs of the plan.
The amount of the related provision corresponds to forecast cash outflows
under the plan.
1.4.12. Off-balance sheet commitments
For several years now, the Group’s reporting system has included detailed
reporting of off-balance sheet commitments. The process provides for the
reporting by consolidated subsidiaries, in their consolidation packages, of
information about the following commitments that they have given:
guarantees, endorsements and bonds;
security interests (mortgages and pledges);
commitments under non-cancellable operating leases and fi rm orders
for fixed assets;
other commitments.
1.4.13. Transactions between owners
Acquisitions or disposals of non-controlling interests that do not affect the
Group’s control of a subsidiary are treated as transactions between owners
and accounted for in equity. The carrying amounts of the subsidiary’s assets
(including goodwill recognised upon obtaining control) and liabilities remain
unchanged.
In the event of a partial disposal leading to the loss of control of a subsidiary,
the Group (a) derecognises the assets (including any goodwill) and liabilities
of the subsidiary at their carrying amounts at the date when control is
lost; (b) derecognises the carrying amount of any non-controlling interests
in the former subsidiary at the date when control is lost; (c) recognises
the fair value of the consideration received; (d) recognises any investment
retained in the former subsidiary at its fair value at the date when control
is lost; (e) reclassifies to profit or loss any gain or loss recognised in other
comprehensive income and (f) recognises any resulting difference as a gain
or loss in profit or loss attributable to the parent. The remeasurement at fair
value of any investment retained therefore affects profit or loss.
1.5. INCOME STATEMENT PRESENTATION
1.5.1. Revenue
Revenue corresponds to the value, excluding tax, of goods and services
sold by consolidated companies in the course of their ordinary activities,
after eliminating intra-group sales.
72 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB