2005 Annual Report - Touax

These financial assets are valued at cost amortized
in accordance with the effective interest rate
method.
■ Assets held to maturity
These are non-derivative financial assets with fixed
or determinable payments, with a fixed maturity,
which the company has the intention and capacity of
retaining to maturity, other than receivables and
loans and other than financial assets classified by
the company in the two other categories (valued at
fair value through the income statement, available
for sale).
In the Group, the assets concerned are principally
collateral deposits and guarantees.
These financial assets are valued at cost amortized
in accordance with the effective interest rate
method.
■ Assets available for sale
Within the Group, this category only includes equity
securities of non-consolidated companies. These
are generally unlisted securities whose fair value
cannot be estimated reliably. They are stated at cost
and are subjected to an impairment test when the
consolidated financial statements are closed.
■ Impairment test of financial assets
Assets valued at amortized cost and assets available
for sale must be subjected to an impairment test at
each closing date if there is an indication of a loss of
value.
For assets valued at amortized cost, the amount of
the impairment is equal to the difference between
the book value of the asset and the discounted value
of expected future cash flows, taking into account
the situation of the counterparty, determined using
the original effective interest rate of the financial
instrument. The expected cash flows from shortterm
assets are not discounted.
note 1.17.3. Cash and cash equivalents
The “Cash” item in the balance sheet comprises the
balances of current bank accounts and shares in
cash UCITS mutual funds which can be accessed in
the short term.
The cash position in the cash flow statements is closed
on the basis of the cash position defined above,
net of current bank advances and overdrafts.
note 1.17.4. Financial liabilities
The financial liabilities of the Group comprise interest-bearing
bank borrowings and derivative instruments.
Borrowings are broken down into current liabilities,
covering the part repayable within 12 months of the
closing date, and non-current liabilities, covering
amounts due after more than 12 months.
Interest-bearing borrowings are initially entered at
historical cost less associated transaction costs.
At the closing date, financial liabilities are then
valued at their amortized cost in accordance with the
effective interest rate method.
note 1.17.5. Group’s exposure to currency risks –
derivative financial instruments
TOUAX SCA and its subsidiaries do not use derivative
financial instruments to hedge their commercial
operations in foreign currencies. The Group considers
that the currency risks incurred are low, with
operating activities being organized in such a way
that the assets and liabilities, revenue and expenses
within a single business are denominated in the
same currency.
The Group refinances its operations mainly by
means of variable rate borrowings and uses derivative
interest rate instruments to reduce its exposure
to interest rate risk.
Variable rate borrowings for which interest rate
swap contracts have been entered into are the subject
of cash flow hedging accounting. Changes in the
fair value of swap contracts associated with changes
in interest rates are stated in shareholders’ equity if
their effectiveness is tested against the criteria of
IAS 39. Failing that, they are stated directly in the
financial result.
note 1.18. Corporation tax
Deferred taxes are stated without discounting in
accordance with the variable carry-forward method
in respect of timing differences between the tax
bases of the assets and liabilities and their book
value in the consolidated financial statements.
Hence the corresponding tax charge is associated
with each period, taking into account in particular
any time lags between the date of recording certain
income and expenses and their effective tax impact.
Deferred tax assets resulting from these temporary
differences or tax losses available for carry-forward
are only maintained to the extent that the companies
or groups of fiscally integrated companies are reasonably
sure of recovering them in the course of the
subsequent years.
The rates used to calculate deferred taxes are the
tax rates known at the closing date of the financial
statements.
In the balance sheet, the tax assets and liabilities
relating to a single tax entity (for example a tax
consolidation group) are presented as a net figure.
The deferred and due tax is stated as an income or
expense item in the income statement except where
annual report 2005
Consolidated accounts
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