2005 Annual Report - Touax

Financial information concerning the assets,
financial position and results of the issuer
annual report 2005
it relates to a transaction or event which is accounted
for directly in shareholders’ equity.
The deferred tax is presented under specific balance
sheet headings forming part of non-current assets
and non-current liabilities.
note 1.19. Revenue and expenses of activities
note 1.19.1. Revenue from activities: the various
components
The Group is an operating lessor of standardized,
mobile equipment which it owns or manages on
behalf of third parties.
In the case of management for third parties, the
Group purchases new equipment and sells it to
investors. The investors entrust the management of
their equipment to the Group under management
contracts. The Group leases the managed equipment
to its customers (cf. notes to the consolidated
financial statements note 1.19.2 page 60 and note
1.19.3 page 61).
The Group also has trading activities (purchasing of
assets with a view to resale – cf. notes to the consolidated
financial statements note 1.19.4 page 61).
Finally, it may resell to investors or to third-party
customers equipment which it previously owned
(capitalized equipment) and leased to customers (cf.
notes to the consolidated financial statements note
1.19.5 page 61).
note 1.19.2. Statement and recognition of revenue
and expenses associated with trust contracts and
management contracts for third parties entered
into by the Group
The Group operates and manages equipment on
behalf of third parties as part of its activities in river
transport and barge leasing and in the leasing of
shipping containers, modular buildings and railcars.
Pools (including the Trusts and the GIE described in
the notes to the consolidated financial statements
note 1.6 page 53) are created for this purpose, bringing
together several investors, including the Group.
This organization allows the pooling of revenues and
expenses for the equipment grouped in a single pool.
From the substantive analysis of the management
and securitization contracts in the light of international
standards, it can be concluded that the Group
is acting in a capacity of principal in its relationships
on the one hand with investors (pools, trusts or GIE)
and on the other hand with customers. The Group is
entirely free to choose the customers, producers
and suppliers with which it deals and in the negotiation
of purchase, leasing and sale prices of the
managed equipment.
Consequently, the Group records in its income statement
all of the income and expense flows generated
by the contracts. The Group records in revenues the
gross leasing revenues invoiced to its customers for
all the equipment managed in pools. The operating
expenses relating to all the managed equipment are
stated in operating expenses. A share of net revenues
is paid to investors (cf. notes to the consolidated
financial statements note 1.19.7 page 61).
The following factors and criteria are taken into
account in determining whether the Group has the
capacity of a principal:
• IAS 18 does not specify the conditions or criteria on
which to distinguish between an agent and principal.
Consequently, having regard to IAS 8, the transaction
may be examined by reference to US GAAP (EITF
99-19), the principles of which do not conflict with
the framework of the IASB or other IAS/IFRS standards.
• The review of the criteria of EITF 99-19 is detailed
in the following paragraphs.
The criteria qualifying a company as a principal are:
• The company is the primary obligor in the arrangement:
TOUAX SCA and its subsidiaries sign Leasing
contracts directly with their customers. The customers
do not know the owners of the equipment.
• The company has general inventory risk: TOUAX SCA
and its subsidiaries are the first to bear the risks associated
with the equipment. TOUAX then turns to the
owners to obtain compensation.
• The company has latitude in establishing price:
TOUAX SCA and its subsidiaries have full freedom to
choose their customers and their leasing rates,
without referring to the owners of the equipment.
• The company changes the product or performs part
of the service: TOUAX SCA and its subsidiaries sign
identical contracts with the customers without any
distinction between the owners of the equipment.
• The company has discretion in supplier selection:
TOUAX SCA and its subsidiaries are free to select
their suppliers without referring to the owners of the
equipment.
• The company has physical loss inventory risk: TOUAX
SCA and its subsidiaries are the first to bear the risk
of loss of containers. TOUAX SCA then turns to its
customers or suppliers to obtain compensation for
the loss of containers and pays this compensation to
the owners of the equipment.
• The company has credit risk: each owner of equipment
bears his own credit risk. TOUAX SCA and its
subsidiaries bear the credit risk for their share of the
pools. TOUAX SCA and its subsidiaries are responsible
for recovery. In the event of default by its customer,
TOUAX SCA is required to do its utmost to find
the owners’ containers.
The criteria qualifying an agent company are:
•The supplier (not the company) is the primary obligor
in the arrangement: As previously stated, TOUAX SCA
60
Consolidated accounts