2010 annual report - touax group

Leases to customers have been analyzed in light of IAS 17 criteria.
They correspond to operating leases, as well as those (the
majority) that are short-term or long-term operational leases
for certain lease-options agreements refinanced by banking
institutions whose clauses protect the Group from the risks
inherent in the assets or customer default (non-recourse
clauses benefiting the Group). Lease payments received (see
the appendix to the consolidated financial statements, note
1.20.2) are booked to the Income Statement, and do not vary
over the duration of the lease. There are also a few finance
leases provided by the Group to its customers, and their revenues
are booked under Leasing Revenues.
Assets managed by the Group on its own behalf are booked
under Tangible Fixed Assets if financed by means of finance
leases; they transfer to the Group virtually all the risks and
rewards of ownership of the asset leased. They are recognized
on the Assets side of the Balance Sheet at the lower of the leased
asset’s fair value at the start of the lease and the discounted
present value of the minimum financial lease payments. The
corresponding debt is entered under Financial Liabilities. Lease
payments are broken down into financial charges and amortization
of the debt, in such a way as to obtain a constant periodic
rate on the balance of the remaining debt. Assets under a
finance lease are amortized over their useful lifetime in accordance
with Group rules (see the appendix to the consolidated
financial statements,note 1.8). They are tested for impairment
in accordance with IAS 36 “Impairment of Assets” (see the
appendix to the consolidated financial statements, note 1.9).
Assets on lease to the Group (its head office, other administrative
buildings, and some equipment) are operating leases yet
the lessor retains virtually all the risks and rewards of ownership
of the asset. Payments on these leases are charged to the
Income Statement, and do not vary over the duration of the
lease.
The examples given in IAS 17 (paragraphs 10 and 11) and the
indications set out there justify classifying the commercial lease
of the assembly plant at Mignières (France) as an operating
lease.
➜ note 1.11. Inventories
Inventories essentially consist of goods bought for resale in the
Shipping Containers and Freight Railcars divisions, and to a lesser
extent in the Modular Buildings division. The stock turnover
period is generally less than a year.
Inventories are valued at the lower of cost and net realizable
value.
Net realizable value is the estimated price of a sale in the normal
course of business, less estimated finishing and selling
costs.
➜ note 1.12. Provisions for Risks and Charges
A provision is made in the accounts if, on the period's closing
date, the Group has contracted a real obligation (whether
legally expressed or implicit) and it is probable that a reliably
predictable amount of resources will be needed to discharge
that obligation.
Provision is made for lawsuits and disputes (industrial, technical,
or tax-related) as soon as there is an obligation by the
Group to another party on the Balance Sheet date. The amount
of the provision made depends on the best estimate of the foreseeable
expense.
➜ note 1.13. Pension and similar liabilities
The Group’s superannuation commitments consist only of severance
payments for its French companies’ employees: these are
“defined benefit schemes” in the terms of IAS 19 “Employee
Benefits”. Under its various schemes, the Group undertakes to
pay benefits in the form of a lump sum on leaving the Group
(severance payments) or during retirement. The Group’s
schemes are not funded, and a provision is made for them in
the accounts. The Group has no commitments under any other
significant defined benefit scheme or under any defined contribution
scheme.
The Group accounts for these superannuation commitments
according to the Projected Unit Credit method as required
under IAS 19. The method calls for long term actuarial assumptions
concerning demographic parameters (staff revenues,
mortality) and financial parameters (salary increases, discount
rate) to be taken into account, and for these parameters to be
reviewed annually. The effect on the total commitment of any
changes in the actuarial assumptions is entered under Actuarial
Differences. In compliance with IAS 19 the Group books
these (positive or negative) actuarial differences to the Income
Statement.
➜ note 1.14. Operating subsidy
The Group has chosen to present government subsidies in its
Financial Statements as reductions of their related expenses,
in accordance with IAS 20.
➜ note 1.15. Share-based payments
IFRS 2 “Share-based Payment”, which applies to schemes
granted after November 7, 2002, requires transactions paid for
in shares or similar instruments to be valued in the firm’s
Income Statement and Balance Sheet. The Standard identifies
three possible types of transactions:
• Share-based transactions settled in equity instruments
• Share-based transactions settled in cash
• Share-based transactions settled in equity instruments or in
cash
Share-based staff benefits are booked under staff costs and
spread over the acquisition period of the entitlements; a counter-entry
is made in the form of an increase in Shareholders’
Equity.
➜ note 1.16. Long-term Non-Current Liabilities
In the Shipping Containers division, initial commissions received
by the Group on the first sale of containers to the TCLRT 98
and TLR 2001 Trusts were used to set up collateral deposits and
liquidity reserves which will not be recoverable until the Trusts
are wound up. Those deposits and reserves are earmarked,
among other things, to enable the Trusts to cover debt service
Consolidated financial statements
Financial information concerning the issuer’s assets, financial position and earnings I 55