2011 Annual report - touax group

Annual report 2011
of this price adjustment will be recognized in the income statement
if the price adjustment is a financial liability.
In line with IFRS 3 “Business Combinations”, goodwill assets
are not amortized.
As required by IAS 36 “Impairment of Assets”, they are subjected
to an impairment test at least once a year and at shorter intervals
if there is any indication of a loss of value. The test is designed
to ensure that the recoverable value of the cash-generating unit
(CGU: usually the individual legal entity) to which the goodwill is
applied is at least equal to its net book value (see notes to the
consolidated financial statements, note 1.9). If impairment is
found, then an irreversible provision is charged to operating
income, on a line of its own.
Should the TOUAX Group increase its percentage stake in an
entity it already controls, the additional equity purchase is booked
directly to shareholders’ equity as the difference between the
price paid for the shares and the additional proportion of the
entity acquired.
In the event that shares are sold without loss of exclusive
control, the difference between the shares' sale price and the
share of consolidated equity at the date of the sale is recognized
under shareholders' equity (Group's share). The consolidated
value of the entity's identifiable assets and liabilities, as well as
the goodwill, remain unchanged.
In the event that shares are sold with loss of exclusive control,
the income from the sale is calculated on the entire holding
at the date of the operation. If there is residual interest, it is
evaluated at its fair value in the income statement at the
moment that exclusive control is lost.
➜ note 1.7. Intangible fixed assets
Computer software and development expenses which are included
among intangible fixed assets are depreciated using the
straight-line method over their useful lifetimes. Development
costs incurred between the decision to start development and
the agreement to manufacture the item are booked as intangible
fixed assets. Development costs are regarded as fixed investments
if they concern distinguishable projects with a realistic chance
of technical success and commercial profitability. They are
amortized over three years.
➜ note 1.8. angible fixed assets
❙ note 1.8.1. Valuation at cost net of amortization
and impairment
Except when acquired as part of a company takeover, tangible
fixed assets are booked at their acquisition or production cost.
Gains arising on sale or purchase within the Group are
eliminated in the consolidated accounts, as are revaluations
due to mergers or partial takeovers. At the end of each financial
period, the book value is reduced to acquisition cost less
cumulative amortization and provisions for impairment calculated
as required by IAS 36 Impairment of Assets (see the notes to
the consolidated financial statements, note 1.9).
The costs of borrowing used to finance assets defined by the
amended IAS 23 are included in the cost of the assets involved.
At present, no assets are eligible for application of the revised
IAS 23.
❙ note 1.8.2. Component" approach
IAS 16 “Property, plant, and equipment” (tangible fixed assets)
requires that any of a fixed asset’s main components that has a
useful lifetime shorter than that of the fixed asset itself should
be recognized separately so as to be depreciated over its own
useful lifetime.
The component approach applies particularly to the River
Barges division. The acquisition cost of pushboats is broken
down into hull and power plant so that the engines can be
depreciated over their useful lifetime, which is usually not more
than ten years.
❙ note 1.8.3. Amortization
Tangible assets are depreciated and are calculated using the
straight-line method over the asset’s useful lifetime. Land is
not depreciated.
Useful lifetimes for assets acquired new are as follows:
Shipping containers ("dry" type )
15 years
Modular buildings
20 years
River transport (barges and pushboats)
30 years
Freight railcars
30 years
The depreciation of shipping containers provides for a residual
value of 15% in accordance with industry standards.
Modular buildings in the USA are depreciated over 20 years with
a residual value of 50% in accordance with American practice.
Assets acquired second-hand are depreciated using the
straight-line method over their remaining useful lifetime.
Residual values are chosen in accordance with the Group’s past
experience. The residual value of freight railcars is considered nil.
Useful lifetimes of second-hand barges depend on their previous
condition of use, and materials it carried (some materials being
more corrosive than others). The expected lifetime of each
barge bought second-hand is estimated on the basis of its date
of construction, past use and the materials carried. The total
useful lifetime applied never exceeds 36 years.
➜ note 1.9. Impairment of fixed assets
According to IAS 36 “Impairment of Assets”, the recoverable
value of tangible and intangible fixed assets must be tested
as soon as there is any indication of a loss of value (to the
company or in the market), and is reviewed at the end of each
financial period. This test is carried out at least once a year in
the case of assets with an indefinite lifetime, which in the
Group’s case means goodwill.
For this test, fixed assets are grouped into Cash-Generating
Units (CGUs). These are homogeneous groups of assets whose
continuous use generates cash flows largely independent
of the cash flows generated by other groups of assets.
The recoverable value of these units is most often calculated
from their value in use, i.e. from the discounted future net
cash flows expected on the basis of business scenarios and on
forecast operating budgets approved by senior management.
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