CONTENTS - Capgemini

74 ANNUAL
GROUP CONSOLIDATED FINANCIAL STATEMENTS
Capgemini
T) Exchange gains and losses on intragroup
transactions
The results and financial position of a foreign subsidiary are included
in the Group’s consolidated financial statements using normal consolidation
procedures, such as the elimination of intragroup balances and
intragroup transactions. However, an intragroup short- or long-term
monetary asset (or liability) cannot be eliminated against the corresponding
intragroup liability (or asset) without showing the results of
currency fluctuations in the consolidated financial statements. This is
because the monetary item represents a commitment to convert one
currency into another and exposes the Group to a gain or loss through
currency fluctuations. Accordingly, in the consolidated financial
NOTE 2 – CHANGE IN ACCOUNTING METHOD
The Group has decided to recognize in equity the full amount of actuarial
gains and losses relating to defined benefit plans in the period in
which they arise, in line with the amendment to IAS 19 – “Employee
Benefits: Actuarial Gains and Losses, Group Plans and Disclosures”,
effective January 1, 2006. It will no longer use the corridor method,
which consists of recognizing the portion of net cumulative unrecognized
actuarial gains and losses that exceeds the greater of (i) 10%
of the present value of the defined benefit obligation and (ii) 10%
of the fair value of the plan assets at the balance sheet date, over the
average remaining service lives of plan participants.
This change in accounting method was applied retrospectively in
accordance with the transitional provisions of the amended IAS 19,
as follows:
Retrospective impacts of this change in method in the balance sheet are set out below:
in millions of euros
REPORT 2006 Capgemini
statements, such an exchange difference continues to be recognized
in profit or loss or is classified in equity if the underlying forms an
integral part of the net investment in the foreign operation.
U) Non-current assets held for sale and discontinued
operations
Non-current assets that meet the criteria to be classified as held for
sale, and liabilities relating to discontinued operations are presented
separately on the face of the balance sheet if their carrying amount
will be recovered principally through a sale transaction rather than
through continuing use. These assets and liabilities are measured at
the lower of the carrying amount and fair value less costs to sell.
In the statement of income, this change in accounting method did
not have any impact on the results reported for 2005 and previous
years as actuarial gains and losses fell within the thresholds
stipulated by the corridor method.
In the balance sheet, this change of method resulted in all cumulative
actuarial gains and losses – previously unrecognized due to the
application of the corridor method being recorded under provisions
for pensions and other post-employment benefits – and the
corresponding deferred tax impacts, with the corresponding entry
posted in shareholders’ equity.
December 31,
2004 (1)
December 31,
2005 (1)
Cumulative impact on provisions for pensions and other post-employment
benefits
35 259
Cumulative impact on deferred tax assets 3 17
Cumulative impact on equity (32) (242)
(1) Amounts calculated using the exchange rate applicable at the balance sheet date of the corresponding accounting period.
Accordingly, at December 31, 2004 and 2005, actuarial gains and losses recognized retrospectively correspond to net actuarial losses of
€35 million and €259 million, respectively. At December 31, 2005, €244 million related to funded defined benefit plans, and €15 million
related to unfunded defined benefit plans (see Note 19 – “Provisions for pensions and other post-employment benefits”).
At December 31, 2006, the application of the new method led to recognition in equity of a net actuarial gain amounting to €150 million
(excluding deferred taxes), and a corresponding decrease in provisions for pensions and other post-employment benefits (see Note 19 – “Provisions
for pensions and other post-employment benefits” and the consolidated statement of recognized income and expense).