A N N U A L R E P O R T - Bouygues

1.9. Significant events and
changes in scope of
consolidation since 31 December
2005
• On 31 January 2006, Bouygues carried out a
bond issue of 250 million euros, supplementary
to the initial issue of 750 million euros (see
Note 1.7), maturing 2020. The issue proceeds
were received on 20 February 2006, and the
issue was priced at 97.203% with an interest
rate of 4.25%.
• TPS: on 6 January 2006, TF1 and M6, who jointly
control the TPS satellite offering with interests
of 66% and 34% respectively, signed an industrial
agreement with Vivendi Universal, the
parent company of the Canal+ pay TV group,
intended to merge the French pay TV activities
of Canal+ and TPS.
The proposed agreement is subject to approval
from the French competition authorities and
to a ruling by the French audiovisual regulator,
the CSA.
For the years ended 31 December 2005 and
2004, income and expenses generated by TPS
have been excluded from the operating activities
shown in the income statement, in accordance
with IFRS 5. Net income for the two
periods relating to TPS is shown on the line “Net
profit of discontinued or held-for-sale operations”.
Assets and liabilities relating to TPS at
31 December 2005 are also shown separately in
the balance sheet under “Held-for-sale assets”
and “Liabilities on held-for-sale assets”.
NOTE 2: IFRS ACCOUNTING
POLICIES
2.1. IFRS standards and
optional treatments applied
As required by European Council Regulation
1606 / 2002, adopted 19 July 2002, the Bouygues
Group has prepared its consolidated financial
statements in accordance with the accounting
standards issued by the International Accounting
Standards Board (IASB) as adopted by the
European Union.
These standards, collectively referred to as
International Financial Reporting Standards
(IFRS), also include International Accounting
Standards (IAS) and interpretations issued by the
Standing Interpretations Committee (SIC) and the
International Financial Reporting Interpretations
Committee (IFRIC).
The Bouygues Group has applied all standards
and interpretations effective within the European
Union as at 31 December 2005.
IAS 32 and IAS 39 on financial instruments have
been applied with effect from 1 January 2004,
ahead of the mandatory application date.
The accounting principles applied by the
Bouygues Group are described below. In some
cases, IFRS allow companies to choose between
the benchmark treatment and an allowed alternative
treatment. The main optional treatments
applied by the Group are described below.
The Group has elected not to apply the following
standards, amendments and interpretations
ahead of the mandatory application date: IFRS
7 (Financial Instrument Disclosures), application
date 1 January 2007; the amendment to IAS 19
(Employee Benefits), application date 1 January
2006; and certain changes to IAS 39 that are
mandatorily applicable from 1 January 2006.
2.1.1. Basis of preparation
The financial statements are prepared using the
historical cost convention, with the exception
of certain items (in particular financial assets
and financial liabilities) which are measured at
fair value.
Preparing financial statements to comply with
IFRS requires the use of estimates and assumptions
which may have affected the amounts
reported for assets, liabilities and contingent
liabilities at the balance sheet date, and the
amounts of income and expenses reported for
the financial year.
These estimates and assumptions have been
applied consistently on the basis of past experience
and of various other factors regarded as
reasonable, forming the basis of assessments
of the valuations of assets and liabilities for
accounting purposes. Actual results may differ
materially from these estimates if different
assumptions or conditions apply.
Where no standard or interpretation applies to
a specific transaction, Group management has
exercised its judgement to define and apply
accounting policies that will provide relevant
and reliable financial information, such that the
financial statements:
• give a true and fair view of the financial position,
financial performance and cash flows of
the Group;
• reflect the economic reality of the underlying
transactions;
• are impartial, prudent, and complete in all
material respects.
2.1.2 Optional accounting treatments
on first-time adoption of
IFRS at 1 January 2004 (IFRS 1)
The transition from French generally accepted
accounting principles (French GAAP) to IFRS was
effected in accordance with IFRS 1, “First-Time
Adoption of International Financial Reporting
Standards”, which requires IFRS to be applied
retrospectively from 1 January 2004.
The effects of the restatements required to comply
with IFRS were recognised in consolidated
shareholders’ equity as at 1 January 2004.
Except as indicated below, the Bouygues Group
has not used any other optional treatments or
exemptions to the retrospective application of
IFRS from the transition date allowed under
IFRS 1. This applies in particular to:
• business combinations,
• fair value or revaluation used as deemed cost.
■ Property, plant and equipment and intangible
assets (IAS 16 and IAS 38)
The Bouygues Group elected to use the depreciated
historical cost model for the subsequent
measurement of property, plant and equipment
after initial recognition, and has applied this
treatment retrospectively to all such assets.
The value of property, plant and equipment
recognised in the IFRS balance sheet at 1 January
2004 took account of estimated terminal residual
values, and of depreciation periods specific to
each component of the asset (plant, equipment,
buildings, etc). The difference between the carrying
amount as determined under French GAAP
and the new carrying amount determined under
IFRS was taken to consolidated shareholders’
equity.
Some items were reclassified in order to comply
with IFRS definitions and disclosure requirements.
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