Annual Report 2006 – Financial Section - Quilvest

Significant Accounting Policies (continued)
Impairment
The carrying amounts of the Group’s property, plant and equipment, intangible assets, investments in associates and other
financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset’s recoverable amount, being the greater of its fair value less costs to sell and its value in
use, is estimated.
Interest-bearing Liabilities
Interest-bearing liabilities are recognized initially at cost, being the fair value of the consideration received less attributable
transaction costs. Subsequent to initial recognition, interest-bearing liabilities are measured at amortized cost with any
differences between cost and redemption value being recognized in the income statement over the period of the liabilities
on an effective interest basis.
Convertible Bonds
Quilvest S.A. issued in 2003 a convertible loan that can be converted to share capital at a fixed predetermined conversion
ratio at the option of the holder at the maturity date of June 30, 2008.This loan is accounted for as a compound financial
instrument, net of attributable transaction costs.The equity component of the convertible loan is calculated as the excess
of the issue proceeds over the present value of the future interest and principal payments, discounted at the market rate
of interest applicable to similar liabilities that do not have a conversion option.This component is included in equity.The
interest expense recognized in the income statement is calculated using the effective interest rate method.
Employee benefit obligations
The Group sponsors pension plans according to the national regulations of the countries in which it operates.The significant
pension plans in France and Switzerland qualify as defined benefit plans under IAS 19.The respective employee benefit
costs are determined in accordance with the Projected Unit Credit Method.Actuarial calculations are conducted on an
annual basis. Any excess of the defined benefit obligation over the fair value of plan assets is initially recognized and presented
under employee benefit obligations. A pension asset is recognized only to the extent that it represents economic
benefits in the form of refunds or reductions in future contributions. Actuarial gains and losses arising from subsequent
calculations are recognized to the extent that they exceed 10% of the greater of the defined benefit and the fair value of
the plan assets. The amount exceeding this corridor is amortized over the average remaining working lives of the
employees participating in the plan.
The pension plan in Luxembourg is a defined contribution plan. The pension costs recognized during a period for such
plans equal the contributions paid or due for that period.
Provisions
A provision is recognized on the balance sheet when the Group has a legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
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