Annual Report 2006 – Financial Section - Quilvest

Significant Accounting Policies (continued)
Deferred tax is recognized based on the balance sheet liability method, on temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.The following
temporary differences are not accounted for: goodwill non-deductible for tax purposes; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit; and differences relating to investments in subsidiaries,
to the extent that they will probably not be reversed in the foreseeable future.The amount of deferred tax recognized is
based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realized.
Taxes that arise from the distribution of dividends are recognized when the liability to pay the related dividend is incurred.
Segment information
The Group's primary dimension for segment reporting is business segments and the secondary dimension is geographical
segments. The risks and returns of the group's operations are primarily determined by the different business activities
rather than the different locations of the group's activity.This is reflected by the Group's management and organizational
structure and internal financial reporting systems.
Business segments
The Group has two main areas of activity which are presented as the business segments "Private Equity" and "Wealth
Management".The Private Equity segment is mostly concentrated in Quilvest Private Equity Ltd and its subsidiaries.The
Wealth Management segment is concentrated in its private banking structures, SIF in Zurich and Quilvest Banque Privée
in Paris.The additional Corporate segment includes the supporting administrative activities concentrated at the holding
and sub-holding structures.
Geographical segments
The Private Equity segment operates in Europe, as well as in America and in Asia.
There are no significant inter-segment transactions.
Critical accounting judgement
The application of the Group's accounting policies requires management to make judgements that can have a significant
effect on the amounts recognized in the consolidated financial statements. Estimates and assumptions are made that affect
the reported amounts of assets, liabilities, income, expenses and related disclosures.The estimates and underlying assumptions
are based on historical experience, on information linked to the close follow-up of the underlying investments and
on market-driven comparison factors. Actual results may differ from these estimates.The most significant estimates and
assumptions concern the fair valuation detailed above under the Financial Investments section, the assumption related to
the valuation of Land and Building, the valuation of goodwill and the actuarial assumptions related to the Employee
Benefits.
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