Annual Report

Share-based payments
Part of the compensation for members of the Board and
Group Management is paid in HUBER+SUHNER AG
shares, which are valued at market price and have a lock-in
period with a minimum of three and a maximum of ten
years. These shares are assigned after closing of the business
year normally in March or April of the following year.
The market value of the shares is fully accrued in accordance
with the accrual principle and the yearlong vesting
period in the accounts of the respective year under review.
2.17 Shareholders’ equity
Ordinary shares are classified as equity. Where a Group
company purchases the Company’s equity share capital
(Treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income
taxes), is deducted from equity attributable to the Company’s
equity holders until the shares are cancelled or
reissued. Where such shares are subsequently reissued,
any consideration received, net of any directly attributable
incremental transaction costs and the related income tax
effects, is included in equity attributable to the Company’s
equity holders.
2.18 Revenue recognition
Revenues from sales of products are recognised upon
making delivery. Delivery is made if risks and rewards are
transferred. Sales are shown as a net amount in the income
statement. They represent the total value of invoices to
third parties reduced by sales taxes, credits for returns and
reductions of revenue (primarily rebates and discounts).
2.19 Research and development expenses
Research and development costs are recognised as an
expense in the period in which they are incurred. Development
costs are capitalised if specific criteria are met
and the capitalised amount can be covered through corresponding
future cash flows.
2.20 Income taxes
Income taxes are accounted for on the basis of the income
of the reporting year, less the utilisation of tax losses carried
forward, using expected actual (local) tax rates.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. Deferred income tax
is determined using tax rates and laws that have been enacted
or substantially enacted at the balance sheet date and
are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is
settled.
Notes to Group Financial Statements
HUBER+SUHNER Annual Report 2010 · Part 2
Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will be
available against which the temporary differences can be
utilised.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries and associates, except
where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable
future.
2.21 Cash flow statement
The cash flow from operating activities is calculated according
to the indirect method. The funds consist of cash
and cash equivalents.
The free cash flow is calculated based on net cash flow
from operating activities less the cash flow from investing
activities (excluding changes of marketable securities and
derivative financial instruments), less payments to shareholders
and purchase of treasury shares.
2.22 EBIT
The EBIT is the operating result before finance costs, income
and expenses relating to financial assets and liabilities
such as currency translation effects, interest or marketable
securities income and before current and deferred taxes.
3 Financial risk management
3.1 Risk assessment
The risk management system of the HUBER+SUHNER
Group and of all Group companies is laid down in the
Board of Directors’ risk strategy and the Executive Group
Management’s guidelines on the risk management process.
Based on its own assessment (top-down) and on information
provided by the Divisions and subsidiaries (bottomup),
Executive Group Management has reviewed in the
reporting year the status and impact of actions decided earlier
and has selected and reassessed the most significant financial,
operational and strategic risks. These risks together
with the ongoing and new actions have been submitted in
the Risk Report 2010 to the Board of Directors for review
and approval. After an in-depth discussion, the Board of
Directors has agreed with the risk assessment 2010 and has
approved the risk report on 1 December 2010.
3.2 Risk policy
As a global industrial corporation with manufacturing and
sales subsidiaries in several countries, HUBER+SUHNER
is exposed to various financial, market and credit risks of
strategic, operational and financial nature. As part of the
scope of the corporate risk process, corporate management
monitors these risks constantly and makes every effort to
minimise negative influences on the Group and especially
on the financial results. HUBER+SUHNER also uses derivative
financial instruments to hedge specific financial
risks. All hedging transactions are always connected with
existing assets and liabilities or with future business transactions
that are extremely likely to take place.
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