Richemont is one of the world's leading luxury - Alle jaarverslagen

Notes to the consolidated financial statements continued4. Risk assessmentThe Company has a centralised risk management process which givesconsideration to both strategic and operational risks. All identifiedrisks are quantified according to their probability of occurrence andpotential impact, and subsequently prioritised by Group Management.A consolidated risk report which includes action plans is reviewedannually by the Board of Directors and the Audit Committee.For identified risks, which arise from the accounting and financialreporting, a risk assessment is performed. Throughout the Group’sinternal control system framework on financial reporting, relevantcontrol measures are defined, which reduce the financial risk.Remaining risks are categorised depending on their possibleimpact (low, average, high) and appropriately monitored.5. Critical accounting estimates and judgementsThe Group is required to make estimates and assumptions thataffect certain balance sheet and income statement items and certaindisclosures regarding contingencies. Estimates and judgements appliedby management are continuously evaluated and are based on informationavailable, historical experience and other factors, including expectationsof future events that are believed to be reasonable under the circumstancesat the dates of preparation of the consolidated financial statements.Principal matters where assumptions, estimates and judgements aremade relate in particular to:Accounting estimates(a) the determination of sales deductions, including rebates, returns,discounts and incentives, which are reported as a reduction in sales;(b) the determination of carrying values for property, plant andequipment, intangible assets and inventories, especially as theyrelate to the purchase price allocation for newly acquired entities;(c)the assessment and recording of liabilities in respect of retirementbenefit obligations;(d) the recognition of provision for income taxes, including deferredtaxation, taking into account the related uncertainties in thenormal course of business; and(e)the measurement of the recoverable amounts of cash-generatingunits containing goodwill.The amounts involved are disclosed elsewhere in the financialstatements, and the likelihood of a significant adjustment to anyamounts in the next twelve months is limited.Accounting judgements(f) the determination of the fair value of stock options immediatelybefore and after the modification of 20 October 2008 basedon closing market data on the date of modification; and(g) the recognition of non-cash distributions to shareholders,acting in their capacity as shareholders, at book value.6. Segment informationA business segment is a group of assets and operations engagedin providing products that are subject to risks and returns thatare different from those of other business segments. The Grouphas identified business segments as the primary segments.A geographical segment is engaged in providing products withina particular economic environment that is subject to risks andreturns that are different from those of segments operating in othereconomic environments. The Group uses geographical segmentsas the secondary segments.(a) Primary reporting format – business segmentsFor the purposes of clarity and comparability of external reporting,the Group combines internal management units with similar riskand reward profiles into business operating segments, which areconstituted as follows:• Jewellery Maisons – businesses whose heritage is in the design,manufacture and distribution of jewellery products; these compriseCartier and Van Cleef & Arpels;• Specialist Watchmakers – businesses whose primary activityincludes the design, manufacture and distribution of precisiontimepieces. The Group’s specialist watchmakers comprise Piaget,A. Lange & Söhne, Jaeger-LeCoultre, Vacheron Constantin,Officine Panerai, IWC, Baume & Mercier and Roger Dubuis;• Writing Instrument Maison – business whose primary activityincludes the design, manufacture and distribution of writinginstruments, namely Montblanc; and• Leather and Accessories Maisons – businesses whose principalactivities include the design and distribution of leather goodsand other accessories, being Alfred Dunhill and Lancel.Other Group operations mainly comprise Chloé, royalty incomeand other businesses. None of these constitutes a separatelyreportable segment.Amounts included in ‘Corporate’ represent the costs of the Group’scorporate operations which are not attributed to the segments.The entire product range of a particular Maison, which may includejewellery, watches, writing instruments and leather goods, is reflectedin the sales and operating result for that segment.Segment assets consist primarily of property, plant and equipment,inventories, trade and other debtors and non-current assets. Segmentliabilities comprise operating liabilities, including provisions, butexclude short and long-term loans and bank overdrafts.Inter-segment transactions are transacted at prices that reflect therisk and rewards transferred and are entered into under normalcommercial terms and conditions.70 Richemont Annual Report and Accounts 2009Consolidated financial statements