Annual report 2010 - Dexia.com

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Notes to consolidated financialstatementsManagement reportConsolidatedfinancial statementsAdditional information Annual financial statements1. Accounting principles andrules of consolidated financialstatementsGeneral information 1261.1. Basis of accounting 1271.2. Changes in accounting policies since the previousannual publication that may impact Dexia Group 1271.3. Consolidation 1281.4. Offsetting financial assets and financial liabilities 1301.5. Foreign currency translation and transactions 1301.6. Financial assets and liabilities 1301.7. Fair value of financial instruments 1331.8. Interest income and expense 1341.9. Fee and commission income and expense 1341.10. Insurance and reinsurance activities 1341.11. Network costs 1361.12. Hedging derivatives 1361.13. Hedge of the interest-rate risk exposure of aportfolio 1371.14. Day one profit or loss 137GENERAL INFORMATIONThe Dexia Group focuses on Retail and Commercial Bankingin Europe (mainly in Belgium, Luxembourg and Turkey) and onPublic and Wholesale Banking, providing local public-financeoperators with comprehensive banking and financial solutions.Asset Management & Services provides asset management,investor and insurance services, in particular to the clientsof the other two business lines. The different business linesinteract constantly in order to serve clients better and tosupport the Group's commercial activity.The parent company of the Group is Dexia SA, which is alimited liability company and is incorporated and domiciled inBelgium. Its registered office is located at: Place Rogier 11 –B-1210 Brussels (Belgium).Dexia is listed on the NYSE Euronext Stock Exchange inBrussels and also on the Luxembourg Stock Exchange. Theshares are also traded on NYSE Euronext Paris.These financial statements were authorised for issue by theBoard of Directors on 23 February 2011.1.15. Tangible fixed assets 1371.16. Intangible assets 1381.17. Non-current assets held for sale anddiscontinued Operations 1381.18. Goodwill 1381.19. Other assets 1391.20. Leases 1391.21. Sale and repurchase agreements and lendingOf securities 1391.22. Deferred income tax 1391.23. Employee benefits 1391.24. Provisions 1401.25. Share capital and treasury shares 1411.26. Fiduciary activities 1411.27. Cash and cash equivalents 1411.28. Earnings per share 141The principal accounting policies adopted in the preparationof these consolidated financial statements are set out below.The common used abbreviations below are:• IASB: International Accounting Standards Board• IFRIC: International Financial Reporting InterpretationsCommittee• IFRS: International Financial Reporting Standards.126 Dexia Annual report 2010
Notes to the consolidated financial statements1.1. BASIS OF ACCOUNTING1.1.1. GeneralDexia's consolidated financial statements are prepared inaccordance with the IFRS adopted by the EU.The European Commission published Regulation EC 1606/2002on 19 July 2002, requiring listed groups to apply IFRS as from1 January 2005. This regulation has been updated severaltimes since 2002.Dexia's financial statements have therefore been prepared“in accordance with all IFRSs as adopted by the EU“ andendorsed by the EC up to 31 December 2010, including theconditions of application of interest-rate portfolio hedgingand the possibility to hedge core deposits.Our accounting principles include only elements where anIFRS text allows the possibility of choice.The consolidated financial statements are prepared on a“going-concern basis“ and are given in millions of euro (EUR)unless otherwise stated.1.1.2. Accounting estimates and judgementsIn preparing the consolidated financial statements,management is required to make estimates and assumptionsthat affect the amounts reported. To make these assumptionsand estimates, management uses information availableat the date of preparation of the financial statements andexercises its judgement. While management believes that ithas considered all available information in developing theseestimates, actual results may differ from the estimates andthe differences could be material to the financial statements.Judgements are made principally in the following areas:• Classification of financial instruments;• Determination of whether there is an active market or not;• Consolidation (control, including SPE);• Identification of non-current assets and disposal groupsheld for sale and discontinued operations (IFRS 5);• Hedge accounting;• Existence of a present obligation with probable outflows inthe context of litigations;• Identification of impairment triggers.These judgements are entered in the corresponding sectionsof the accounting policies.Estimates are principally made in the following areas:• Determination of the recoverable amount of impairedfinancial assets;• Determination of the useful life and the residual value ofproperty, plant and equipment, investment property andintangible assets;• Measurement of liabilities for insurance contracts;• Actuarial assumptions related to the measurement ofemployee benefits obligations and plan assets;• Estimate of future taxable profit for the recognition andmeasurement of deferred tax assets;• Estimate of the recoverable amount of cash-generatingunits for goodwill impairment.1.2. CHANGES IN ACCOUNTING POLICIESSINCE THE PREVIOUS ANNUAL PUBLICATIONTHAT MAY IMPACT DEXIA GROUPThe overview of the texts below is made until the reportingdate of 31 December 2010.1.2.1. IASB and IFRIC texts endorsed by the EuropeanCommission and applied as from 1 January 2010The following standards, interpretations or amendments havebeen endorsed by the European Commission and are appliedas from 1 January 2010.• “Improvements to IFRSs“ (issued by IASB in April 2009),which are a collection of amendments to existing standardsand interpretations. Unless otherwise specified, theamendments are effective as from 1 January 2010. There isno impact for Dexia.• Amendments to “IFRS 2 Group Cash Settled Share-basedPayment Transactions“. These amendments aim to clarify thescope of IFRS 2. There is no impact for Dexia.• Revised IFRS 1 “First-Time adoption of International FinancialReporting Standards“, which replaces the standard as issuedin June 2003. The revision of this standard has no impact onDexia, which is not a first-time adopter anymore.• Amendments to IFRS 1 “Additional Exemptions for FirsttimeAdopters. The revision of this standard has no impact onDexia, which is not a first-time adopter anymore.• “Revised IFRS 3 Business Combinations“, which is appliedprospectively to business combinations for which theacquisition date is on or after 1 January 2010. There is noimpact on Dexia because there were no new significantbusiness combinations as from 1 January 2010.• Amendment to “IAS 39 Financial Instruments: Recognitionand Measurement: Eligible Hedged Items“. There is no impacton Dexia.• Amendments to “IAS 27 Consolidated and separate financialstatements. There is no impact on Dexia for the period ending31 December 2010 other than relabelling “minority interest“into “non-controlling interest“.• Amendments to “IFRS 5 Non-current Assets held for Saleand Discontinued Operations“ issued in May 2008 as part ofthe improvements to IFRSs. There is no impact on Dexia.• IFRIC 12 “Service Concession Arrangements“. This interpretationhas no impact on Dexia.• IFRIC 15 “Agreement for the Construction of Real Estate“.This interpretation has no impact on Dexia.• IFRIC 16 “Hedges of a Net Investment in a ForeignOperation“. This interpretation has no impact on Dexia.• IFRIC 17 “Distributions of non-cash-assets to owners“. Thisinter pretation has no impact on Dexia.• IFRIC 18 “Transfers of assets from customers“. This interpretationhas no impact on Dexia.1.2.2. IASB and IFRIC texts endorsed by the EuropeanCommission during the current year but not yetapplicable as from 1 January 2010• Amendment to IFRS 1 “Limited Exemption from ComparativeIFRS 7 Disclosures for First-time Adopters“ applicable as fromManagement reportConsolidatedfinancial statementsAdditional information Annual financial statementsAnnual report 2010 Dexia127
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4 Group profile8 Message from the c
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Group profileManagement reportConso
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Group profileRESULTS Dexia GAAP IFR
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Message from the ChairmenManagement
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2010 and early 2011 highlightsManag
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2010 and early 2011 highlightsDecem
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Human ResourcesMEMBERS OF STAFFGEND
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Annual report 2010 - Dexia.com

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