6 - Vicat

EXAMINATION OF THE FINANCIAL POSITION AND RESULTS9.1. INTRODUCTION 99.1.4. Elements of the income statementIn the Group’s consolidated financial statements preparedin accordance with IFRS standards, the principalitems of the income statement, which are furtherdiscussed below, are the following :• sales, which are mainly composed of billings forproducts delivered during the period and servicesrendered during the period, in particular the transportof goods sold re-invoiced to the customer ;• goods and services purchased, which mainly comprisepurchases and changes in inventories of rawmaterials and fuels, electricity supplies and otherservices received (in particular maintenance costsand transport charges) ;• personnel costs, which include the cost of salariesand social security contributions related topersonnel employed directly by the Group, aswell as employee profit-sharing schemes forcompanies in which these schemes exist andcharges related to post-employment benefits ;• taxes and duties which represent taxes other thanthose based on income.In addition to the accounting aggregates presentedin the income statement, the principal indicatorsused by the Group for measurement of financial andindustrial performance are EBITDA and EBIT, whichare shown at the foot of the income statement aspublished. These aggregates are defined in note 1.22of the appendix to the consolidated financial statementsand the rationalization between Gross operatingearnings, EBITDA, EBIT and Operating income ispresented in note 23 (See also section 3 “Selectedfinancial information” of this Registration Document).9.1.5. Effect of changes in the consolidation scope andexchange rate fluctuationsChanges in the consolidation scopeChanges in the consolidation scope of consolidationinclude acquisitions (included in the consolidationscope), divestments (removed from the consolidationscope) and the changes in the method of consolidationof the Group’s subsidiaries (additional acquisitionsor partial divestment).At the end of April 2010, the Group announced thesignature of an agreement with the shareholders ofBharathi Cement Company Limited (BCCL), a cementcompany operating in the State of Andhra Pradesh,relating to the acquisition of 51 % of this company’scapital. BCCL owns a cement works with two productionlines which, at the end of 2010, represented anannual capacity of 5 million tonnes of cement. Thisacquisition of a majority stake in Bharathi Cement isin addition to the Vicat Sagar Cement joint venture,and has helped the Group consolidate its position ina market with a great deal of potential.In December 2010, the Group acquired L. Thiriet &Cie, a company based in the French Department ofMeurthe-et-Moselle specializing in the production ofConcrete and Aggregates. L. Thiriet & Cie operates3 concrete plants and 4 aggregate quarries, withan overall annual capacity of around 100,000 m 3 ofconcrete and 500,000 tonnes of aggregates. In 2009,L. Thiriet & Cie had sales of € 19 million. With thisacquisition, Vicat is expanding and consolidating itsbusiness in Southern Lorraine, by providing supportfor the Xeuilley cement works.During the 2009 and 2010 financial years, additionalshare holdings which did not lead to significantchanges in the consolidation scope were acquired.Furthermore, in 2009 the Group consolidated thecompany Sinaï White Cement using the equitymethod.Exchange rate fluctuationsThe Group’s international operations expose its resultsto fluctuations inthe currencies of each countrywhere the Group is established relative to the Euro (i),as well as fluctuations in the currencies used by itssubsidiaries for their business activities relative totheir operating currencies (ii).i. On the closing of each year’s accounts, the incomestatements of the subsidiaries are converted intoEuros at the average exchange rate for the period.The fluctuations from one period to anotherbetween the different currencies in which theGroup operates relative to the Euro result in fluctuationsin sales and, more generally, income andexpense in Euros, even though such fluctuationsdo not reflect changes in the Group’s performance.For the purposes of comparison, the Grouppresents, in note 19 of the appendix to theconsolidated financial statements for 2010,sales recomputed at constant consolidationscope and exchange rates compared to 2009.In addition, the balance sheets of the subsidiariesare converted at the year-end exchange rates.Fluctuations in these currencies result in conversionadjustments allocated to equity (see note 1.5 of theappendix to the consolidated financial statements).ii. Profits or losses recorded by the Group’s subsidiarieswhen carrying out transactions in currenciesdifferent from their operating currencies are recordedin the financial income as exchange rategain or loss.2010 registration document VICAT 73