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4Financial position – resultsNotes to the consolidated financial statementsActuarial gains and losses arising on pension benefit obligations,defined as changes related to experience adjustments andactuarial assumptions in accordance with IAS 19, are recogniseddirectly in equity (shown in the consolidated statement of comprehensiveincome). Actuarial gains and losses arising on otherlong-term benefits are recognised immediately in profit or loss.Defined benefit plans can give rise to the recognition of provisionsand mainly concern:a) pension benefit obligations:■■pension annuity plans,■■lump-sum payments on retirement,■■other pension obligations and supplementary pensions;b) other long-term benefits:■■long-service awards,■■early retirement plans;c) other employee benefits:■■healthcare plans,■■employee incentive and/or profit-sharing plans.B17 - Other provisionsA provision is recognised when the Group has a present obligation(legal or constructive) arising from a past event, whose amountcan be estimated reliably, and whose settlement is expected toresult in an outflow of resources embodying economic benefitsfor the Group.These mainly comprise provisions for environmental and legalcontingencies as well as restructuring provisions.Provisions are discounted where the effect of the time value ofmoney is material. Discounting is calculated based on risk-freerates net of inflation for each geographic area concerned.Provisions for environmental and legal contingenciesThe Group generally assesses its environmental and legal contingencieson a case-by-case basis, in accordance with the applicablelegal requirements. Provisions are recognised on the basis of thebest available information at end of the reporting period, providedthat such information enables a probable loss to be determinedand that a reliable estimate can be made of the amount ofthe obligation.Restructuring provisionsA restructuring provision is recognised when the Group hasapproved a detailed formal plan for the restructuring and haseither started to implement the plan or has publicly announcedits main features.B18 - DebtInterest-bearing debt is recognised at cost, which correspondsto the fair value of the amount received less directly attributabletransaction costs. Debt is subsequently recognised at amortisedcost. The difference between the cash received (less directlyattributable transaction costs) and the redemption value is takento profit based on the effective interest rate over the duration ofthe borrowings.Debt is classified as a current liability unless the entity has anunconditional right to defer settlement of the liability for at least12 months after the end of the reporting period.When a loan is recognised initially, any directly-attributabletransaction costs are deducted from the fair value if the borrowingsare recognised at amortised cost and then factored into theeffective interest rate.Net debt is an important indicator for the Group. It is the sum ofshort- and long-term debt, less cash and cash equivalents, othermarketable securities and certain investments accounted for ascash and cash equivalents. A breakdown is provided in Note 18,“Financial instruments”.B19 - Stock options and share awardsThe Group has granted options to purchase Sequana shares andshare awards to certain of its employees (“Equity-settled plans”).At the grant date, the fair value of the options and share awardsis calculated in accordance with the binomial method. This fairvalue is then recognised as an expense over the vesting periodof the options. This method enables the following elements tobe taken into account: the plans’ characteristics (exercise priceand period), market data at the grant date (risk-free rate, shareprice, volatility, expected dividend) and assumptions regardingthe behaviour of beneficiaries.The fair value of the options and share awards is recognised on astraight-line basis over the vesting period. This amount is recognisedin the income statement under “Personnel expenses” with acorresponding adjustment to equity. Upon exercise of the optionsor the vesting of share grants, the price paid by the beneficiariesto exercise the options, or the amount paid by Sequana forthe shares awarded, is recognised in cash with a correspondingadjustment to equity.At the end of each reporting period the Group assesses the numberof options that are expected to vest or to be exercised andrecognises the impact of its estimates in profit or loss, with a correspondingadjustment to equity.The related social security charges are an integral part of theseshare awards and are recognised immediately in profit or loss inthe reporting period in which the plans are set up.106 | Sequana | 2012 Document de référence (English version)