Contents

Financial position – resultsNotes to the consolidated financial statements 4B20 - Treasury sharesTreasury shares are used within the scope of the liquidity contractset up to improve both the liquidity of the Sequana shareand the regularity of its quotations on the Eurolist market ofNYSE Euronext Paris (see Note 12d). They are recognised at costand as a deduction from equity until they are sold.Proceeds on the sale of treasury shares are debited to equity – andto cash when consideration is received – and no amount is recognisedin profit or loss for the period.B21 - Trade and other payablesTrade and other payables are initially recognised at fair valuewhich in most cases corresponds to their nominal amount.B22 - Revenue recognitionRevenues are measured at the fair value of the considerationreceived or receivable for sales of goods and services in the ordinarycourse of the Group’s activities, net of sales tax, and lessany trade or volume discount granted, goods returned and intercompanysales.Sales include sales of goods and services in the ordinary course ofthe Group’s main activities. For sales of manufactured goods andgoods purchased for resale, revenue is recognised in “sales” whenthe risk and rewards inherent to ownership of the goods havebeen transferred to the purchaser. For sales of services, revenue isrecognised by reference to the stage of completion of the transactionat the end of the reporting period, measured on the basis ofwork completed.In France, research tax credits are sometimes granted for researchand development expenditure incurred during the reportingperiod and they are recognised as a deduction from said expenditureand not as a deduction from income tax expense, exceptfor the portion that may be capitalised in line with accountingpolicies.Interest income is recognised on a time-proportion basis usingthe effective interest method.Dividends are recognised in the income statement when theshareholder’s right to receive a dividend has been established.B23 - Other operating income and expenses, netThis caption includes material items that must be disclosed separatelyfrom other items of profit and loss so as not to distort thepresentation of the Group’s results. Examples include:■■gains or losses on disposals of property, plant and equipmentand intangible assets (when these are not recognised in “discontinuedoperations”);■■impairment of assets (including goodwill impairment);■■restructuring costs;■■environmental costs related to closed sites or discontinuedoperations;■■additions to (reversals of) provisions for litigation; and■■other items of a non-recurring nature.B24 - Operating income and recurring operating incomePursuant to CNC Recommendation 2009-R-03 of 2 July 2009,the Group defines the two indicators that it discloses in its consolidatedincome statement as follows:■ ■ “Operating income” corresponds to all income and expensesthat are not related to financing activities, associates, discontinuedoperations and income taxes;■ ■ “Recurring operating income” is equal to “Operating income”less “Other operating income and expenses, net” (see the definitionin Note 2B23).The Group also uses the following indicator (EBITDA) to calculatecertain ratios (see Notes 12c and 18):■■Earnings before interest, taxes, depreciation and amortisation(or EBITDA) is equal to “Recurring operating income”,less net changes in depreciation, amortisation and provisionsrelated to operating activities. A reconciliation is provided inchapter 1 – Presentation of Sequana – Key figures.B25 - Net financial incomeNet financial income includes the following two items:■■cost of net debt, which corresponds to:• income from the investment of cash and cash equivalents andnet gains made on their sale,• interest on debt calculated using the effective interest method,the financial expense arising on discounting non-current liabilitiesand the costs of early repayment of borrowings or ofcancellation of credit facilities,• foreign exchange gains and losses,• changes in the fair value of derivatives related to componentsof net debt;■■other financial income and expenses, which include:• gains or losses on disposals of non-consolidated investments,• dividends,• changes in the fair value of derivatives related to financialassets,• bank charges and other financial fees and commissions.B26 - Income taxIncome tax expense corresponds to current taxes for all consolidatedsubsidiaries, adjusted for deferred taxes. Income taxes arerecognised in profit or loss unless they relate to items recogniseddirectly in equity, in which case they are recognised immediatelyin equity.The Group has elected to recognise the new national economiclevy (contribution économique territoriale – CET) applicable toFrench subsidiaries within the scope of the 2010 Finance Act,as follows:■ ■ the portion of the levy that relates to the company land tax(contribution foncière des entreprises – CFE) is recognised as anoperating expense;Sequana | 2012 Document de référence (English version) | 107