financial report and registration document 2011 - Groupe SEB

5 Notes
Consolidated fi nancial statements
to the consolidated fi nancial statements
NOTE 29 SIGNIFICANT EVENTS, LITIGATION AND CONTINGENT LIABILITIES
Note 29.1. SIGNIFICANT EVENTS
AND LITIGATION
29.1.1. Signifi cant events
SALE OF PLANT 3 IN BRAZIL
In August 2008, Groupe SEB do Brasil signed an agreement to sell Plant 3
in São Paulo, Brazil. The sale was conditional upon the Group providing the
purchaser with a decontamination certifi cate. The site was decontaminated
in 2009 and 2010.
On 4 February 2011, Groupe SEB do Brasil received a partial payment of
€14.8 million in respect of the sale. The balance of €1.8 million has been
retained by the purchaser in guarantee of full and complete decontamination
of the surrounding land. The site’s carrying amount, including decontamination
expenses, was €3.2 million at 31 December 2010.
The capital gain generated on this transaction and recorded in the 2011
fi nancial statements came to €13.8 million.
RENEGOTIATION OF THE SYNDICATED LOAN
The unused €456.1 million syndicated loan due in 2011 was renegotiated with
the banking pool, which comprises BNP Paribas, Citibank, Commerzbank,
Crédit Agricole, HSBC, Natixis and Société Générale. The new loan bears
interest at a fl oating rate and has a nominal amount of €560 million and a
fi ve-year term. None of the loan had been drawn down at 31 December 2011.
BOND ISSUE
On 26 May 2011, the Group launched its fi rst bond issue, representing a
total amount of €300 million. The bonds have a fi ve-year term maturing on
3 June 2016 and pay interest at an annual rate of 4.5%. The lead managers
for the issue were BNP Paribas, Crédit Agricole CIB, Natixis and Société
Générale. The bonds have been admitted to trading on the NYSE Euronext
Paris stock exchange.
29.1.2. Litigation
SUPPLIER DISPUTE
A provision for contingencies has been set aside following a dispute with
a Chinese supplier concerning a shipment (see Note 6.3). The Group’s
maximum exposure in relation to this dispute is estimated at €5 million, but
the entire claim is being contested and the related legal proceedings are
expected to be lengthy.
PENTALPHA DISPUTE
In April 2006, a jury in New York returned a verdict in favour of Groupe SEB
in relation to a patent infringement suit fi led in 2000 against the Hong Kong
companies, Pentalpha Enterprises Ltd. and Global-Tech Appliances, Inc.
(hereinafter referred to as Pentalpha), concerning a deep fryer marketed in
the United States. The ensuing New York District Court ruling on 9 October
2008 found that Groupe SEB was entitled to a reasonable royalty payment
of $4.7 million. Pentalpha challenged this ruling by fi ling:
� an appeal before the Court of Appeals for the Federal Circuit (CAFC) in
Washington, which fully upheld the District Court ruling on 5 February
2010;
� a suit against the SEB patent with the US Patent and Trademark Offi ce
(USPTO). The suit was overruled as the USPTO upheld all the claims of
the SEB patent in December 2009.
Pentalpha then submitted a request for the CAFC to review its decision.
Pentalpha has also submitted a $1 million claim against SEB and its lawyer
before the New York State Court for alleged inaccurate and misleading
statements made during the patent case.
The CAFC rejected Pentalpha’s request for a review of its conviction for
patent infringement and on 10 August 2010 Groupe SEB received the
$5.1 million in damages (including interest) that had been held in escrow
during the proceedings. On 25 June 2010, however, Pentalpha asked the
Supreme Court of the United States to hear its appeal of the CAFC decision.
On 31 May 2011 the US Supreme Court ruled in Groupe SEB’s favour on the
appeal lodged by Pentalpha concerning the patent infringement suit fi led
against Pentalpha relating to deep fryers in the United States. Consequently,
the $5.1 million in damages (including interest) received in August 2010 were
recognised as income in the 2011 fi nancial statements.
In the past twelve months, other than the proceedings refl ected in the
fi nancial statements and described in the accompanying notes, there have
been no other government, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Group is
aware) which may have or have had in the recent past signifi cant effects on
the Group and/or its fi nancial position or profi tability.
Note 29.2. CONTINGENT LIABILITIES
Recycling end-of-life products
European directive 2002/96/EC on waste electrical and electronic equipment
adopted in February 2003 requires Member States to recycle end-of-life
household appliances. This directive was transposed into the national laws
of EU member countries during 2006.
The directive states that household appliance manufacturers and importers
are responsible for fi nancing the cost of collecting, sorting and reusing/
recycling end-of-life electrical and electronic equipment. Concerning
products sold to private households before the directive was transposed into
national legislation (historical waste), the directive requires that all producers
contribute to fi nancing the costs in proportion to their respective share of the
equipment put on the market during a “reference period”, generally the year
the waste was collected and recycled. This system is known as “one for one”
(one product recycled for every one sold) or “pay as you go”.
130 GROUPE SEB Financial Report and Registration Document 2011