financial report and registration document 2011 - Groupe SEB

Derivative instruments designated as the hedging instrument in a hedging
relationship may be classifi ed as either fair value or cash fl ow hedges:
� a fair value hedge is a hedge of the exposure to changes in fair value of
a recognised asset or liability or an unrecognised fi rm commitment that
is attributable to a particular risk and could affect profi t;
� a cash fl ow hedge is a hedge of the exposure to variability in cash fl ows
that is attributable to a particular risk associated with a recognised asset
or liability or a highly probable forecast transaction and could affect profi t.
The gain or loss arising from remeasurement at fair value of derivative
instruments designated as fair value hedges is recognised in profi t, offsetting
all or part of the gain or loss recognised on the hedged item.
In the case of cash fl ow hedges, the effective portion of the gain or loss
arising from remeasurement of the derivative instrument at fair value is
recognised in equity and the ineffective portion is recognised in profi t. The
cumulative gains and losses on cash fl ow hedges recognised directly in
equity are reclassifi ed into profi t when the hedged item affects profi t.
Hedge accounting is applied when:
� the hedging relationship is formally designated and documented at the
inception of the hedge;
� the hedge is expected to be highly effective and is determined actually
to have been highly effective throughout the fi nancial reporting periods
for which it was designated.
At the inception of each hedge, the hedging relationship is formally
documented, specifying in particular the Group’s risk management objective
and strategy for undertaking the hedge. The initial documentation also
includes details of how the Group will assess the hedging instrument’s
effectiveness. In subsequent periods, the hedging instrument’s actual
effectiveness in offsetting the exposure to changes in the hedged item’s fair
value or cash fl ows attributable to the hedged risk is also fully documented.
Hedge accounting is discontinued prospectively when the derivative
instrument ceases to be a highly effective hedge or when it expires or is
sold, terminated or exercised.
Changes in the fair value of derivative instruments that do not qualify for
hedge accounting are recognised in profi t.
1.4.5. Inventories
Raw materials and goods purchased for resale are measured at purchase
cost, using the weighted average cost method.
Work-in-progress and fi nished products are measured at cost, including raw
materials and labour and a portion of direct and indirect production costs.
In accordance with IAS 2, inventories are measured at the lower of cost,
determined as explained above, and net realisable value.
Net realisable value corresponds to the estimated selling price in the ordinary
course of business less the estimated costs necessary to make the sale
(mainly distribution costs).
The carrying amount of inventories does not include any borrowing costs.
Financial Report and Registration Document 2011
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Consolidated fi nancial statements
Notes to the consolidated fi nancial statements
1.4.6. Trade receivables
Trade receivables are measured at the lower of their nominal amount – which
approximates fair value due to their short maturity – and their estimated net
realisable value. Provisions for impairment are determined on the basis of
the age of the receivables, taking into account any identifi ed recovery risks.
1.4.7. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and shortterm
investments in money market instruments. These instruments have
maturities of less than three months; they are readily convertible into known
amounts of cash and are subject to an insignifi cant risk of changes in value.
The consolidated cash fl ow statement is presented using the indirect method
and cash fl ows are analysed between operating, investing and fi nancing
activities.
IAS 7 was amended following the publication of IAS 27R. The aggregate cash
fl ows arising from obtaining or losing control of a subsidiary are classifi ed
as investing activities while cash fl ows arising from changes in ownership
interests in a fully consolidated subsidiary are classified as financing
activities. Transactions with jointly controlled entities or entities accounted
for by the equity method continue to be classifi ed as investing activities.
1.4.8. Treasury stock
Treasury stock is deducted from equity at cost. Any gains or losses arising
from the purchase, sale, issue or cancellation of treasury stock are recognised
directly in equity without affecting profi t.
1.4.9. Income taxes
Income tax expense reported in the income statement corresponds to current
tax for the period and changes in deferred taxes.
In accordance with IAS 12 – Income Taxes, deferred taxes are recognised for
temporary differences between the carrying amounts of assets and liabilities
and their tax base. They are determined using tax rates (and tax laws) that
have been enacted or substantively enacted by the balance sheet date.
Temporary differences include:
a) taxable temporary differences, which are temporary differences that will
result in taxable amounts in determining taxable profi t (tax loss) of future
periods when the carrying amount of the asset or liability is recovered or
settled; and
b) deductible temporary differences, which are temporary differences that
will result in amounts that are deductible in determining taxable profi t (tax
loss) of future periods when the carrying amount of the asset or liability
is recovered or settled.
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