financial report and registration document 2011 - Groupe SEB

5 Notes
Consolidated fi nancial statements
to the consolidated fi nancial statements
Deferred tax assets are recognised for deductible temporary differences and
tax loss carryforwards to the extent that it is probable that future taxable
profi ts will be available against which they can be utilised.
Deferred tax assets previously unrecognised at the date of a business
combination or during the twelve-month fair value measurement period are
subsequently recognised as an adjustment to profi t or loss provided they
meet the recognition criteria.
In accordance with IAS 12, deferred tax assets and liabilities are not
discounted.
1.4.10. Employee benefi ts
A) PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
In some countries, the Group is required to pay length-of-service awards to
employees on retirement or pension benefi ts under formal pension plans. The
Group also pays contributions to government-sponsored pension schemes
in its various host countries. The accounting treatment of these pension and
other post-employment benefi t plans depends on the type of plan, as follows:
Defi ned contribution plans
Contributions to these plans are recognised as an expense for the period
to which they relate.
Defi ned benefi t plans
In accordance with IAS 19 – Employee Benefi ts, obligations under defi ned
benefi t plans are calculated annually by independent actuaries using the
projected unit credit method based on fi nal salaries. The projected unit credit
method sees each period of service as giving rise to an additional unit of
benefi t entitlement and measures each unit separately to build up the fi nal
obligation, which is then discounted.
The actuarial assumptions used to calculate the obligation include staff
turnover rates, mortality rates, the discount rate and the expected retirement
age. The assumptions vary according to local laws and regulations in the
host countries concerned.
Actuarial gains and losses arising from the effects of changes in actuarial
assumptions and experience adjustments on plan obligations and assets are
recognised in profi t by the corridor method. Under this method, the portion
of the net cumulative unrecognised actuarial gains and losses that exceeds
the greater of 10% of the present value of the defi ned benefi t obligation and
10% of the fair value of any plan assets at that date is amortised over the
remaining service lives of the employees concerned.
A provision is recorded in the balance sheet for any unfunded obligations,
corresponding to defi ned benefi t obligations not covered by plan assets, net
of unrecognised gains and losses.
For plans that have a surplus – corresponding to the excess of plan assets
over the defi ned benefi t obligation – the Group applies the limit provided for
in IAS 19 in measuring any asset recognised in the balance sheet.
B) OTHER LONG-TERM BENEFIT PLANS
Certain subsidiaries pay jubilees to employees who have completed a
certain number of years’ service or offer employees “time savings accounts”.
The cost of these long-term benefi ts is calculated on an actuarial basis
and recognised in profi t over the service lives of the employees concerned.
Actuarial gains and losses are recognised immediately in profi t during the
period in which they are generated, as their deferral is not allowed under
IFRS.
Pension and other post-employment benefi t costs are classifi ed as operating
expenses, except for the interest cost, which is included in other fi nancial
income and expense in accordance with the alternative treatment allowed
under IAS 19.
In accordance with IFRS 1 – First-time Adoption of International Financial
Reporting Standards, cumulative actuarial gains and losses at 1 January
2004 were included in provisions for pensions and other post-employment
benefi t obligations at that date by adjusting equity. Groupe SEB has elected
not to use the option available in the amended version of IAS 19 whereby
entities may recognise actuarial gains and losses under defi ned benefi t
pension plans directly in equity as from 1 January 2006.
C) SHARE-BASED PAYMENTS
Stock option plans are measured and recognised in accordance with IFRS 2
– Share-based Payment. Stock options represent a benefi t for the grantee
and, accordingly, are treated as part of the Group’s compensation costs.
Option grants are not cash-settled, and the benefi t is therefore recognised
as an expense over the vesting period by adjusting equity, for an amount
corresponding to the fair value of the underlying equity instruments. As
the stock options granted to employees of Group subsidiaries are only
exercisable for SEB S.A. shares they are deemed to be equity-settled sharebased
payments.
Fair values are determined using the Black & Scholes option pricing model.
This model takes into account the option exercise price and period, market
data at the grant date (risk-free interest rate, share price, volatility, expected
dividends) and grantee behaviour assumptions.
IFRS 2 has been applied only to stock options granted after 7 November
2002 that had not yet vested at 1 January 2005. As allowed under IFRS 1,
no options granted prior to 7 November 2002 have been restated.
1.4.11. Provisions
In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent
Assets, a provision is recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable that an
outfl ow of resources embodying economic benefi ts will be required to settle
the obligation, and a reliable estimate can be made of the amount of the
obligation.
A) PROVISIONS FOR WARRANTY COSTS
The Group provides a warranty on its products. The estimated costs of the
warranty are accrued at the time of sale, based on historical data.
This item also includes provisions for product recalls, which are set up when
the recall is decided.
B) PROVISIONS FOR CLAIMS AND LITIGATION
As a general principle, all known claims and litigation involving the Group
are reviewed by management at each period-end. All necessary provisions
have been recorded to cover the related risks, as estimated after obtaining
advice from outside legal advisors.
88 GROUPE SEB Financial Report and Registration Document 2011