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financial report and registration document 2011 - Groupe SEB

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C) RESTRUCTURING PROVISIONS<br />

The Group is considered as having a constructive obligation when<br />

management has a detailed formal plan for the restructuring, has raised a<br />

valid expectation in those affected that it will carry out the restructuring by<br />

announcing its main features <strong>and</strong> no infl ow of economic benefi ts is expected<br />

that would offset the costs of the plan.<br />

The amount of the related provision corresponds to forecast cash outfl ows<br />

under the plan.<br />

1.4.12. Off -balance sheet commitments<br />

For several years now, the Group’s <strong>report</strong>ing system has included detailed<br />

<strong>report</strong>ing of off-balance sheet commitments. The process provides for the<br />

<strong>report</strong>ing by consolidated subsidiaries, in their consolidation packages, of<br />

information about the following commitments that they have given:<br />

� guarantees, endorsements <strong>and</strong> bonds;<br />

� security interests (mortgages <strong>and</strong> pledges);<br />

� commitments under operating leases <strong>and</strong> fi rm orders for fi xed assets;<br />

� other commitments.<br />

1.4.13. Transactions between owners<br />

Acquisitions or disposals of non-controlling interests that do not affect the<br />

Group’s control of a subsidiary are treated as transactions between owners<br />

<strong>and</strong> accounted for in equity. The carrying amounts of the subsidiary’s assets<br />

(including goodwill recognised upon obtaining control) <strong>and</strong> liabilities remain<br />

unchanged.<br />

In the event of a partial disposal leading to the loss of control of a subsidiary,<br />

the Group (a) derecognises the assets (including any goodwill) <strong>and</strong> liabilities<br />

of the subsidiary at their carrying amounts at the date when control is lost;<br />

(b) derecognises the carrying amount of any non-controlling interests in<br />

the former subsidiary at the date when control is lost; (c) recognises the<br />

fair value of the consideration received; (d) recognises any investment<br />

retained in the former subsidiary at its fair value at the date when control<br />

is lost; (e) reclassifi es to profi t or loss any gain or loss recognised in other<br />

comprehensive income <strong>and</strong> (f) recognises any resulting difference as a gain<br />

or loss in profi t or loss attributable to the parent. The remeasurement at fair<br />

value of any investment retained therefore affects profi t or loss.<br />

Note 1.5. INCOME STATEMENT PRESENTATION<br />

1.5.1. Revenue<br />

Revenue corresponds to the value, excluding tax, of goods <strong>and</strong> services<br />

sold by consolidated companies in the course of their ordinary activities,<br />

after eliminating intra-group sales.<br />

Revenue is recognised when the signifi cant risks <strong>and</strong> rewards of ownership<br />

are transferred to the buyer – generally when the customer receives a product<br />

– for an amount corresponding to the fair value of the consideration received<br />

or receivable, as determined after deducting rebates <strong>and</strong> discounts.<br />

Financial Report <strong>and</strong> Registration Document <strong>2011</strong><br />

5<br />

Consolidated fi nancial statements<br />

Notes to the consolidated fi nancial statements<br />

Advertising expense contributions billed by customers <strong>and</strong> the cost of<br />

consumer promotions that do not fulfi l the criteria for recognition as operating<br />

expenses are recognised as a deduction from revenue. The <strong>report</strong>ed amount<br />

of revenue also includes miscellaneous revenues.<br />

Freight <strong>and</strong> other costs billed to customers are treated as an integral part<br />

of revenue.<br />

Accruals are booked for deferred rebates granted to customers on the basis<br />

of contractual or constructive commitments identifi ed at the period-end.<br />

1.5.2. Operating result from activity<br />

(formerly “Operating margin”)<br />

<strong>and</strong> operating expenses<br />

The Group’s main performance indicator is operating result from activity,<br />

which corresponds to revenue less operating expenses. Operating<br />

expenses comprise the cost of sales, research <strong>and</strong> development costs,<br />

advertising costs <strong>and</strong> distribution <strong>and</strong> administrative expenses. Statutory <strong>and</strong><br />

discretionary employee profi t-sharing <strong>and</strong> non-recurring operating income<br />

<strong>and</strong> expenses, as defi ned in Note 1.5.4, are excluded from the calculation.<br />

1.5.3. Recurring operating profi t<br />

Recurring operating profi t corresponds to operating result from activity less<br />

statutory <strong>and</strong> discretionary employee profi t sharing.<br />

1.5.4. Operating profi t<br />

Operating profi t comprises all the recurring <strong>and</strong> non-recurring income <strong>and</strong><br />

expenses generated in the course of the Group’s ordinary activities, including<br />

income <strong>and</strong> expenses resulting from one-off decisions or transactions that<br />

are unusual in terms of their amount. Non-recurring operating income <strong>and</strong><br />

expenses mainly include the following items (see Note 6 for details):<br />

� costs of signifi cant restructuring plans;<br />

� impairment losses on property, plant <strong>and</strong> equipment <strong>and</strong> intangible assets,<br />

including goodwill;<br />

� costs related to business combinations (excluding the costs of issuing<br />

equity instruments or of new debt contracted for the purpose of the<br />

business combination) <strong>and</strong> the remeasurement at fair value of any<br />

previously held investment on the date control was obtained;<br />

� gains or losses recognised upon losing control of a subsidiary, including<br />

the remeasurement at fair value of any investment retained;<br />

� gains <strong>and</strong> losses on very exceptional events (litigation, asset disposals, etc.<br />

involving unusually large amounts) <strong>and</strong> changes in provisions booked for<br />

these types of events.<br />

1.5.5. Other income statement items<br />

Accrued interest on interest-bearing instruments is recognised by the<br />

effective interest method based on the purchase price.<br />

Dividend income is recognised when the shareholders’ right to receive<br />

payment is established.<br />

Finance costs are recognised in the income statement on an accruals basis.<br />

GROUPE <strong>SEB</strong><br />

5<br />

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