2010Annual Report - Schneider Electric CZ, s.r.o.

5 CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
158
Note 1 Accounting Policies
1.1 - Accounting standards
The consolidated financial statements have been prepared in
compliance with the international accounting standards (IFRS) as
adopted by the European Union as of December 31, 2010. The
same accounting methods were used as for the consolidated
fi nancial statements for the year ended December 31, 2009, with
the exception, notably, of the fi rst application of the revised IFRS 3
- Business Combinations and revised IAS 27 – Consolidated and
Seperate Financial Statements norms
IAS 27 (revised) presents the consolidated fi nancial statements of a
group as those of a single economic entity with two categories of
owners: fi rstly the equity holders of the parent (Schneider Electric
SA shareholders) and secondly non-controlling interests (minority
shareholders in the subsidiaries). A non-controlling interest is defi ned
as the equity in a subsidiary not attributable, directly or indirectly, to
a parent (hereinafter “minority interests”). Under this new approach,
changes in a parent’s ownership interest in a subsidiary not resulting
in a loss of control are accounted for as equity transactions since
there is no change in control within the economic entity. Thus, from
January 1, 2010, when increasing its interest in a consolidated
subsidiary, the Group recognises the difference between the
acquisition cost and the book value of the minority interests as a
change in equity attributable to the shareholders of Schneider Electric
SA. Conversely, the Group recognises any gains or losses generated
on share sales resulting in a loss of control of the subsidiary in the
statement of income.
IFRS 3 (revised) introduced a series of changes to the acquisition
method as defi ned in IFRS 3 prior to the revision, notably including:
• the option to measure the minority interests in the acquiree either
as their proportionate interest in the identifi able net assets of the
acquiree or at fair value. This option is available on a case by case
basis for each acquisition;
• the recognition of any adjustment to the purchase price at fair
value from the acquisition date;
• the recognition as an expense for the period of costs directly
associated with the acquisition;
• in the case of a business combination achieved in stages (step
acquisition), the fair value measurement on the acquisition date of
the interest previously held in the acquiree and the recognition of
any resulting gain or loss in the statement of income.
The impact on the statement of income of the application of IFRS 3
(revised) and IAS 27 (revised) is recognised under other operating
income/(expense). EUR31 million in acquisition-related costs were
recognised in the statement of income in 2010.
The main areas of impact of the adoption of IFRS 3 (revised) and
IAS 27 (revised) on Schneider Electric’s consolidated financial
statements as of December 31, 2010 were as follows:
• the treatment of the sale of shares in Schneider Electric South
Africa without a loss of control, recognised in equity and thus
not resulting in any gain on disposal being recognised in the
statement of income;
• the restatement in the 2009 comparative statement of income
of the EUR25.8 million in acquisition costs incurred in 2009 on
deals concluded in 2010; these costs were previously capitalised
whereas they must be recognised as an expense for the period
under the new standard (see below: reconciliation between the
published 2009 statement of income and balance sheet as of
December 31, 2009 and those presented for comparative
purposes).
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
The following standards and interpretations that were applicable
during the period did not have a material impact on the consolidated
fi nancial statements as of December 31, 2010:
• amendment to IFRS 1 – First-time Adoption of International
Financial Reporting Standards;
• amendment to IFRS 2 – Share-based Payment (Group cashsettled
share-based payment transactions);
• amendement of IAS 39 – Financial instruments: Recognition and
Measurement – Exposures Qualifying for Hedge Accounting;
• IFRS improvements (May 2008): amendment to IFRS 5;
• IFRS improvements (April 2009);
• IFRIC 12 – Service Concession Arrangements;
• IFRIC 15 – Agreements for the Construction of Real Estate;
• IFRIC 16 – Hedges of a Net Investment in a Foreign Operation;
• IFRIC 17 – Distributions of Non-cash Assets to Owners;
• IFRIC 18 – Transfers of Assets from Customers.
There are no differences in practice between the standards applied
by Schneider Electric as of December 31, 2010 and the IFRSs issued
by the International Accounting Standards Board (IASB), since the
application of standards and interpretations that are mandatory for
reporting periods beginning on or after January 1, 2010 but not yet
adopted by the European Union would not have a material impact.
Lastly, the Group did not apply the following standards and
interpretations that had not yet been adopted by the European
Union as of December 31, 2010 or that are mandatory at some
point subsequent to December 31, 2010:
• standards adopted:
– IAS 24 – Related party disclosures,
– amendment to IAS 32 – Classifi cation of rights issues,
– amendment to IFRIC 14 – Prepayments of a Minimum Funding
Requirement,
– IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments;
• standards not yet adopted:
– improvements to IFRSs (May 2010),
– IFRS 9 - Financial Instruments,
– amendment to IFRS 7 – Disclosures – Transfers of fi nancial
assets,
– amendments to IFRS 1 – Severe Hyperinfl ation and Removal
of Fixed Dates for First-time Adopters,
– amendments to IAS 12 – Deferred Tax: Recovery of Underlying
Assets.
Schneider Electric is currently assessing their potential impact on
the Group’s consolidated financial statements. At this stage of
analysis, the Group does not expect the impact on its consolidated
fi nancial statements to be material, except for IFRS 9 for which an
impact analysis has not yet begun, due to its incomplete nature and
uncertainties surrounding the adoption process in Europe.
The fi nancial statements provide data prepared in accordance with
IFRS for the years ended December 31, 2010 and December 31,
2009. The fi nancial statements for the year ended December 31,
2008, presented in the Registration Document registered with
Autorité des Marchés Financiers (AMF) under number D 09-0124
on March 17, 2009, are incorporated by reference.