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LISI 2011 —
39
— financial report
Consolidated financial statements
framework of these programs are subject to certain sale and transfer
restrictions. In the case of capital increases reserved for employees as
part of the Group Savings Plan, the benefit offered to employees is
the discount on the subscription price, being the difference between
the subscription price of the shares and the share price at the award
date (with a maximum of 20% in accordance with French law). This
expense is recognized in its entirety at subscription date in the case of
the Group Savings Plan.
2.2.16 Debts
Interest-bearing loans are initially recognized at their fair value less
costs attributable to the transaction. They are then measured at
depreciated cost; the difference between the cost and the repayment
value is recognized in the income statement for the period of the
loans, in accordance with the effective rate of interest method.
2.2.17 Trade and other accounts payable
Trade and other accounts payable are valued at fair value at first
recognition, and then at depreciated cost. When the maturity of such
financial assets is short, the sums obtained from applying this method
are very close to the nominal value of the payables, which is then the
value employed.
2.2.18 Definition of the concepts “current” and “non current”
in the balance sheet
Assets and liabilities whose maturity is less than the operating cycle,
which is generally 12 months, are classified as current assets and
liabilities. If maturity is later than this, they are classified as non-
current assets and liabilities.
2.2.19 Overview of the income statement
The Group has opted to continue showing the following totals,
which are not strictly accounting ones, and whose definitions are
as follows:
– Current Gross Operating Profit (EBITDA) includes added value,
administrative and sales expenses, costs of pensions including
contributions to provisions for pension commitments and the cost of
remuneration in shares. It does not include other contributions and
write-offs from depreciation and provisions.
– Current Operating Profit (EBIT) includes Current Gross Operating
Profit (EBITDA) as well as other contributions and write-offs to
depreciation and provisions.
–Operating Profit includes EBIT, other non-recurring operating income
and expenses. These non-recurring items are strictly defined as
income and expenses resulting from events or transactions that are
clearly distinct from the company’s ordinary activities, and that are
not expected to reoccur on a regular basis, owing to:
• their unusual nature and
• their random occurrence, such as expenses or compensation
received for losses, costs resulting from shutdowns, restructurings,
or site relocations, goodwill amortization, and capital gains and
losses on the sale of non-operating, tangible and intangible assets.
2.2.19.1 Sale of goods and provision of services
Income from the sale of goods is recognized in the income statement
when the significant risks and advantages inherent in ownership of
the goods have been transferred to the buyer.
Sales revenues are shown after deduction of discounts. Sums from
royalties, patent fees and use of trademarks are posted to sales
revenues.
2.2.19.2 Payments for operating lease contracts
Payments for operating leases are recognized as expenses on a
straight-line basis over the period of the lease.
2.2.19.3 Payments for finance lease contracts
The minimum payments for finance leases, as described in paragraph
2.2.8.2, are broken down into financial charges and debt repayment.
The financial charge is applied for each period covered by the lease so
as to have a constant, periodic interest rate to apply to the declining
balance.
2.2.19.4 Cost of finance and other financial charges and income
The cost of finance includes:
– interest charges on loans calculated using the effective interest rate
method;
– interest charges included in payments made for a finance lease and
calculated using the effective interest rate method,
– interest income generated from short-term investments;
– variations in fair value of financial instruments;
– income fromdividends of non-consolidated companies is recognized
in the income statement when the Group becomes entitled to
receive payments,
i.e.
, in the case of quoted securities, on the
coupon date.
Other financial income and expenses mainly include exchange profits
and losses.
2.2.19.5 Income tax
Corporate income tax (debit or credit) includes the tax to pay (the tax
credit) in respect of each financial year and the amount of deferred
taxation to pay (credit). The tax is recognized as income, except if it
relates to items that are directly recognized as equity; in which case it
is recognized as equity.
Deferred taxation is calculated using the variable carry forward
method for all timing differences at year-end between taxable
and accounting values of assets and liabilities on the consolidated
balance sheet. Fiscally non-deductible goodwill does not give rise to a
declaration of deferred tax.
Deferred tax assets are only recognized if their recovery is probable.
Deferred tax debits and credits are measured at the tax rates that will
be applicable when the timing differences are settled.