APC 2004 Annual Report Download - page 117

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2.4.4 - Impairment of assets
As recommended by the French securities regulator
(COB, now renamed AMF), the Group elected for
early adoption – starting in 2002 – of standard CRC
2002-10 concerning impairment of assets. The
method used to test assets for impairment complies
with IAS 36 –
Impairment Of Assets and the level
(Cash Generating Unit) at which the recoverability of
goodwill is assessed is also compatible with this stan-
dard.
The Group's business is highly sensitive to techno-
logical advances and property, plant and equipment
are already tested for impairment at regular intervals.
For the purpose of preparing the IFRS accounts, IAS
36 is also being applied to intangible assets corre-
sponding to capitalized development costs.
2.4.5 - Provisions for losses and contingencies
The changeover to IFRS has no impact on provisions
for losses and contingencies because the criteria
applied in the French GAAP accounts to recognize
these items comply with IAS 37 –
Provisions,
Contingent Liabilities And Contingent Assets.
However, in the IFRS accounts, long-term provisions
(due date over one year) for losses and contingencies
have been discounted. The discounting adjustment
posted to retained earnings amounts to 18 million
at January 1, 2004 and 16 million at December 31,
2004.
Certain provisions reported as liabilities relate to
impairment of assets and have been reclassified
against the corresponding assets (29 million at
January 1, 2004 and 28 million at December 31,
2004).
2.5 - Application of IAS 32 and IAS 39
I AS 32 – Financial Instruments: Disclosure and
Presentation
and IAS 39 – Financial Instruments:
Recognition and Measurement
will be applied
prospectively as from January 1, 2005.
The choices concerning the designation of hedges.
particularly hedges of intercompany transactions.
may change depending on the outcome of the IASB's
discussion of this topic.
IAS 32 and IAS 39 mainly apply to the following bal-
ance sheet items:
Investments
Cash and cash equivalents
Financial instruments and derivatives
Treasury stock.
Measurement of financial assets
(investments carried at cost and cash equivalents)
Securities available for sale will be remeasured at fair
value and changes in fair value will be recognized
directly in equity up to the date of sale. The Group's
French GAAP accounts already include disclosures
about the fair value of financial instruments (note 7 to
the 2004 French GAAP consolidated financial state-
ments).
Hedging transactions
The Group hedges currency. interest rate and com-
modity risks, as described in note 20 to the 2004
French GAAP consolidated financial statements.
Treasury shares
Schneider Electric shares carried in the French GAAP
balance sheet under assets will all be reported as a
deduction from shareholders' equity in the IFRS bal-
ance sheet, in accordance with IAS 32. The adjust-
ment has no impact on the income statement.
If IAS 32 had been applied, the adjustments would
have amounted to 91 million at December 31, 2003
and 87 million at December 31, 2004.
Financial liabilities
The impact of IAS 32 on the measurement and pre-
sentation of debt is not material.
2.6 - Application of IAS 14
IAS 14 - Segment Reporting requires more detailed
information by segment, notably concerning assets,
liabilities and operating cash flow. The Group has
decided to use geographical segments for its primary
segment reporting format and business segments for
its secondary segment reporting format.
The notes to the financial statements will be reviewed
to comply fully with IFRS requirements.
Consolidated financial statements