APC 2006 Annual Report Download - page 109

Note 2 - Application of IAS 32 and IAS 39 as from January 1, 2005
IAS 32 –
Financial Instruments – Disclosure and Presentation and IAS 39 – Financial Instruments – Recognition and Measure-
ment
– have been applied as from January 1, 2005.
The following table, which reconciles the closing balance sheet for 2004 with the opening balance sheet for 2005, shows the
impact on the main balance sheet items affected by the application of IAS 32 and IAS 39.
Dec. 31, 2004 Treasury Fair value Hedging Derivative Perpetual Puts Jan. 1, 2005
IFRS before stock adjustment instruments instruments bonds granted IFRS
IAS 32 and 39 not qualifying to minority including
for hedge interests IAS 32 and 39
Goodwill 4,462.3 76.7 4,539.0
Available-for-sale financial assets 154.3 44.2 198.5
Deferred tax assets 830.3 1.0 1.4 832.7
Other accounts receivable 529.1 19.9 1.8 550
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Cash and cash equivalents 1,062.8 (87.0) 975.8
Other assets 6,257.3 6,257.3
Total Assets 13,296.1 (87.0) 44.2 19.9 2.8 1.4 76.7 13,354.1
Retained earnings, net of tax 1,797.5 (1.2) (2.7) 1,793.6
Own shares reserve (199.7) (87.0) (286.7)
Other reserves, net of tax 22.3 29.0 12.9 64.2
Translation reserve (84.5) 0.2 (84.3)
Total equity attributable to equity
holders of the parent 7,395.1 (87.0) 29.0 12.9 (1.0) (2.7) 0.0 7,346.3
Minority interests 72.8 3.4 76.2
Perpetual bonds 73.3 (73.3) 0.0
Long-term financial debt 24.9 47.6 72.5
Deferred tax liabilities 203.2 15.2 7.0 0.5 225.9
Short-term financial debt 254.3 (26.6) 227.7
Other non current liabilities 104.4 73.3 177.7
Other current liabilities 279.2 3.3 56.4 338.9
Other liabilities 4,888.9 4,888.9
Total Liabilities 13,296.1 (87.0) 44.2 19.9 2.8 1.4 76.7 13,354.1
107
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2.1 - Treasury stock
IAS 32 requires all Schneider Electric shares held by
the parent company and subsidiaries to be recorded
as a deduction from equity, whatever the purpose for
which the shares are held. In accordance with this
standard, Schneider Electric shares with a value of
87 million carried in assets in the French GAAP bal-
ance sheet at December 31, 2004, under "Cash and
cash equivalents", have been reclassified as a deduc-
tion from equity.
2.2 - Available-for-sale
financial assets
In accordance with IAS 39, investments in non-consol-
idated companies have been reclassified as available-
for-sale financial assets and measured at fair value
(corresponding to market value in the case of listed
shares). Gains and losses arising from remeasure-
ment at fair value are accumulated in equity under
other reserves.
Fair value adjustments to available-for-sale financial
assets at January 1, 2005 amounted to 44.2 million.
2.3 - Derivative instruments
and hedge accounting
IAS 39 requires all derivative instruments to be recog-
nized in the balance sheet and measured at fair value,
whereas in the French GAAP accounts, these instru-
ments were generally carried off-balance sheet. The
treatment of gains and losses arising from remeasure-
ment at fair value depends on whether or not the instru-
ments qualify for hedge accounting under IAS 39.
Currency instruments qualified as cash flow hedges
under IAS 39 have been recognized in the balance
sheet under other receivables at their fair value of
12.2 million, leading to an adjustment of equity in the
same amount, recorded under other reserves.
Hedges of future metal purchases qualified as cash
flow hedges under IAS 39 have been recognized in the
balance sheet under other receivables at their fair
value of 7.7 million, leading to an adjustment of equi-
ty in the same amount, recorded under other reserves.
2.4 - Derivative instruments
not qualifying for hedge accounting
Derivative instruments not qualifying for hedge account-
ing under IAS 39 have been recognized at fair value in
the balance sheet, in assets for 1.8 million and in lia-
bilities for 3.3 million, leading to corresponding adjust-
ments to equity. The instruments concerned consist
mainly of interest rate hedges on intragroup debt.