APC 2011 Annual Report Download - page 168

166 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
CONSOLIDATED FINANCIAL STATEMENTS
5NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December31, 2009 (involving puts granted to minority shareholders
prior to this date). In this case, the Group elected to recognise the
difference between the purchase price of the minority interests
and the share of the net assets acquired as goodwill, without
re- measuring the assets and liabilities acquired. Subsequent
changes in the fair value of the liability are recognised by adjusting
goodwill.
The Group elected to recognise the subsequent changes in the fair
value of the liability against equity.
1.23 – Revenue recognition
The Group’s revenues primarily include merchandise sales and
revenues from services and contracts.
Merchandise sales
Revenue from sales is recognised when the product is shipped
and risks and benefi ts are transferred (standard shipping terms
areFOB).
Provisions for the discounts offered to distributors are set aside
when the products are sold to the distributor and recognised as a
deduction from revenue.
Certain Group subsidiaries also offer cash discounts to distributors.
These discounts and rebates are deducted from sales.
Consolidated revenue is presented net of these discounts
andrebates.
Service contracts
Revenue from service contracts is recorded over the contractual
period of service. It is recognised when the result of the
transaction can be reliably determined, by the percentage of
completionmethod.
Long-term contracts
Income from long-term contracts is recognised using the
percentage-of-completion method, based either on the percentage
of costs incurred in relation to total estimated costs of the entire
contract, or on the contract’s technical milestones, notably proof
of installation or delivery of equipment. When a contract includes
performance clauses in the Group’s favor, the related revenue is
recognised at each project milestone and a provision is set aside if
targets are not met.
Losses at completion for a given contract are provided for in full
as soon as they become probable. The cost of work-in-process
includes direct and indirect costs relating to the contracts.
1.24 – Earnings per share
Earnings per share are calculated in accordance with IAS 33 –
Earnings Per Share.
Diluted earnings per share are calculated by adjusting profi t
attributable to equity holders of the parent and the weighted
average number of shares outstanding for the dilutive effect of the
exercise of stock options outstanding at the balance sheet date.
The dilutive effect of stock options is determined by applying the
“treasury stock” method, which consists of taking into account the
number of shares that could be purchased, based on the average
share price for the year, using the proceeds from the exercise of the
rights attached to the options.
1.25 – Statement ofcashflows
The consolidated statement of cash fl ows has been prepared
using the indirect method, which consists of reconciling net profi t
to net cash provided by operations. The opening and closing
cash positions include cash and cash equivalents, comprised
of marketable securities, (note 1.16) net of bank overdrafts
andfacilities.
Note2 Changes in the scope of consolidation
The Group’s consolidated fi nancial statements for the year ended December31, 2011 can be summarised as follows:
Number of companies Dec.31, 2011 Dec.31, 2010
Parent company and fully consolidated subsidiaries 590 549
Proportionally consolidated companies 1 1
Companies accounted for by the equity method 5 6
TOTAL 596 556