APC 2011 Annual Report Download - page 207

2052011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
CONSOLIDATED FINANCIAL STATEMENTS
5
NOTES TO THE CONSOLIDATED FINANCIAL
29.1 – Guarantees and similar undertakings
Dec.31, 2011 Dec.31, 2010
Market counter guarantees (1) 934 880
Pledges, mortages and sureties (2) 15 17
Endorsements and guarantees - 6
Other commitments given (3) 318 175
GUARANTEES GIVEN 1,267 1,078
Endorsements and guarantees received 71 80
GUARANTEES RECEIVED 71 80
(1) On certain contracts, customers require a guarantee from a bank that the contract will be fully executed by the Group. For these
contracts the Group gives a counterguarantee to the bank. If a claim occurs, the risk linked to the commitment is assessed and a
provision for contingencies is recorded when the risk is considered probable and can be reasonably estimated.
(2) Certain loans are secured by property, plant and equipment and securities lodged as collateral.
(3) Other guarantees given comprise guarantees given in rental payments.
Note29 Commitments and contingent liabilities
29.2 – Purchase commitments
Shares in subsidiaries and affiliates
Commitments to purchase equity investments correspond to put
options given to minority shareholders in consolidated companies
or relate to earn-out payments. The amount of these commitments
was not material at December31, 2011.
Information technology services
The Group is party to an agreement with Capgemini providing for
outsourcing (facilities management) of certain of its information
technology functions in Europe and deployment of a system of
shared SAP management applications. The fi rst pilot version of
the global system was implemented in India in April2007 and the
second version was deployed in mid-2008 in several European pilot
countries. At the end of 2011, Schneider Electric had capitalised
total costs (net of impairment) of EUR142 million. The costs are
progressively amortised with effect from 2009, over a seven-year
rolling calendar and based on the number of users connected
worldwide as the system is deployed.
For 2011 , the contractual facilities management costs amount to
EUR100million including the volume and indexing factors provided
for by the contract (EUR103million for 2010).
29.3 – Contingent liabilities
Senior Management believes that the provisions recognised in the
balance sheet, in respect of the known claims and litigation to which
the Group is a party, should be adequate to ensure that such claims
and litigation will not have any substantial impact on the Group’s
fi nancial position or results. This is notably the case for the potential
consequences of a current dispute in Belgium involving former
senior executives and managers of the Group.
The Group has entered into a company-wide agreement in
respect of individual training entitlement. It has applied the French
accounting treatment recommended by opinion 2004-F issued
by the CNC’s urgent issues committee. Expenditure on individual
training is written off as an expense during the period and therefore
no provision is made for it. As of December 31, 2011, rights
accrued but not used by employees of French entities of the Group
corresponded to around 1,643,000hours.
Note30 Subsequent events
On February13, 2012, we received notice that a tax litigation in Spain was settled in favor of Schneider Electric for an amount of EUR20million
excluding late payment interests. This potential tax income was not recorded in 2011 consolidated fi nancial statements.