APC 2012 Annual Report Download - page 219

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 217
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER31, 2012
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note28 Related party transactions
28.1 – Associates
Companies over which the Group has signifi cant infl uence,
accounted for by the equity consolidation method. Transactions
with these related parties are carried out on arm’s length terms.
Related party transactions were not material in2012.
28.2 – Related parties with significant
influence
No transactions were carried out during the year with members of
the Supervisory Board or Management Board.
Compensation and benefi ts paid to the Group’s top senior
executives are described in note27.3.
Note29 Commitments and contingent liabilities
29.1 – Guarantees and similar undertakings
Dec.31, 2012 Dec.31, 2011
Market counter guarantees (1) 859 934
Pledges, mortgages and sureties (2) 9 15
Endorsements and guarantees --
Other commitments given (3) 267 318
GUARANTEES GIVEN 1,135 1,267
Endorsements and guarantees received 67 71
GUARANTEES RECEIVED 67 71
(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.
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. At December 31,
2012, there is one material put related to the 26% interests in
Luminous that was valued for an amount of EUR72million as
other non-current liabilities.
Information technology services
The Group has agreed with Capgemini to provide outsourcing
of certain of its information technology functions in Europe and
deployment of a system of shared SAP management applications.
This global project has been deployed since 2007 in several
countries. At the end of2012, Schneider Electric had capitalized
total costs for a net amount of EUR91 million. The costs are
progressively amortized 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2012, the contractual facilities management costs amount to
approximately EUR100million including the volume and indexing
factors provided for by the contract (EUR100million for2011).
29.3 – Contingent liabilities
Senior Management believes that the provisions recognized 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, 2012, rights
accrued but not used by employees of French entities of the Group
corresponded to around 1,526,922hours.