APC 2013 Annual Report Download - page 198

5CONSOLIDATED FINANCIALSTATEMENTS ATDECEMBER 31, 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, certain long-term receivables and loans to Merchandise sales
subsidiaries are considered to be part of a net investment in a Revenue from sales is recognized when the product is shipped
foreign operation, as defined by IAS21 – The Effects of Changes and risks and benefits are transferred (standard shipping terms
in Foreign Exchange Rates. In accordance with the rules are FOB).
governing hedges of net investments, the impact of exchange Provisions for the discounts offered to distributors are set aside
rate fluctuations is recorded in equity and recognized in the when the products are sold to the distributor and recognized as
statement of income when the investment is sold. a deduction from revenue.
Interest rate swaps Certain Group subsidiaries also offer cash discounts to
distributors. These discounts and rebates are deducted from
Interest rate swaps allow the Group to manage its exposure to sales.
interest rate risk. The derivative instruments used are financially Consolidated revenue is presented net of these discounts
adjusted to the schedules, rates and currencies of the andrebates.
borrowings they cover. They involve the exchange of fixed and
Service contracts
floating-rate interest payments. The differential to be paid (or
received) is accrued (or deferred) as an adjustment to interest
income or expense over the life of the agreement. The Group Revenue from service contracts is recorded over the contractual
applies hedge accounting as described in IAS39 for interest rate period of service. It is recognized when the result of the
swaps. Gains and losses on re-measurement of interest rate transaction can be reliably determined, by the percentage of
swaps at fair value are recognized in equity (for cash flow completion method.
hedges) or in profit or loss (for fair value hedges).
Long-term contracts
Commodity contracts Income from long-term contracts is recognized using the
The Group also purchases commodity derivatives including percentage-of-completion method, based either on the
forward purchase contracts, swaps and options to hedge price percentage of costs incurred in relation to total estimated costs
risks on all or part of its forecast future purchases. Under IAS39, of the entire contract, or on the contract’s technical milestones,
these qualify as cash flow hedges. These instruments are notably proof of installation or delivery of equipment. When a
recognized in the balance sheet and are measured at fair value contract includes performance clauses in the Group’s favor, the
at the period-end. The effective portion of the hedge is related revenue is recognized at each project milestone and a
recognized separately in equity (under “Other reserves”) and then provision is set aside if targets are not met.
recognized in income (gross margin) when the hedged item Losses at completion for a given contract are provided for in full
affects consolidated income. The effect of this hedging is then as soon as they become probable. The cost of work-in-process
incorporated in the cost price of the products sold. The includes direct and indirect costs relating to the contracts.
ineffective portion of the gain or loss on the hedging instrument is
Earnings per share1.25 –
recognized in “Net financial income/(loss)”.
Cash flows from financial instruments are recognized in the
consolidated statement of cash flows in a manner consistent Earnings per share are calculated in accordance with IAS33 –
with the underlying transactions. Earnings Per Share.
Put options granted to minority shareholders Diluted earnings per share are calculated by adjusting profit
attributable to equity holders of the parent and the weighted
In line with the AMF’s recommendation of November2009 and in average number of shares outstanding for the dilutive effect of
the absence of a specific IFRSrule, the Group elected to retain the exercise of stock options outstanding at the balance sheet
the accounting treatment for minority put options applied up to date. The dilutive effect of stock options is determined by
December31, 2009, involving puts granted to minority applying the “treasury stock” method, which consists of taking
shareholders prior to this date. In this case, the Group elected to into account the number of shares that could be purchased,
recognize the difference between the purchase price of the based on the average share price for the year, using the
minority interests and the share of the net assets acquired as proceeds from the exercise of the rights attached to the options.
goodwill, without re-measuring the assets and liabilities acquired.
Statement of cash flows1.26 –
Subsequent changes in the fair value of the liability are
recognized by adjusting goodwill.
Revenue recognition1.24 –
The consolidated statement of cash flows has been prepared using
the indirect method, which consists of reconciling net profit to net
cash provided by operations. The opening and closing cash
The Group’s revenues primarily include merchandise sales and
positions include cash and cash equivalents, comprised of
revenues from services and contracts.
marketable securities, (note1.20) net of bank overdrafts andfacilities.
196 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC