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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition
Revenue corresponds to the gross inflows of economic benefits received
or receivable by the Group during the period on its own account which
arise from ordinary operating activities and result in increases in equity.
The applicable standards require that revenue be measured at the
fair value of the consideration received or receivable. In most cases,
the consideration is in the form of cash or cash equivalents and the
amount of revenue is the amount of cash or cash equivalents received
or receivable.
The Group recognises its revenue in the period in which the services
are rendered. Revenue for the Group comprises:
●
invoices issued or to be issued for services rendered;
●
the valuation at cost price of services for which the Group has
undertaken works and for which it is certain that it will receive an
order from the client; and
●
commissions on business for which the Group acts as an agent.
Depending on the type of transaction involved, the criteria for
determining the stage of completion of services rendered can at a
given date include:
●
surveys of work performed;
●
services performed to date as a percentage of total services to be
performed; or
●
the proportion that costs incurred to date bear to the estimated total
costs of the transaction.
The criteria applied are left to the discretion of the operating unit’s
manager who chooses those that are best suited to the project.
The Group’s services are valued based on the following:
●
time and materials contracts:
the valuation of services rendered
under these contracts depends on the resources used. Revenue is
determined on a time-spent basis, agreed on with the client, and
corresponding to an aggregate resulting from the multiplication of
an hourly or daily rate.
●
fixed-price contracts:
services rendered under these contracts are valued
based on the percentage of completion method as defined in IAS 11
●
provisions for losses on completion:
a provision is recognised when it
is probable that contract costs will exceed contract revenue. The amount
of the provision is calculated by reference to the stage of completion
less the loss already recognised, and it is recorded under “Depreciation,
amortisation and provisions for recurring operating items, net”.
Government grants and tax credits
Government grants are recognised in the income statement on a
systematic basis over the periods necessary to match them with the
costs that they are intended to compensate. They are recognised either:
●
as a deduction from the corresponding expense if the grant is intended
to compensate an identified cost, or
●
as a decrease in other operating expenses if the grant is for general
purposes.
Tax credits relating to operating expenses (research tax credits, etc.) are
recognised in operating profit as a deduction from the expenses to which
they relate, using the same accounting treatment as for government grants.
Operating profit before non-recurring items (EBITA)/
Operating profit
A new sub-total called “EBITA including share of profit of equity-accounted
investees” has been added to the income statement in 2015, which
corresponds to the aggregate of “Operating profit before non-recurring
items (EBITA)” and “Share of profit of equity-accounted investees”.
Operating profit before non-recurring items (EBITA) corresponds to
operating profit before:
●
share-based payment expense (performance shares/free shares and
stock options);
●
acquisition- and divestment-related expenses (external fees associated
with external growth transactions and divestments);
●
capital gains or losses arising on business divestments;
●
income and expenses related to unusual, atypical and infrequent
events, mainly comprising restructuring costs, asset impairment losses
(including goodwill impairment), and other material income and
expenses.
Net financial income (expense) on cash and debt
and other financial income and expenses
Net financial income (expense) on cash and debt (hereinafter “Finance
costs, net”) corresponds to all income and expenses arising during the
period on items making up net debt, including gains and losses on
interest rate and currency hedges on debt.
Cash and debt consist of (i) cash and cash equivalents and current
and non-current derivatives (included in other financial assets) on the
assets side of the statement of financial position, and (ii) bond debt,
other debt and financial liabilities, and the fair value of derivatives on
the liabilities side.
Changes in the fair value of the above-mentioned categories of financial
assets and liabilities are not included in “Finance costs, net” and instead
are recognised in “Other financial income and expenses”.
“Other financial income and expenses” corresponds to income and
expenses that are non-operational (
e.g.
financial income arising from
the main business of the Company, a subsidiary or a division and
associated with a commercial activity) and which are not included in
“Finance costs, net”.
They consist mainly of dividends from non-consolidated companies,
impairment of AFS financial assets, gains and losses on the disposal of
AFS financial assets, impairment and losses on disposals of other current
and non-current financial assets, the effect of discounting provisions,
changes in the fair value of financial assets and liabilities, foreign
exchange gains and losses on operating assets and liabilities, and
miscellaneous financial income and expenses.
Basic earnings per share and diluted earnings per share
Basic earnings per share is calculated by dividing profit for the period
attributable to owners of the parent (after deducting coupons on the
Odirnane bonds – see below) by the weighted average number of
ordinary shares outstanding during the period.
Diluted earnings per share is calculated by adjusting (i) profit for the
period attributable to owners of the parent for the impact of all dilutive
potential ordinary shares, net of the related tax, and (ii) the weighted
ASSYSTEM
FINANCIAL REPORT
2015
87