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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4
MAIN SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial statements in accordance with IFRS requires
the use of estimates and assumptions that can affect the reported amounts
of certain assets and liabilities and income and expenses. The impact
of any changes in estimates is accounted for on a prospective basis.
The estimates are made by Management based on the going concern
principle using information available at the reporting date. They may
change, however, due to circumstances or new information that could
require a reconsideration of the context in which they were prepared.
Actual results may therefore differ from the estimates.
The random nature of certain estimates may make it difficult to ascertain
the Group’s economic outlook, particularly in relation to asset impairment
tests (see Note 8 – Goodwill).
The accounting items that are the most exposed to the risk of estimation
uncertainty are described below.
Revenue recognition
As described in Note 3 – Basis of preparation and summary of
significant accounting policies, revenue is recognised at the fair value
of the consideration received or receivable for the services rendered
by the Group.
Revenue generated from long-term service contracts is accounted for
in accordance with IAS 11. The stage of completion of projects and
revenue amounts are determined using numerous estimates based on
cost-monitoring and past experience. Estimates and assumptions may be
adjusted throughout the term of the contract and could have a significant
impact on future profit.
Provisions for losses on completion of contracts
and project warranty costs
Provisions for expected losses on engineering contracts can be
recognised in accordance with the percentage of completion method,
in accordance with IAS 18 and IAS 11 (see the “Revenue recognition”
section in Note 3 – Basis of preparation and summary of significant
accounting policies). When it becomes probable that total contract costs
will exceed total contract revenue a provision is immediately recognised
for the related loss, after deducting any previously recognised losses.
However, the loss actually recognised on completion of the contract
may differ from the amounts originally provisioned, and may have an
impact on future profit.
Figures relating to provisions are presented in Note 20 – Provisions
and contingent liabilities.
Impairment of trade receivables
An impairment loss is recognised on trade receivables if the present
value of future amounts to be collected is less than their nominal value.
The amount of the impairment loss recognised takes into account the age
of the receivable and the debtor’s capacity to honour its obligations. A
lower recoverability rate than estimated or a default by a major client
could adversely affect future profit.
Figures relating to impairment of trade receivables are presented in
Note 14 – Trade receivables.
Deferred taxes
Deferred tax assets are recognised for the carryforward of unused tax
losses and unused tax credits and deductible temporary differences
only to the extent that it is probable that the Group will have sufficient
future taxable profit against which the unused tax losses, tax credits
and temporary differences can be utilised.
In assessing whether it will have sufficient future taxable profit to recover
deferred tax assets the Group takes into account forecasts of future
taxable profits, non-recurring expenses included in past losses and
which will not be incurred again in the future, and its past history of
taxable profit for prior years.
Figures for deferred taxes related to unused tax losses and temporary
differences are presented in Note 24 – Deferred taxes.
Goodwill impairment
The estimates used in the assumptions for calculating goodwill impairment
and the related sensitivity analyses are set out in Note 8 – Goodwill.
Employee benefit obligations
The estimates used in the assumptions for calculating employee
benefit obligations and the related sensitivity analyses are set out in
Note 21 – Employee benefit obligations.
Derivative embedded in the Ornane bonds
The derivative embedded in the Ornane bonds is measured using the
Cox-Ross-Rubinstein model whose calculation assumptions are based
on estimates.
ASSYSTEM
FINANCIAL REPORT
2015
89