sain t-gobain annu al report 2008 annual report

Notes
to the consolidated
financial statements
134
NOTE 1
Accounting principles and policies
Basis of preparation
The consolidated financial statements of Compagnie de
Saint-Gobain and its subsidiaries (“the Group”) have been
prepared in accordance with the International Financial
Reporting Standards (IFRS) adopted for use in the European
Union at December 31, 2008.
IFRS were applied retrospectively in the opening balance sheet
at the transition date (January 1, 2004), with the exception of
certain optional or mandatory exemptions provided for under
IFRS 1 – First-time Adoption of International Financial
Reporting Standards. The Group elected to apply IAS 32 and
IAS 39 relating to financial instruments and IFRS 2 relating
to share-based payments as of January 1, 2004.
The accounting policies applied are consistent with those
used to prepare the financial statements for the years ended
December 31, 2006 and 2007. The consolidated financial
statements have been prepared using the historical cost
convention, except for certain assets and liabilities that
have been measured using the fair value model as explained
in these notes.
The standards, interpretations and amendments to published
standards applicable for the first time in 2008 (see the table
below) do not have a material impact on the Group’s consolidated
financial statements.
The Group has not early adopted any new standards, interpretations
or amendments to published standards that are applicable
for financial years beginning on or after January 1, 2009
(see table below). Accordingly, IFRS 8 – Operating Segments
has not been applied. Application of this standard would not
have any impact on the presentation of the disclosures in
Note 32.
The Group has not early adopted IFRIC 14, that was adopted
by the International Accounting Standards Board (IASB) on
January 1, 2008 but has been adopted for use in the European
Union from January 1, 2009. Application of this interpretation
would lead to a €138 million reduction in equity after tax.
With the exception of IFRIC 14, the consolidated financial
statements have been prepared in accordance with all the
standards issued by the IASB.
These consolidated financial statements were adopted by the
Board of Directors on February 19, 2009 and will be submitted
to the Shareholders’ Meeting for approval. They are expressed
in millions of euros.
Estimates and assumptions
The preparation of consolidated financial statements in
compliance with IFRS requires management to make estimates
and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements, as well
as the reported amounts of income and expenses during the
period. These estimates and assumptions are based on past
experience and on various other factors, considering the sharp
deterioration in the economic and financial environment,
which makes assessing the business outlook difficult. Actual
amounts may differ from those obtained through the use of
these estimates and assumptions.
The main estimates and assumptions described in these notes
concern the measurement of employee benefit obligations,
provisions for other liabilities and charges, asset impairment
tests, deferred taxes, share-based payments and financial
instruments. Estimates are revised at the balance sheet date
and tests are carried out where appropriate to assess their
sensitivity to changes in assumptions.
Saint-Gobain – Financial Report 2008