REGISTRATION DOCUMENT - Bourbon

CONSOLIDATED FINANCIAL STATEMENTS4Notes to the consolidated financial statements1.5.12 Treasury sharesWhen the Group purchases its own equity instruments (treasuryshares), they are deducted from shareholders’ equity. No profi t orloss is booked in the income statement at the time of the purchase,sale, issue or cancellation of the Group’s equity instruments.1.5.13 ProvisionsProvisions are recognized when the Group has a present obligationresulting from a past event, when it is probable that an outfl ow ofresources embodying economic benefi ts will be necessary to settlethe obligation, and when the amount of the obligation can be reliablyestimated.If the effect of the time value of the money is signifi cant, the provisionsare discounted on the basis of a pre-tax rate which refl ects the risksspecifi c to the liability, if any. When the provision is discounted, theincrease in the provision related to the passage of time is recognizedas a fi nance expense.1.5.14 Employee benefitsEmployee benefi ts include retirement indemnities, seniority awards,incentives and profi t-sharing.Retirement benefit obligationsGroup employees receive retirement indemnity in addition to thelegal retirement benefi ts in effect in the countries in which they areemployed.Pursuant to IAS 19 “Employee benefi ts”, retirement benefi t obligationsare measured using the projected unit credit method. Under thismethod, the valuation of the commitment takes into considerationthe pension rights that the employee will have acquired on the date ofhis retirement. However, the commitment is allocated proportionatelybetween the employee’s seniority on the calculation date, taking intoaccount the ratio between the employee’s current seniority and hisseniority projected at retirement date.These calculations include the following assumptions:3 retirement age: legal age prevailing in each country;3 average life expectancy: based on the mortality table applicableto each country;3 discount rate;3 infl ation rate;3 turn-over: established for each company, using the average turnoverobserved over the last fi ve years;3 assumptions on salary increases;3 calculation of the rights based on collective agreements orspecifi c agreements in force in each entity/country.In accordance with the option offered by IAS 19, the Group haselected to account for its actuarial differences directly in shareholders’equity.IncentivesIncentives are based on the Company’s performance, measuredprimarily by the increase in revenues and operating margins.There are two application methods: the fi rst consists of applying thecoeffi cient of increase for each individual to the salary he receivedduring the last six months, with the bonus paid every six months.The second method, calculated annually, incorporates a progressivebonus by salary category. The amount of the bonus is, therefore,calculated by applying the corresponding percentage to the annualpayroll. One part is then distributed uniformly among the employeesand the other one is distributed in proportion to the gross salaries forthe reference year.Where the bonus is deposited to the Company Savings Plan (Pland’Epargne Entreprise – PEE), an employer’s contribution of 20% isgranted.Profit sharingThe amounts owed under profi t sharing are either paid directly to theemployee if he so requests, or locked in for fi ve years with a rightscustodian (barring early release).Stock option plansThe cost of equity-settled share-based payment transactions withemployees, granted after November 7, 2002, is measured at the fairvalue of the equity instruments granted at the grant date using the“Black & Scholes” method.This cost is recognized as personnel expenses as a contra entry toan equivalent increase in shareholders’ equity, using the straight-linemethod over the vesting period. This period ends on the date onwhich the employees obtain an unconditional right to the instruments(“the rights acquisition date”).The cumulative expense recorded for these transactions at the endof each year until the rights acquisition date takes into accountthe Group’s best estimate, on that date, of the number of equityinstruments that will be acquired.When stock subscription options are exercised by their benefi ciaries,the shares issued on that occasion will be remitted to them. Theexercise price of the shares will be recognized as cash by thecounterparty of the shareholders’ equity. In the case of stockpurchase options, income from the sale at the time the options areexercised will be recognized as shareholders’ equity.Bonus sharesThe cost of equity-settled share-based payment transactions withemployees, granted after November 7, 2002, is measured at the fairvalue of the equity instruments granted at the grant date.This cost is recognized as personnel expenses as a contra entry toan equivalent increase in shareholders’ equity, using the straight-linemethod over the vesting period. This period ends on the date onwhich the employees obtain an unconditional right to the instruments(“the rights acquisition date”).BOURBON - 2011 Registration Document 75