Annual Report 2011 - Analist.be

Accounts at 31 December 2011 - Accounting policiesAll transactions qualified as hedge accounting are documentedby reference to the hedging strategy by identifying thehedged risk, the hedged item, the hedging instrument, thehedging relationship and the measurement method of thehedge relationship effectiveness. The measurement of thehedge relationship effectiveness is updated at every balancesheet date. Derivatives are measured at fair value on initialrecognition. Fair value is subsequently remeasured at everybalance sheet date by reference to market conditions.Derivatives recorded as assets or liabilities are classified in theheadings “Other non-current assets and liabilities” and “Othercurrent assets and liabilities” depending on their maturity dateand that of the underlying transactions. The recognition ofderivatives classified as hedging varies depending on whetherthey are designated as fair value hedges, cash flow hedgesor hedges of net investments in foreign entities.Fair value hedgeWhen changes in fair value of a recognised asset or liabilityor an unrecognised firm commitment may affect income,these changes may be covered by a fair value hedge. Thehedged item and the hedging instrument are remeasuredsymmetrically against profit or loss at every balance sheetdate. The impact in profit or loss is limited to the ineffectiveportion of the hedge.Cash flow hedgeA cash flow hedge is used to cover unfavourable cash flowvariations related to a recognised asset or liability or a highlylikely future transaction when such variations are likely to affectincome. At every balance sheet date, the effective portion ofthe hedge is recognised in equity and the ineffective portion inprofit or loss. When the transaction is recognised, the effectiveportion in equity is reclassified to profit or loss simultaneouslywith recognition of the hedged item.Hedge of net investments in foreign operationsExchange rate variations generated by net assets held inthe Group’s consolidated operating companies in foreigncurrencies can be hedged. At every balance sheet date, theeffective portion of the hedge is recognised in equity andthe ineffective portion in profit or loss. Upon cessation of theactivity, the effective portion in equity is reclassified in profitor loss.GBL also uses derivatives. It can carry out transactions onlisted shares in its portfolio using call or put options. Thesetransactions are implemented with reference to thoroughdocumentation and are monitored periodically and manageddynamically, as necessary.Items denominated in foreign currenciesMonetary assets and liabilities denominated in foreigncurrencies in the accounts of Group’s companies aretranslated into euro using the exchange rates of the last dayof the financial year. Unrealised differences on translationresulting from the application of this methodology are recordedas gains or losses of the financial year. Non-monetary assetsand liabilities are recorded using the exchange rates applicableon the date of the transaction.In the consolidated financial statements, the Group’s foreignassets and liabilities are converted at the closing rate.Headings of income and expenses in foreign currencies areconverted into euro at the average exchange rate for the year.Differences on translation arising from the difference betweenaverage rate and closing rate are included in shareholders’equity under the “Currency translation adjustments“ heading.These currency adjustments are recorded in profit or losswhen the Group disposes of the entity concerned.InterestInterest income and expenses include interest to be paidon loans and interest to be received on investments.Interest income received is recorded prorata temporis in theconsolidated statement of comprehensive income, taking intoaccount the effective interest rate on the investment.DividendsDividends relating to available-for-sale investments or tradingsecurities are booked on the date on which their distributionis decided upon. The amount of withholding tax is recordedas a deduction of gross dividends.Accounting policies, changes in accounting estimates anderrors/judgementsA change in the accounting policies is only applied to meetthe requirements of a standard or an interpretation, or if itgives a more reliable and more relevant information. Changesin accounting policies are recognized retrospectively, exceptin case of specific transitional provision stated in a standardor an interpretation. When an error is detected, it is alsoretrospectively adjusted.Uncertainties inherent to the activities require estimates tobe made when preparing the financial statements. Theseestimates result from judgements aiming at providing a trueand fair view based upon available and reliable information.An estimate is revised to reflect changes in circumstances,new information available and effects linked to experience.78 Annual Report 2011