2008 Registration Document - Rexel

14. Financial information concerning the assets andliabilities, financial position and profits and lossesof Rexel2.2.2 Accounting standards and interpretationsapproved by the European Union not yet in effectThe Group elected not to apply by anticipation thefollowing new and amended standards and interpretationsendorsed by the EU in 2008 and applicable in 2009financial year:– IAS 1 “Presentation of Financial Statements” has beenamended to enhance the usefulness of informationpresented in the financial statements. The key change isthe introduction of a new statement of comprehensiveincome that combines all items of income andexpense recognized in profit or loss together with othercomprehensive income. IAS 1 revised is effective forfinancial year starting on or after January 1, 2009 andshould have a limited impact on the Group’s disclosuresas Rexel already presents a statement of recognizedincome and expenses which is similar to the statement ofcomprehensive income.– IAS 23 “Borrowing Costs” has been revised to eliminatethe option of expensing all borrowing costs andrequires these costs to be capitalized if they are directlyattributable to the acquisition, construction, or productionof a qualifying asset. This amendment is effective forfinancial year beginning on or after January 1, 2009and should have no impact on the Group financialposition.– Amendment to IFRS 2 “Share-based Payment” – VestingConditions and Cancellations clarifies the definition ofa vesting condition and prescribes the treatment foran award that is effectively cancelled. This amendmentis effective for financial years beginning on or afterJanuary 1, 2009.– IFRS 8 “Operating Segments” supersedes IAS 14“Segment Reporting” and adopts a full managementapproach to identifying and measuring the result ofreportable operating segments. IFRS 8 will be applicablefrom January 1, 2009. The Group is currently reviewingthe potential impact of this standard.– IFRIC 13 “Customer Loyalty Programmes” requirescustomer loyalty programmes to be accounted foras a separate component of the sales transaction inwhich they are granted. A portion of the fair value ofthe consideration received is allocated to the awardcredits and deferred. This is then recognized as revenueover the period the award credits are redeemed. Thisinterpretation is applicable for fiscal years starting on orafter July 1, 2008. The Group is currently assessing theimpact of this interpretation which will be implemented in2009.2.3 Basis of consolidationSubsidiaries and associatesSubsidiaries (including special purpose entities) are entitiescontrolled by the Group. Control exists when the Group hasthe power, directly or indirectly, to govern the financial andoperating policies of an entity so as to obtain benefits fromits activities.In assessing control, presently or potentially, exercisablevoting rights are taken into account.Entities over which the Group has a significant influence areaccounted for using the equity method.The financial statements of subsidiaries are included in thefinancial statements from the date control is obtained untilthe date control ceases.Inter-company transactionsInter-company balances, unrealized gains and losses,and income and expenses arising from inter-companytransactions, are eliminated in preparing the financialstatements.Minority interestsMinority interests represent the portion of profit and lossand net assets not held by the Group. They are presentedseparately in the income statement and separately fromequity attributable to equity holders of the parent.2.4 Foreign currency translationItems included in the financial statements of each of theGroup’s entities are measured using the currency of theprimary economic environment in which the entity operates(the functional currency).The functional currency of Rexel and the presentationcurrency of the Group’s financial statements are the Euro.Foreign currency transactionsTransactions in foreign currencies are translated into thefunctional currency at the exchange rate prevailing at thedate of the transaction.Monetary assets and liabilities denominated in foreigncurrencies at the balance sheet date are translated into thefunctional currency at the foreign exchange rate prevailingat that date. Exchange gains and losses resulting from thesettlement of foreign currency transactions and from thetranslation at the closing date exchange rates of monetaryassets and liabilities denominated in foreign currencies arerecognized in the income statement, except where hedgeaccounting is applied (see note 2.9.5). Non-monetaryassets and liabilities that are measured at cost in a foreigncurrency are translated using the exchange rate at the dateof the transaction.Foreign operationsThe assets and liabilities of foreign operations, includinggoodwill and fair value adjustments arising on consolidationare translated into euro at foreign exchange rates rulingat the balance sheet date. The revenues and expensesof foreign operations are translated into euro at ratesapproximating the foreign exchange rates ruling at the datesof the transactions. All resulting translation differences arerecognized as a separate component of equity (foreigncurrency translation reserve).PAGE 162 | REXEL 2008