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152 REGISTRATION DOCUMENT − L’ORÉAL 2011

52011 parent company Financial Statements

Notes to the parent company nancial statements

Note1 Accounting principles 152

Note2 Sales 155

Note3 Other revenue 155

Note4 Average headcount 155

Note5 Depreciation, amortisation

andchargestoprovisions 155

Note6 Net financial income 156

Note7 Exceptional items 156

Note8 Income tax 157

Note9 Increases or reductions in future tax

liabilities 157

Note10 Research costs 157

Note11 Intangible assets 158

Note12 Tangible assets 158

Note13 Non-current assets held under finance

leases 159

Note14 Financial assets 159

Note15 Transactions and balances with related

entities and parties 160

Note16 Marketable securities 160

Note17 Stock purchase and subscription

options–Free shares 161

Note18 Maturity of receivables 162

Note19 Provisions for liabilities and charges 163

Note20 Borrowings and debt 163

Note21 Maturity of payables 164

Note22 Unrealised exchange gains and losses 165

Note23 Derivative financial instruments 166

Note24 Off-balance sheet commitments 167

Note25 Changes in working capital 167

Note26 Changes in other financial assets 168

Note27 Cash and cash equivalents at the end

oftheyear 168

Note28 Other disclosures 168

Note29 Subsequent events 168

5.5. Notes to the parent company financial statements

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Detailed list of notes

The following notes form an integral part of the parent company financial statements.

The financial statements are presented in millions of euros, while the figures in the table detailing subsidiaries and affiliates are

expressed in thousands of euros.

NOTE1 Accounting principles

The Company’s annual financial statements are prepared in

accordance with French law and regulations (1999French

Chart of Accounts) and with French generally accepted

accounting principles.

The items recorded in the financial statements are valued

at historical cost, except for non-current assets revalued in

accordance with legal requirements.

1.1. Sales

These are comprised of sales of goods (net of rebates and

discounts) and services (including technological assistance

fees).

1.2. Advertising and promotion

expenses

Expenses relating to the advertisement and promotion of

products to customers and consumers are recognised as

expenses for the year in which the advertisement or promotional

initiative takes place.

1.3. Research and development costs

Research and development costs are recognised in expenses

in the period in which they are incurred.