amount of cash, or negotiable certiﬁcates of deposit issued by the company’s banks. Interest-bearing sight accounts opened in the company’s banks are treated as cash. All these holdings are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insigniﬁcant risk of changes in value, as speciﬁed by IAS 7. Net cash (as shown in note 18.1) is deﬁned as the amount of “Cash and cash equivalents” less ﬁnancial borrowings (as shown in note 18.2) when this difference is positive. When this difference is negative, the result corresponds to a net ﬁnancial debt. Cash equivalents are recognized at their fair value; changes in fair value are recognized in the income statement.
NOTE 2.12 CAPITAL MANAGEMENT POLICY
The application of IFRS 2 has resulted in the recognition of an expense corresponding to the fair value of the advantage granted to beneﬁciaries. This expense is recognized in personnel costs with a counterpart in equity. It is measured using the Black & Scholes model and is deferred prorata temporis over the stock options’ vesting period.
NOTE 2.14 BORROWINGS AND FINANCIAL DEBT
In managing its capital, the Group seeks to achieve the best possible return on capital employed. The liquidity of Lectra’s shares on the stock market has been ensured by means of a Liquidity Agreement with Exane BNP Paribas (see note 15.2). The payment of dividends is an important instrument in the Group’s capital management policy, the aim being to compensate shareholders adequately as soon as this is justiﬁed by the Group’s ﬁnancial situation while preserving the necessary cash to fund the Group’s future development.
NOTE 2.13 STOCK OPTIONS
The non-current portion of borrowings and ﬁnancial debt comprises the portion due in more than one year of: – the interest-bearing bank loans; – non-interest bearing reimbursable advances corresponding to R&D grants. The current portion of borrowings and ﬁnancial debt comprises: – the portion of bank loans, reimbursable advances and other borrowings and ﬁnancial debt due in less than one year; – cash facilities, where applicable. Borrowings and ﬁnancial debts are recognized initially at fair value. At closing date, borrowings and ﬁnancial debt are stated at amortized cost using the effective interest rate method, deﬁned as the rate whereby cash received equals the total cash ﬂows relating to the servicing of the borrowing. Interest expenses on the bank loans and on the utilization of cash credit facilities are recognized as ﬁnancial expenses in the income statement.
NOTE 2.15 RETIREMENT BENEFITS OBLIGATIONS
The company has granted stock options to Group employees and managers. All plans are issued at an exercise price equal or greater than the ﬁrst average stock market price for the 20 trading days prior to granting. Under the regulations governing the company’s stock option plans, which have been accepted by all of their beneﬁciaries, the Group is not exposed to the risk of liability for payment of French social security charges on capital gains arising from sales of shares within four years of the granting of options, for the options granted before September 28, 2012. Those granted after this date are no longer concerned, as tax and social security regulations have changed.
The Group is subject to a variety of deferred employee beneﬁts plans, depending on the subsidiary concerned. The only deferred employee liabilities are retirement beneﬁts obligations. Deﬁned Contributions Plans These refer to post-employment beneﬁts plans under which, for certain categories of employee, the Group pays deﬁned contributions to an outside insurance company or pension fund. Contributions are paid in exchange for services rendered by employees during the period. They are expensed as incurred, as are wages and salaries. Deﬁned contributions plans do not create future liabilities