L'Oreal Accounting assignment

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L’Oreal 2011
1. Profile of the company: history and ownership structure
The L’Oreal Group is the largest cosmetics and beauty company in the world and it is present in 130 countries. Its office is registered in Paris and its head office in the Paris suburb of Clichy, Hauts-de-Seine, France. L’Oreal has developed activities in the field of cosmetics. Concentrating on make-up, skin care, hair colour, sun protection, hair care and perfumes, the company is active in the tissue engineering, dermatological, and pharmaceutical fields and the company is the top nanotechnology patent-holder in the US. In 1907, Eugene Schueller, a young French chemist, developed a hair dye formula called Auréale. Schueller formulated and manufactured his own products, which he sold to hairdressers in Paris. In 1919, Schueller registered his company: the Société Française de Teintures Inoffensives pour Cheveux, the original L’Oreal. Research and innovation in the field of beauty were the guiding principles of the company, which eventually became L’Oreal. L’Oreal is a listed company, holding 27 international brands. The founder's daughter Liliane Bettencourt and her family hold 30.8% of the shares and voting rights, the Swiss food company Nestlé owns 29.6% of the shares and voting rights. 38.2% is owned by public investors. 1.4% of the shares is treasury stock, which has no voting rights. 2. Recent and forward looking info

The performances of L'Oreal in 2011 show the relevance of the strategic thrusts and give further confirmation of the key role played by research, innovation, and creativity in the Group's industry. It was also another year of solid construction for operating profit. The strong growth in results reflects the virtuous dynamics set in motion: operational efficiency has advanced in all fields of activity, it enabled L'Oreal to prepare well for the future, and also the profitability of the New Markets zone increased substantially. The good quality of these results denotes that L'Oreal is more confident than ever in its ability to achieve sustainable and profitable growth. L’Oreal is well equipped to succeed in its strategy of universalising beauty and to achieve another year of sales and profit growth in 2012. Commenting on the annual results, Jean-Paul Agon, Chairman and Chief Executive Officer of L'Oreal, said: "2011 was a solid year of development, which has made the group even stronger. In a cosmetics market whose global trend was favourable, L'Oreal achieved sustained sales growth and confirmed its position as the world leader in beauty. All divisions are expanding. L'Oreal Luxury in particular posted a very good year, especially thanks to Lancôme, Giorgio Armani and Kiehl's. Internationalisation is continuing across all divisions. The group is pursuing its conquest of the New Markets, with Asia and Latin America leading the way, and is making clear progress in North America. 2012 will be a symbolic year, as the New Markets are set to become the group's number one geographic zone. Through its proposal to pay a dividend of 2 euros, the Board of Directors is expressing its confidence in the group's outlook and its strong potential for development." 3. Accounting methods and estimates

L’Oreal states that all financial statements are prepared in accordance with French law and regulations (1999 French Chart of Accounts), as it is originally a French company. This also applies to the income tax. The accounting procedure is in accordance with IFRS standards. L’Oreal states that all items recorded in the financial statement are valued at historical cost. The non-current assets are an exception; these are revalued in accordance with legal requirements. L’Oreal values its advertising and promotion expenses as accrued expenses. This method holds that the expense is recognized before cash is paid. In this case cash is paid by new customers who were at one point attracted by L’Oreal’s advertisements and/or promotions. Thus L’Oreal uses...
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