Vilmorin & Cie - Annual report 2017-2018

5 ANNUAL REPORT Vilmorin & Cie 155 2017-2018 13- Inventories and production in progress Inventories and production in progress are evaluated at their lowest cost and their net realizable value. Costs are generally calculated according to the method of weighted average cost; they include an appropriate proportion of overheads based on the normal production capacity, but excluding financial charges and any costs of a drop in activity. The net realizable value is the estimated selling price in the normal course of business less the estimated costs necessary to achieve the sale. Where relevant impairment is recorded, it is generally intended to cover the following risks: realizable value lower than market price, adjustment according to sales perspectives, poor product quality (mainly poor germination and problems of sanitary quality). In this respect, the line “Cost of goods sold” in the income statement includes the notion of a cost of obsolescence comprising the net change in inventory depreciation plus the cost of products destroyed during the fiscal year. 14- Trade receivables Receivables are valued at their fair value at their initial evaluation, and then at their amortized cost after any later evaluations. Impairment is recorded when the recoverable amount is lower than the book value. 15- Treasury shares Treasury shares are recorded at their cost of acquisition less equity. Income from the sale of these shares is recorded directly as equity, and does not contribute to the profit for the fiscal year. 16- Employee benefits (revised IAS 19) In accordance with the laws and practices of each country in which it operates, Vilmorin & Cie participates in various pension, early retirement and post-employment benefit schemes. 16.1 - Post-employment benefit schemes Two types of post-employment benefit schemes are distinguished: 16.1.1 Defined contribution plans A defined contribution plan is a scheme involving benefits paid out after termination of the work contract, for which an entity pays defined contributions to a distinct entity and has no legal or implicit obligation to pay any further contributions if the fund does not have sufficient assets to pay benefits to the beneficiaries for present or previous fiscal years. For basic plans and other plans with defined contributions, the contributions payable are recorded as charges for the fiscal year in which they are due, and no provision is made, since Vilmorin & Cie is only committed within the limit of the contributions paid. These plans are applied in most of the countries where Vilmorin & Cie is present (Europe, North and Central America, Asia). 16.1.2 Defined benefit plans A defined benefit plan is any scheme involving benefits paid out after termination of the work contract other than a defined contribution plan. These plans are characterized by an obligation of the employer towards his employees. If they are not entirely funded in advance, they must be recorded as provisions. This type of plan is either funded: directly by the group, which records provisions for the charges on an actuarial basis. These defined benefit plans mainly comprise lump sums paid at retirement (principally France) or, through a pension fund that the group pays into in accordance with the rules and regulations in force (North America, United Kingdom, etc.). For these plans, the provision reflects the balance between the amount currently due and the value of the assets, assessed at fair value. For these plans, Vilmorin & Cie records provisions that are determined as follows: Commitments are assessed using the method known as “projected credit units” which stipulates that each period of service generates a unit of benefit entitlement. Each of these units is assessed separately to obtain the final amount due. Calculations involve hypotheses for mortality, staff turnover and projections on future salaries. An adjustment rate linked to the average duration of this commitment is applied. These assessments are carried out for all the plans by independent actuaries. 5.1. Consolidated Financial Statements Financial INFORMATION