Vilmorin & Cie - Annual report 2017-2018

5 ANNUAL REPORT Vilmorin & Cie 157 2017-2018 margins on inventory, income from sales of intra-group fixed assets, retirement benefits, etc.), recognized evaluation differences in the case of business combinations to the extent they concern clearly identified and controlled assets, the differences between the book value and the tax base for certain assets based on favorable fiscal systems such as the provisions for mergers in France. Assets and liabilities of deferred taxes are assessed at the tax rate expected for the period during which the asset is recovered and the liability is settled, using the tax rates that have been enacted by the balance sheet date. The balance sheet approach to the variable carry forward method is applied and the effects of taxable rate modifications are recorded in the income for the fiscal year during which the change in rate is fixed, as long as these tax modifications have no effect on the deferred taxes that had been recorded directly in equity. Deferred tax assets are recorded in the balance sheet to the extent that it is probable that they can be recovered in later years. Assessment of the capacity of Vilmorin & Cie to recover these assets in particular depends on the following criteria: future forecasts of fiscal results, the share of exceptional charges must not be renewed in the future and included in past losses, the net liabilities position can, in certain circumstances, be reduced in accordance with tax deficits carried forward reasonably recordable in consideration, on the basis of an amortization table. In compliance with standard IAS 12, deferred tax assets and liabilities are not readjusted. Depending on the case, they are presented in the balance sheet as non-current assets or liabilities. 20- Accounts payable Debts that concern the normal operating cycle are recorded on the line “Accounts payable” for their fair value fixed at the initial assessment, and then adjusted for the cost of depreciation/ amortization for subsequent evaluations. 21- Financial instruments (IAS 32 and IAS 39) Financial instruments at fair value are classified according to the following level of hierarchy: level 1 (listed markets): financial instruments listed in an active market, level 2 (observable data): financial instruments where the assessment makes use of valuation techniques based on observable parameters, level 3 (internal model): financial instruments where the assessment makes use of valuation techniques based fully or partially on non-observable parameters. 21.1 - Unconsolidated equity securities and other non-current financial assets In compliance with standard IAS 39 “Financial instruments,” participation securities in unconsolidated companies are considered to be available for sale and are therefore recorded at their fair value, which is determined in the following conditions: for listed securities, the fair value corresponds to the stock market value, for other securities whose fair value in general cannot be determined reliably, the securities are recorded at cost price less any impairments. Variations in fair value are recorded directly in equity. If there is an objective indication of impairment of the financial asset concerned, an irreversible impairment is recorded in income. Write-back of the provision in the income will only come into play when the securities are disposed of. Loans are recorded at amortized cost price. They can be amortized if there is an objective indication of any impairment. Any impairment corresponding to the difference between the book value and the recoverable amount is recorded in the income, and is reversible if evolution is favorable in the future. In cases where loans, advance payments or other mid- or long-term receivables do not receive interest, or if the interest rate is lower than market rates, the assets are adjusted in accordance with the real interest rate. At each close, an examination of the portfolio of unconsolidated securities and other financial assets is made in order to assess the objective indications of impairment of these assets. Where necessary, any impairment is recorded in the accounts. 21.2 - Accounts receivable Mid- or long-term receivables that do not receive interest are adjusted in the conditions described above in Note 1 paragraph 21.1. 21.3 - Recording financial assets and derivatives Vilmorin & Cie applies the following principles: 21.3.1 Derivatives Vilmorin & Cie uses derivatives to cover its exposure to risks in the variation of interest rates, currency exchange rates and in the prices of raw materials, resulting from its current activity and its funding. Derivatives are assessed at their fair value. 5.1. Consolidated Financial Statements Financial INFORMATION