Vilmorin & Cie - Annual report 2017-2018

Financial INFORMATION 5 ANNUAL REPORT Vilmorin & Cie 158 2017-2018 For a derivative to be eligible for hedge accounting (cash flow or fair value), the hedging relationship must be formally designated and documented, and its life-long effectiveness must be demonstrated. A fair value hedge is a hedge of the exposure to changes in fair value of assets, liabilities or firm commitments. A cash flow hedge is a hedge of the exposure to variability in cash flows (sales generated by the company’s assets, for example). In compliance with the provisions of standard IAS 39, variations in the fair value of these instruments are recorded as follows: Variations in the fair value of instruments eligible for cash flow hedging are recognized directly in equity for their effective part of the cover, and in financial profit and loss for their ineffective part. Variations in the fair value of instruments eligible for fair value hedging are recorded in profit and loss where they compensate for the variations in fair value of the assets, liabilities or firm commitments covered. Forward cover of the prices of the raw materials used by Vilmorin & Cie mainly concerns futures negotiated on an organized market. Vilmorin & Cie also implements strategies that combine futures with options which are also negotiated on an organized market. 21.3.2 Conditional advance payments Conditional advance payments appear in accordance with IFRS principles on the line “Deferred income.” They are included in the income if the funded programs concerned fail. 21.3.3 Loan issue costs Costs incurred by the issue of loans are, in accordance with standard IAS 39, recorded at the book value of the loans concerned. These costs are recorded as charges for the full duration of the loan using the effective interest rate method. 21.4 - Financial debts – compound instruments Certain financial instruments include both a financial debt component and an equity component. In compliance with standard IAS 32, the different components of these instruments are recorded in equity and financial debts in respective proportions. The component classified as financial debts is evaluated on date of issue. It corresponds to the future agreed cash flow value adjusted to the market rate of a similar instrument with the same conditions, but without an option of conversion or redemption as shares. 21.5 - Accounts payable In cases of deferred interest-free payment greater than one year, rules for adjustment are applied in compliance with the principles presented above in Note 1 paragraph 21. 22- Cash and cash equivalents – investment securities 22.1 - Cash and cash equivalents In accordance with standard IAS 7 “Cash flow statement,” the line “Cash and cash equivalents” appearing in the balance sheet includes: cash and bank in hand, short-term investments that are liquid and easily convertible into a determinable amount of cash with negligible risk and variation in value, current accounts recoverable at short notice. Investments at more than three months without the possibility of an anticipated exit, and bank accounts carrying restrictions (blocked accounts) are excluded from cash flow. Overdrafts assimilated to funding instruments are also excluded from cash flow. 22.2 - Investment securities In compliance with standard IAS 39 “Financial instruments,” investment securities are assessed at their fair value. No investment is analyzed as being held until its due date. The manner in which investment securities are recorded in accounts depends on the aim of the operations: For investments held for purposes of transaction, variations in fair value are systematically recorded in income. For investments available for sale, variations in fair value are recorded directly in the equity, or in the income where there is an objective indication of impairment that is greater than the temporary impairment of the security concerned. 23- Breakdown of assets and liabilities into current / non-current 23.1 - General principle Standard IAS 1 states that assets and liabilities must be classified as either “current” or “non-current.” 5.1. Consolidated Financial Statements