Assystem - 2018 Register document

BUSINESS REVIEW AND FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

8.3

Derivative instruments

Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently remeasured at fair value at each reporting date. The method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the hedged item. On inception of a hedge, the Group documents the relationship between the hedged item and the hedging instrument. The Group also documents its estimates both on inception and prospectively to determine the effectiveness of the hedge in offsetting changes in fair value or cash flows attributable to the hedged risk. Fair value hedges Fair value hedges are used to hedge the Group’s exposure to changes in fair value of a recognised asset or liability (or an identified portion of such an asset or liability) or a firm commitment to purchase or sell an asset at a pre-defined price, that is attributable to a particular risk and could affect profit. Fair value gains and losses are recognised in the income statement. Cash flow hedges A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a

recognised asset or liability or a highly probable forecast transaction and could affect profit. The Group applies cash flow hedge accounting when the following conditions are met:

● there is formal designation and documentation of the hedging relationship;

● the hedge is highly effective; and

● the forecast transaction that is the subject of the hedge is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in the income statement. If the hedging instrument expires, or is sold, cancelled or exercised, the gain or loss initially recognised in other comprehensive income continues to be recorded separately in other comprehensive income until the forecast transaction occurs. If the commitment no longer exists or the forecast transaction is no longer expected to occur, any related cumulative gain or loss on the hedging instrument that had been recognised directly in other comprehensive income is reclassified to profit.

5

At 31 December 2018 the fair value of the Group’s currency derivatives was not material (positive fair value of €0.3 million at 31 December 2017, recorded under “Other current financial liabilities”). The application of hedge accounting to these derivatives resulted in the recognition of a €0.4 million fair value loss in other comprehensive income in 2018.

CURRENCY DERIVATIVES During 2018 the Group pursued its currency hedging strategy (see Chapter 2, Section 2.2.3 of this Registration Document – Financial risks) by setting up new hedges comprising currency forwards and swaps.

8.4

Net debt

Cash and debt consist of (i) cash and cash equivalents and non-current and current derivatives (included in other financial assets) on the assets side of the statement of financial position, and (ii) debt and financial liabilities, and the fair value of derivatives on the liabilities side.

123

ASSYSTEM

REGISTRATION DOCUMENT 2018