2021 Universal Registration Document

FINANCIAL STATEMENTS

Consolidated financial statements

NOTE 24

FINANCIAL INSTRUMENTS

Accouting policies Financial assets and financial liabilities are recognized on the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. Trade receivables a) See Note 14. Investments b) In accordance with IFRS 9 – Financial Instruments, investments are classified into one of the following three categories: financial assets at fair value through profit or loss; ● financial assets measured at amortized cost; ● financial assets measured at fair value through other comprehensive income. ● The classification determines the accounting treatment of these instruments. It is determined by the Group on the initial recognition date, based on the characteristics of the instrument and the management objective for which these assets were acquired. Purchases and sales of financial assets are recognized on the trade date, the date on which the Group is committed to buying or selling the asset. A financial asset is derecognized if the contractual rights to the cash flows associated with the financial asset expire or if the asset has been transferred. 1. Financial assets at fair value through profit or loss Financial assets recognized at fair value through profit or loss are mainly financial assets for which the contractual cash flows do not only correspond to principal repayments and interest payments on the outstanding principal. This category mainly includes UCITS and cash investments whose management and performance are based on fair value. Changes in the value of these assets are recorded in the consolidated income statement. The net gains and losses of assets measured at fair value through profit or loss correspond to interest income, dividends and changes in fair value. 2. Financial assets measured at amortized cost Financial assets are measured at amortized cost if their ownership is part of a business model aimed at receiving contractual cash flows corresponding solely to principal repayments and interest payments on the outstanding principal. These instruments are initially recognized at fair value, then at amortized cost calculated using the effective interest rate method. Provisions are recorded in the consolidated income statement. Net gains and losses on loans and receivables correspond to interest income and provisions. 3. Financial assets measured at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if their holding is part of an economic model that aims both to collect contractual cash flows, corresponding only to repayments of principal and interest payments on outstanding principal, and to the sale of financial assets. This category includes debt securities that meet the contractual flow characteristics and management model set out above, as well as shares at fair value through equity on option. Cash and cash equivalents c) Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term (less than three-months) highly liquid money market investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The application of IAS 7 has resulted in money market UCITS with a historical volatility over the last 12 months of above 0.50% being considered non-eligible as “Cash equivalents.” These items are now classified as “Other current financial assets.” Financial liabilities and equity d) Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deduction of all its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

250

• BIC GROUP - 2021 UNIVERSAL REGISTRATION DOCUMENT •