Econocom - 2020 annual report

06 consolidated financial statements

notes to the consolidated financial statements

Information 21.3. on transfers of assets associated with refinancing – Derecognised assets NATURE OF CONTINUING 21.3.1. INVOLVEMENT Residual financial value Outstanding amounts under the Group’s lease agreements with customers are refinanced on a non-recourse basis except in very rare cases. The Group’s active risk management policy is aimed at limiting both credit risk and any other continuing involvement. Accordingly, the Group derecognises outstanding amounts under leases refinanced on a non-recourse basis. However, the Group frequently sells, and commits to repurchase, the leased equipment at the same time as the outstandings under leases. These purchase obligations are classified within “gross commitments on residual financial assets” and recognised in balance sheet liabilities. Other continuing involvement The main legal forms of refinancing contracts for lease outstandings are described below: outstandings assigned in full: Econocom • considers that it has no other involvement within the meaning of IFRS 7; outstandings assigned as sales of • receivables: Econocom has continuing involvement since it retains a portion of the risk associated with the contractual relationship and ownership of the assets;

outstandings assigned under finance • leases: Econocom has continuing involvement since it retains a portion of the risk associated with the contractual relationship. Risk from continuing involvement depends above all on Econocom’s relationship with its customers, and as such is considered, managed and, where appropriate, covered by provisions as an operational risk and not a financial risk. RECOGNITION IN INCOME 21.3.2. STATEMENT For Econocom group, the cost of transferring outstandings is an operating expense included in the economic analysis of each transaction, and is included in profit (loss) from current operating activities accordingly. In contrast, costs relating to the factoring of trade receivables are of a financial nature and are classified within net financial expense. Gains and costs relating to unwinding the discount on the residual interest in leased assets and to gross commitments on residual financial assets are considered as operating costs and are included in “Financial income – operating activities”. BREAKDOWN OF TRANSFERS 21.3.3. FOR THE YEAR Refinancing is part of the operating sales cycle and its seasonal nature is thus linked to that of its business and not to the presentationof the balance sheet. A significant part of this business takes place in December, which is traditionally an important month for companies where ICT investments and digital investments more generally are concerned.

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2020 annual report