FFP_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS

Consolidated financial statements

C. Non-current financial liabilities Non-current financial liabilities mainly include long-term borrowings and firm commitments to subscribe to private equity funds. Borrowings are initially recognised at fair value, net of transaction costs. They are subsequently recognised at amortised cost. They are not discounted. Commitments to subscribe to private equity funds are recorded under assets and liabilities at their nominal value without discounting, since discounting has no material impact. D. Derivative instruments – Hedging instruments FFP has hedged the risk of interest-rate movements on part of its borrowings with interest-rate swaps. The effective portion of the change in fair value of these swaps, which meet the criteria for cash flow hedging, is taken directly to equity. The gain or loss resulting from the ineffective portion is taken immediately to income for the year. Changes in the fair value of financial instruments that do not qualify as hedges are taken to income. To measure the fair value of hedging instruments, CVA-DVA impacts are deemed to be non-material and so are not recognised. INVENTORIES Inventories relate to the winemaking business of SCA Château Guiraud. They are carried at the lower of production cost and net realisable value. Production cost mainly includes harvesting costs, growing costs, depreciation and the cost of ageing and keeping the wine until it is bottled. It does not include borrowing costs. Inventories were measured at estimated market value when Château Guiraud was acquired. DEFERRED TAX Deferred tax is recognised using the liability method, and is based on the timing differences between the tax base of assets and liabilities and their carrying amounts. Deferred tax is calculated using tax rates enacted at the end of the financial year and which are expected to be applied when the relevant tax asset is realised or the tax liability is settled. Deferred tax assets are recognised only insofar as the Company is likely to make a taxable profit in future. Deferred tax assets and liabilities are not discounted. For companies accounted for under the equity method and companies subject to the tax regime covering parent companies and subsidiaries, a tax liability on dividend distributions is recognised to the extent of the timing differences, although differences are limited to 5% of expenses as required by the parent/subsidiary dividend tax regime. 1.7 1.8

1.9 PROVISIONS In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, a provision is recognised when the Group has a present obligation towards a third party and it is probable that an outflow of resources will be required to settle the obligation, and no inflow of resources of an equivalent amount is expected. The amount of a provision is the best estimate of the outflow required to settle the obligation. A. FFP FFP’s obligations in respect of employee benefits are as follows: O a supplementary defined-contribution pension plan, under which the Company is under no obligation other than to pay contributions; there is also an old defined-benefit supplementary pension plan, the only beneficiaries of which are retired former employees; O post-employment benefits, paid to employees still with the Company upon their retirement; O bonuses related to long-service awards. Defined-benefit pension obligations and post-employment benefits are measured using the projected unit credit method. The calculations mainly take into account: O an assumed retirement age, which is generally 62 years but increased for people who, at the age of 62, do not have enough years of contributions to qualify for a full state pension; O a discount rate; O an inflation rate; O assumptions regarding wage increases and staff turnover. B. Société Château Guiraud Château Guiraud employees are entitled to post-employment benefits representing one-off payments made at the time of retirement. Defined-benefit pension obligations and post-employment benefits are measured using the projected unit credit method. The calculations mainly take into account: O an assumed retirement age, which is generally 62 years but increased for people who, at the age of 62, do not have enough years of contributions to qualify for a full state pension; O a discount rate; O an inflation rate; O assumptions regarding wage increases and staff turnover. 1.10 EMPLOYEE BENEFIT OBLIGATIONS

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FFP

2017 REGISTRATION DOCUMENT