SCH2017_DRF_EN_Livre.indb

5 Consolidated financial statements at December 31, 2017 Notes to the consolidated financial statements

26.2 – Fair value hierarchy Financial assets and liabilities can be classified at the fair value following the hierarchy levels below: E Level 1: market value (non-adjusted) on active markets, for similar assets and liabilities, which the company can obtain on a given valuation date; E Level 2: data other than the market rate available for level 1, which are directly or indirectly observable on the market; E Level 3: data on the asset or liability that are not observable on the market.

Dec. 31, 2017

Carrying Amount

Fair value

Level 1

Level 2

Level 3

ASSETS Financial assets

155

155

26

129 (1)

Marketable securities Derivative instruments

1,393

1,393

1,393

135

135

135

LIABILITIES Bonds

(6,375)

(6,702)

(6,702)

Other long-term debt Other current liabilities Derivative instruments

(24)

(24)

(24)

(5,185)

(5,185)

(5,185)

(77)

(77)

(77)

(1) Unlisted available-for-sale financial assets are tested once a year and impaired when necessary.

Dec. 31, 2016

Carrying Amount

Fair value

Level 1

Level 2

Level 3

ASSETS Available-for-sale financial assets

161 899

161 899

36

- -

125 (1)

Marketable securities Derivative instruments

899

- -

74

74

-

74

LIABILITIES Bonds

(6,746)

(7,076)

(7,076)

- - -

-

Other long-term debt Other current liabilities Derivative instruments

(46)

(46)

- - -

(46)

(5,001)

(5,001)

(5,001)

(197)

(197)

(197)

-

(1) Unlisted available-for-sale financial assets are tested once a year and impaired when necessary.

26.3 – Derivative instruments 26.3.1 Foreign currency

currencies and other currencies can have a significant impact on its results and distort year-on-year performance comparisons. As a result, the Group uses derivative instruments to hedge its exposure to exchange rates mainly through futures and natural hedges. Furthermore, some long term loans and borrowings granted to the affiliates are considered as net investment according to IAS 21.

Due to the fact that a significant proportion of affiliates’ transactions are denominated in currencies other than their functional currencies, the Group is exposed to currency risks. If the Group is not able to hedge these risks, fluctuations in exchange rates between the functional

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

275