Ubisoft 2014 Annual Report Download - page 121

Financial statements
2014
116
Derivatives are initially recorded at fair value; associated transaction costs are recognized in profit or
loss when incurred. After initial recognition, derivatives are measured at fair value while resulting
changes are recorded using the principles outlined below.
 Cash flow hedging
The Group applies hedge accounting (Cash Flow hedge model) for transactions in US dollars,
Canadian dollars and pound sterling. Management believes this method better reflects its hedging
policy in the financial statements.
Hedge accounting applies if:
- the hedging relationship is clearly defined and documented on the date it is established;
- the effectiveness of the hedging relationship is proven from the outset and for as long as it
lasts.
Application of cash flow hedge accounting has the following consequences:
- the effective hedging portion of the change in the fair value of the hedging instrument is
recognized in other comprehensive income, as the hedged item does not appear on the
balance sheet;
- the ineffective portion of the change in fair value is recognized in financial income.
When the hedging instrument no longer meets the criteria for hedge accounting, reaches maturity, is
sold, cancelled or exercised, hedge accounting is no longer applied. The profit or loss accumulated is
held in others items of comprehensive income until the completion of the planned transaction. When
the hedged item is a non-financial asset, the profit or loss accumulated is removed from other
comprehensive income and included in the initial cost. In other cases, related profits and losses that
have been recognized directly in other comprehensive income are reclassified under profit or loss for
the period in which the hedged item impacts the result.
 Other derivatives
Derivatives for which documentation on the hedging relationship does not meet the requirements of
IAS 39 are not referred to as accounting hedges. Changes in the fair value of these instruments are
recognized on the income statement in accordance with IAS 39. The same goes for certain types of
derivatives (options) that are not eligible for hedge accounting. The fair value of assets, liabilities and
derivatives is determined on the basis of market prices at the closing date.
Hierarchy and levels of fair value
In accordance with IFRS 7 (revised), financial assets and liabilities measured at fair value have been
classified according to the fair value levels specified by the standard:
- Level 1: the fair value corresponds to the market value of instruments listed on a deep market
- Level 2: the fair value is measured on the basis of observable data
- Level 3: the fair value is measured on the basis of non-observable data
Note 14 specifies the fair value level for each category of assets and liabilities measured at fair value.
The Group did not carry out any transfers between levels 1 and 2 during the financial year.
The Group does not hold any assets or liabilities measured at fair value under level 3.
Employee benefits
Post-employment obligations
Ubisoft contributes to pension, medical and termination benefit plans in accordance with the laws and
practices of each country. These benefits can vary depending on a range of factors, including
seniority, salary and payments to compulsory general plans.
These plans may be either defined contribution plans or defined benefit plans: