2021 Universal Registration Document

The Group uses derivative financial instruments to hedge its exposure to risks arising in the course of its business. Hedged risks are foreign exchange, interest rate and fuel price risk.

In accordance with IFRS 9, derivatives are initially recognized at cost. They are subsequently measured at fair value at each period-end. The intended use of the derivatives determines the IFRS designation and therefore the accounting treatment of changes in fair value.

Most interest rate and foreign currency derivatives used by Edenred meet the criteria to qualify as hedging instruments. In accordance with IAS 39, hedge accounting is applicable if, and only if:

• at the time of setting up the hedge, there is a formal designation and documentation of the hedging relationship;
• the effectiveness of the hedging relationship can be demonstrated from the outset and at each balance sheet date, prospectively and retrospectively.

Financial instruments designated as hedging instruments

When derivatives are designated as hedging instruments, their accounting treatment varies depending on whether they are designated as:

• a fair value hedge of an asset or a liability or of an unrecognized firm commitment; or
• a cash-flow hedge.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss carried in equity at the time remains in equity and is recognized in the income statement when the forecast transaction is ultimately recognized in the income statement.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss carried in equity is immediately transferred to the income statement.

Other derivatives

Derivatives not designated as hedging instruments are classified as “Financial assets at fair value through profit and loss”. Any changes in their fair value are booked in financial income or expense.