L'Oréal - 2018 Registration Document

2018 Consolidated Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Foreign exchange gains and losses 10.2.

ACCOUNTING PRINCIPLES

on the transaction date and at the exchange rate effective on the settlement date are recognised directly on the appropriate income and expense lines, after allowing for

Foreign exchange gains and losses resulting from the difference between the value of foreign currency operating income and expenses translated at the spot rate effective

hedging derivatives.

Foreign exchange gains and losses break down as follows:

2018 -76.7

2017 -90.5

2016 -44.8 87.1 42.3

€ millions

Time value

Other foreign exchange gains and losses

87.1 10.4

-5.0

TOTAL

-95.5

Foreign currency transactions are translated at the spot rate at the transaction date. Assets and liabilities denominated in foreign currencies have been translated using the exchange rates effective at the closing date. Foreign exchange gains and losses also include the following items relating to derivative instruments:

changes in market value linked to variations in the spot rate s between the inception of the hedge and the date when the hedged transactions are completed; residual ineffectiveness linked to excess hedges and s recognised directly in the income statement under other foreign exchange gains and losses for -€4.3 million, -€8.4 million and -€10.9 million in 2018, 2017 and 2016 respectively.

4

These amounts are allocated to the appropriate operating expense items as follows:

2018

2017 -77.8

2016 28.2

€ millions

Cost of sales

13.2 -6.2

Research and development Advertising and promotion

3.3

6.9 4.6 2.6

1.9 1.6

-12.4

Selling, general and administrative expenses FOREIGN EXCHANGE GAINS AND LOSSES

-8.6

10.4

-95.5

42.3

REGISTRATION DOCUMENT / L'ORÉAL 2018

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