FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS AND LIABILITIES, FINANCIAL POSITIONAND PROFITS AND LOSSES 20 comprehensive income for the portion representing the actuarial The deferred tax assets are recognized in the Financial Statements gains and losses. only to the extent that it is likely that the future profits will be sufficient to absorb the losses that can be carried forward or The Company’s payments for the defined-contribution plans are backward. Considering its stage of development, which precludes recognized as expenses on the Consolidated Statement of Income the income projections from being sufficiently reliable to be made, (Loss) of the period during which they become payable. the Group has not recognized deferred tax assets in relation to 3.13 Provisions for risks and expenses tax loss carryforward in the Consolidated Statement of Financial The provisions for risks and lawsuits correspond to the Position. commitments resulting from lawsuits and various risks whose due 3.16 Segment information dates and amounts are uncertain. The Company operates in a single operating segment: the A provision is recognized in the Financial Statements when the conducting of research and development of novel therapies for Group has a legal or implicit obligation to a third party resulting mitochondrial and neurodegenerative diseases of the eye and from a past event, which is likely or certain to cause an outflow central nervous system in order to market them in the future. The of resources to that third party, and provided that the future assets, liabilities and operating loss realized are located mainly in outflows of liquid assets can be estimated reliably. France. The amount recognized in the Financial Statements as a provision 3.17 Presentation of financial assets and financial liabilities is the best estimate of the expenses necessary to extinguish the measured at fair value obligation. In accordance with IFRS 7 Financial Statements: Disclosures, financial instruments are presented in three categories based on 3.14 Leases a hierarchical method used to determine their fair value: The leases involving property, plant and equipment are • level 1: fair value calculated using quoted prices in an active classified as finance lease agreements when the Group bears market for identical assets and liabilities; substantially all the benefits and risks inherent in the ownership of the property. The assets that are covered under finance • level 2: fair value calculated using valuation techniques based lease agreements are capitalized as of the beginning date of on observable market data such as prices of similar assets and the rental agreement on the basis of the fair value of the rented liabilities or parameters quoted in an active market; and asset or the discounted values of the future minimum payments, • level 3: fair value calculated using valuation techniques based whichever is lower. Each rental payment is distributed between wholly or partly on unobservable inputs such as prices in an the debt and the financial cost in such a manner to determine inactive market or a valuation based on multiples for unlisted a constant interest rate on the principal that remains due. The securities. corresponding rental obligations, net of the financial expenses, 3.18 Use of estimates are classified as financial liabilities. The property, plant and equipment acquired within the framework of a finance lease The Financial Statements are prepared in accordance with IFRS. agreement is amortized over the use period or the term of the The preparation of the Financial Statements requires management lease agreement, whichever is shorter. to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, income and expenses during The rental agreements for which a significant portion of the the reporting period. The Group bases estimates and assumptions risks and advantages is preserved by the lessor are classified as on historical experience when available and on various factors that operating leases. The payments made for these operating leases, it believes to be reasonable under the circumstances. The Group’s net of any incentive measures, are recognized as expenses on the actual results may differ from these estimates under different Consolidated Statement of Income (Loss) in a linear manner over assumptions or conditions. There have been no significant changes the term of the agreement. from original estimates in any periods presented. 3.15 Income tax These estimates and judgments involve mainly: Deferred taxes are recognized for all the temporary differences • the estimate of the amount of the intangible asset recognized arising from the difference between the tax basis and the in the context of a license agreement. The acquisition of this accounting basis of the assets and liabilities that appear in the license in 2013 resulted in the issuance of ordinary shares as Financial Statements. The primary temporary differences are consideration paid for the license. The amount of the intangible related to the tax losses that can be carried forward or backward. asset recognized was determined based on the fair value of the The legal tax rates as of the closing date are utilized to determine ordinary shares, €0.41 per share, issued as consideration for the deferred taxes. the license (see Note 4); GENSIGHT BIOLOGICS – 2017 Registration Document– 195