| FINANCIAL LIABILITIES (in millions of euro) | CATEGORY | NOTE | AUGUST 31, 2019 | FAIR VALUE LEVEL | ||||
|---|---|---|---|---|---|---|---|---|
| CARRYING AMOUNT | FAIR VALUE | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | |||
| Bond issues* | Bond issues *CATEGORY Financial liabilities at amortized cost | Bond issues *NOTE 12.4 | Bond issues *AUGUST 31, 2019 2 468 | Bond issues *FAIR VALUE LEVEL 2 553 | - | - | - | - |
| Bank borrowings | Bank borrowings CATEGORY Financial liabilities at amortized cost | Bank borrowings NOTE 12.4 | Bank borrowings AUGUST 31, 2019 1 577 | Bank borrowings FAIR VALUE LEVEL 1 636 | - | - | - | - |
| Other borrowings | Other borrowings CATEGORY Financial liabilities at amortized cost | Other borrowings NOTE 12.4 | Other borrowings AUGUST 31, 2019 39 | Other borrowings FAIR VALUE LEVEL 39 | - | - | - | - |
| Bank overdrafts | Bank overdrafts CATEGORY Financial liabilities at amortized cost | Bank overdrafts NOTE 12.2 | Bank overdrafts AUGUST 31, 2019 35 | Bank overdrafts FAIR VALUE LEVEL 35 | - | - | - | - |
| Trade and other payables | Trade and other payables CATEGORY Financial liabilities at amortized cost | Trade and other payables NOTE 4.3 | Trade and other payables AUGUST 31, 2019 4 892 | Trade and other payables FAIR VALUE LEVEL 4 892 | - | - | - | - |
| Vouchers payable | Vouchers payable CATEGORY Financial liabilities at amortized cost | Vouchers payable NOTE 4.5 | Vouchers payable AUGUST 31, 2019 2 981 | Vouchers payable FAIR VALUE LEVEL 2 981 | - | - | - | - |
| Derivative financial instrument liabilities | Derivative financial instrument liabilities NOTE 12.5 | Derivative financial instrument liabilities AUGUST 31, 2019 (7) | Derivative financial instrument liabilities FAIR VALUE LEVEL (7) | - | (7) | - | (7) | |
* Fair value is calculated on the basis of listed bond prices as of August 31, 2019.
There were no transfers between the various fair value hierarchy levels between Fiscal 2019 and Fiscal 2020.
The Group holds, through its wholly-owned subsidiary Sofinsod, a 19.61% stake in Bellon SA, a company that controls Sodexo S.A. with 42.75% of its shares and 57.14% of its voting rights exercisable on August 31, 2020. This shareholding does not give the Group significant influence over Bellon SA, as voting rights attached to Bellon SA shares cannot be exercised by Sofinsod, in accordance with the provisions of article L.233-31 of Code de commerce.
Due to the application of IFRS 9, the Group assessed this investment at its fair value, determined in accordance with IFRS 13, and opted for accounting for subsequent changes in fair value in other non-recyclable items of consolidated comprehensive income.
The management conducted a fair value assessment of the equity participation in the first application of IFRS 9, with the support of two independent experts. The valuation of the fair value of the investment depends, among other things, on the revalued Net Asset Value (NAV) of Bellon SA which has limited debt and holds no assets other than shares of Sodexo S.A. These shares are valued at their closing share price for the calculation of the NAV of Bellon SA.
The bylaws of Bellon SA include a clause which restricts the sale of Bellon SA shares to non-shareholder third parties, subject to the prior approval of its Supervisory Board. Bellon SA is controlled 72.6% by Mr. and Mrs. Pierre Bellon, and their four children who signed in June 2015 a 50-year agreement preventing the direct descendants of Mr. and Mrs. Pierre Bellon from freely disposing of their Bellon SA shares. The sole asset of Bellon SA being its interest in Sodexo, it can be inferred that Bellon SA does not intend to sell this interest to third parties.
These specific characteristics imply very limited liquidity for the shares that Sofinsod holds in Bellon SA. The valuation method used by management (Level 3 of the hierarchy defined by IFRS 13) incorporates this illiquidity on the one hand, as well as all of the characteristics of the holding’s ownership structure, on the other hand. This method results in a discount to net asset value on Bellon SA estimated at 40% as of September 1, 2018 and August 31, 2019.
As of August 31, 2020, the fair value of the investment is assessed at 410 million euro, and its change since the opening of the year has been recorded in other non-recyclable items of comprehensive income. Its fair value was assessed to 708 million euro as of August 31, 2019.
