BIC - 2018 Registration document

FINANCIAL STATEMENTS

Consolidated financial statements

NOTE 4

OPERATING EXPENSES

Accounting policies Government grants are recognized systematically in profit or loss over the periods necessary to match them with the associated ● costs and presented as a reduction to the related expenses. The research and development tax credit is deducted from operating expenses and the French tax credit for Competitiveness and ● Employment is deducted from labor costs. Research expenses are recognized as expenses in the period in which they were incurred. ●

At December 31, 2017*

December 31, 2018

(in thousand euros)

Raw materials, consumables used and change in inventory

525,962 524,648

509,277 505,683 108,958 489,451

Staff costs

Depreciation and amortization expenses

88,095

Other operating expenses*

506,959

Impairment loss on manufacturing equipment

-

1,501

Gain on operational foreign currency translation

(90)

(14,923)

TOTAL

1,645,574

1,599,947

Restated for IFRS 15 – Revenue from Contract with Customers. *

Other income and expenses are not included in the total amount and are disclosed in Note 5. Other operating expenses mainly include outside services. Research and development costs recognized under operating expenses for 2018 amounted to 35.3 million euros, versus 36.4 million euros for 2017. They include the French research tax credit for 1.4 million euros, versus 1.3 million euros for 2017.

The tax credit for competitiveness and employment (CICE) amounted to 2.1 million euros in 2018, versus 2.6 million euros in 2017. The rental expense related to lease contracts falling under IFRS 16 but benefiting from the exemption (duration under 12 months or asset value less that 5,000 dollars) is not included in the valuation of the financial debt and amounts 78 thousand euros in 2018.

NOTE 5

OTHER INCOME AND EXPENSES

December 31, 2017

December 31, 2018

(in thousand euros)

Royalties income

8

19

Gain on disposal of fixed assets

940

598

Other

8,845 9,793

11,057 11,674

Other income

Impairment loss

(837)

(74,334)

Restructuring costs related to retained BIC Graphic operations

(23,742)

-

Cost reduction plans – other

(967)

(15,396) (4,889) (8,104)

BIC Sport divestiture loss

-

Other

(5,227)

Other expenses

(30,773) (20,980)

(102,724)

TOTAL

(91,050)

In 2018, other income and expenses mainly include the partial as of December 31, 2018 for 4.9 million euros and restructuring Cello goodwill impairment charge amounting to 68.7 million euros costs amounting 15.4 million euros, mainly due to Stationery and and the full Pimaco goodwill impairment charge for 5.5 million Lighters manufacturing reorganization, Organizational review and euros (see note 10). They also relate to BIC Sport loss on disposal Haco Industries restructuring costs.

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• BIC GROUP - 2018 REGISTRATION DOCUMENT •