BIC - 2020 Universal Registration Document

FINANCIAL STATEMENTS

Consolidated financial statements

Foreign exchange risk 24-2 To manage its exchange rate exposure, the Group uses forward foreign currency contracts, currency swaps and currency options. Forward foreign currency contracts are recognized as hedges insofar as they are designated as such. These hedges may cover the net investment of the Group in certain foreign entities, foreign currency receivables or debts, or budgets in foreign currency. As Group cash is centralized, SOCIÉTÉ BIC has current accounts with its main subsidiaries. A portion of foreign currency credit balances are swapped against the euro and contribute to the Group's euro liquidity. This liquidity, which is usually invested in money market funds and other short-term investment products, is currently held in a cash position in our bank accounts. Indeed, given the negative interest rate environment in the euro zone, almost all short-term investment products are performing negatively. As SOCIÉTÉ BIC is not yet subject to the application of negative interest on its euro cash surpluses by its banking pool, it is appropriate to keep them in our bank accounts. In addition, the dollar liquidity that participated in the short-term swap activity is now kept in dollars and invested as such in short-term investment products directly denominated in dollars.

This makes it possible to limit the amounts converted into euros and still benefit from positive interest rates on dollar investments. Every day, Group Treasury adjusts the liquidity situation of the current accounts, excluding the US dollar, as a result of currency swaps realized on the market. This strategy, even though it uses exchange instruments, cannot be considered as a full foreign exchange risk management hedging program, as there is no definitive translation of bank accounts. It only relates to optimization of funding by SOCIÉTÉ BIC through foreign liquidity management. 24-3 As of December 31, 2020, the only significant debt was represented by the 75 million euros outstanding NeuCP issue. This three-month debt, issued at negative rates, is not hedged. The exposure to interest rate fluctuations on borrowings is very limited. All local funding needs are directly indexed on a variable rate. Borrowers’ positions are insignificant and are of too limited a time scale to require any relevant hedging. Interest rate risk

Impact of interest rate and foreign exchange risk hedging on the consolidated financial statements 24-4 as of December 31, 2020

The following amounts have been booked as the fair value of derivatives as of December 31, 2020 (in thousand euros):

Net financial Income/ (expense) before tax (a) – Note 6

Other comprehensive income before tax (a)

Income from operations – Note 4

Hedge qualification/ hedged risk

Current assets (b)

Non-current assets

Current Liabilities

Non-current Liabilities

Derivative instruments and revaluation

Hedging revaluation impact

Cash flow hedge/Foreign exchange risk Net investment/Foreign exchange risk

Commercial flows

(398)

5,148

21,470

25,236

976

(3,214)

(53)

Dividends

1,914

664

Subtotal (1)

(398)

5,148

23,384

25,900

976

(3,214)

(53)

Revaluation of cross-currency swaps backed by cash positions in foreign currencies

At fair value through P&L/Foreign exchange risk

Subtotal (2)

166

-

-

173

-

(80)

-

TOTAL (1)+(2) (53) This corresponds to mark-to-market of hedging instruments in the portfolio at December 31, 2020 restated for the reversal of the mark-to-market of the portfolio of hedging instruments (a) as of December 31, 2019. Including options not yet exercised held by SOCIÉTÉ BIC representing current assets for 528 thousand euros. (b) (232) 5,148 23,384 26,073 976 (3,294)

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• BIC GROUP - 2020 UNIVERSAL REGISTRATION DOCUMENT •