BIC_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Consolidated financial statements

Identify the performance obligations in the contract, • Determine the transaction price, • Allocate the transaction price to the performance obligations in • the contract, Recognize revenue when (or as) the entity satisfies a • performance obligation. The implementation of the standard on revenue recognition was subject to a dedicated project by the BIC Group and that addressed all geographies. The work carried out to date shows that the expected effects on the consolidated financial statements will be limited and will concern certain contractual clauses in the sales agreements. The main impact is related to business development funds that consist of general brand promotions or advertising services (that the Group could have also acquired from a third-party advertising supplier) and should be accounted for as an operating expense instead of net sales. The Income from operations will not be affected significantly, but this new accounting treatment will mainly result in a reclassification between net sales and expenses that will amount to around 20 million euros in 2017. The Group has decided to apply the standard retrospectively to the prior reporting period presented in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ; IFRS 16 – Leases ● Upon its initial implementation on January 1, 2019 (or on January 1, 2018 if the Group decides to early adopt it), IFRS 16 will affect the accounting of leases by lessees: the lessees will account for all of their leases, whether they • qualify as a finance lease or an operating lease under the current lease accounting standard (IAS 17), as an asset against a financial liability, in addition to the effect on the statement of financial position, • the income statement will also be affected: instead of the current operating expense, lessees will recognize a depreciation charge and an interest expense, regarding the statement of cash flows, only the interest • expense will continue to affect the operating cash flows, while the financing cash flows will be impacted by the repayment of the debt. The financial reporting will be sensitive to a greater level of judgement required in applying the new accounting standard, notability: the definition of a lease, • the estimation of the remaining duration of each lease, • the determination of the discount rate. • During the second half of the year, the Group set up a project team, whose objective is to identify all the lease contracts the Group has entered into, collect all information required to apply the standard, select and implement a contract management tool and define its accounting policies. The Group is yet to choose its transition method.

Standards, interpretations and amendments issued with mandatory application after 2017 but not yet adopted by the European Union that may have an impact on the Group’s financial statements IFRIC 22 – Foreign Currency Transactions and Advance ● Consideration; IFRIC 23 – Uncertainty over Income Tax Treatments; ● Amendments to IFRS 2 – Classification and Measurement of ● Share-based Payment Transactions. Analysis of the practical consequences of these new standards is in progress. 1-1-3 The consolidated financial statements include the financial statements of the parent company, SOCIÉTÉ BIC, and of the entities controlled by SOCIÉTÉ BIC (“its subsidiaries”). An investor controls an investee if it has the exposure, or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the investor’s returns. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to align their accounting policies with those used by other entities of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. 1-1-4 In preparing the consolidated financial statements, the BIC Group has to make estimates and assumptions that impact the consolidated financial statements and information reported in certain notes to the financial statements. The BIC Group regularly reviews these estimates and assumptions in order to take into account past experience as well as changes in the economic environment, especially in some key countries of the Group. The results of these reviews could lead to the amounts published in future consolidated financial statements differing from those previously disclosed. The assumptions on which the main estimates are based and the assessment made are explained in the following notes: Note 1-2: Change in Group structure; ● Note 10: Goodwill; ● Note 17: Provisions; ● Note 18: Pensions and other employee benefits; ● Note 22-6: Fair value of financial assets and liabilities; ● Note 24: Derivative financial instruments and hedge accounting. ● Consolidation of subsidiaries Estimates and judgments

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BIC GROUP - 2017 REGISTRATION DOCUMENT