BPCE - 2018 Registration document

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of BPCE SA group as at December 31, 2018

Changes to the percentage of interest in subsidiaries that do not lead to a change in control are recognized as transactions affecting equity. The effects of these transactions are recognized in other equity at their after-tax amount and therefore do not impact consolidated income attributable to equity holders of the parent. Exclusion from the scope of consolidation Non-material controlled entities are excluded from the scope in accordance with the principle set out in Note 13.4. Employee pension funds and supplementary health insurance plans are excluded from the scope of consolidation insofar as IFRS 10 does not apply to either post-employment benefit funds or other long-term employee benefit plans to which IAS 19, “Employee Benefits”, applies. Likewise, interests acquired with a view to their subsequent short-term disposal are recorded as available for sale and recognized in accordance with the provisions of IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”. An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of an entity, without exercising control or joint control over those policies. It is presumed to exist if the Group holds, directly or indirectly, 20% or more of the voting rights of an entity. A joint venture is a partnership in which the parties which exercise joint control over the entity have rights over its net assets. Joint control is the contractually agreed sharing of control over a company, which exists only when the strategic decisions require the unanimous consent of the parties sharing control. Equity method Income, assets and liabilities of investments in associates and joint ventures are accounted for in the Group’s consolidated financial statements using the equity method. An investment in an associate or a joint venture is initially recognized at its acquisition cost and subsequently adjusted for the Group share in the income and other comprehensive income of the associate or joint venture. The equity method is applied from the date on which the entity becomes an associate or a joint venture. On the acquisition of an associate or a joint venture, the difference between the cost of investment and the Group’s share in the net fair value of the entity’s identifiable assets and liabilities is recognized in goodwill. When the net fair value of the entity’s identifiable assets and liabilities is higher than the cost of investment, the difference is recognized in income. The share of net income of entities accounted for under the equity method is included in the Group’s consolidated income. When a Group entity carries out a transaction with a Group joint venture or associate, the profit or loss resulting from this transaction is recognized in interests held by third parties in the associate or joint venture. Investments in Associates and Joint Ventures 3.1.2 Definitions

The net investment in an associate or joint venture is subject to impairment testing if there is objective evidence of impairment arising from one or more events occurring after the initial recognition of the net investment and if the events have an impact on estimated cash flows, provided this impact can be reliably calculated. In such cases, the total carrying amount of the investment (including goodwill) is subject to impairment testing according to the provisions When the investment is held by a venture capital organization, an investment fund, an investment company with variable share capital or a similar entity such as an insurance asset investment fund, the investor may choose not to recognize the investment using the equity method. In this case, revised IAS 28 “Investments in Associates and Joint Ventures” authorizes the investor to recognize the investment at its fair value (with changes in fair value recognized in income) in accordance with IFRS 9. These investments are therefore recognized as “Financial assets at fair value through profit or loss”. The Natixis group’s private equity subsidiaries have chosen to measure their investments in this way, considering that this valuation method provides more relevant information. of IAS 36 “Impairment of Assets”. Exception to the equity method A joint activity is a partnership where parties that have joint control over an entity have direct rights over the entity’s assets, and obligations for its liabilities. Accounting treatment of joint activities An investment in a joint enterprise is accounted for by integrating all interests held in the joint activity, i.e. the entitled share in each asset and liability and item of income. These interests are allocated by nature to the various lines of the consolidated balance sheet, consolidated income statement and the statement of net income and gains and losses recognized directly in other comprehensive income. 3.2 The consolidated financial statements are prepared using uniform accounting policies for reporting similar transactions in comparable circumstances. Where material, consolidation adjustments are made to ensure the consistency of the measurement methods applied by consolidated entities. 3.2.1 The consolidated financial statements are expressed in euros. Balance sheet items of foreign subsidiaries and branches whose functional currency is not the euro are translated using the exchange rate in force at the balance sheet date. Income and expense items are translated at the average exchange rate for the period, which is the approximate value of the transaction price if there are no significant fluctuations. CONSOLIDATION RULES Foreign currency translation Investments in joint activities 3.1.3 Definition

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Registration document 2018