2021 Universal Registration Document

FINANCIAL STATEMENTS

Consolidated financial statements

The Group no longer uses hedge accounting if the commitment or forecast transaction is no longer expected to occur, and the net cumulative gain or loss recognized in equity is transferred to profit or loss for the period. hedge of net investment in a foreign operation: the hedging instrument is adjusted to fair value. Following this adjustment, the ● change in fair value attributable to the hedged exchange risk is recorded, net of taxes, in equity. The cumulative amount included in equity is transferred to the income statement at the date of liquidation or sale of the net investment. Derivatives embedded in other financial instruments or other non-financial host contracts are treated as separate derivatives when their risks and financial characteristics are not closely related to those of the host contract and the hybrid instrument is not carried at fair value with gains or losses reported in profit or loss. The BIC Group did not carry out any such transactions over the past three years. Fair value hierarchy i) Financial instruments measured at fair value are classified within three fair value levels (IFRS 13): level 1: quoted prices in active markets for identical assets or liabilities; ● level 2: directly or indirectly observable inputs other than quoted prices included within level 1; ● level 3: non-observable inputs. ●

Derivatives and hedge accounting 24-1 The financial risk management is mainly concentrated at the SOCIÉTÉ BIC level and managed and/or coordinated by the Group Treasury. This department is not a profit center. Group Treasury has ongoing contact with subsidiaries and collects information throughout the year to identify, follow and lead risk management. Regarding foreign exchange risk, the Group policy consists in hedging the net position currency by currency on a yearly basis. Buyer and seller positions are aggregated and the determined net nominal is hedged on the market. Depending on the fluctuation of the foreign exchange market, Group Treasury can speed up the hedging pace in order to benefit from favorable trends or slow it down so as not to fix too early a rate. All the positions are constantly monitored in real-time by the Group Treasury, which has the necessary information and analytical tools. An update of all the positions is transmitted to management each month and detailed by currency, product (forward, option, etc.), and purpose (commercial flows or net investments). In case of local constraints that would not permit the centralization at optimum conditions for BIC, the hedges are performed locally under the strict control of Group Treasury. 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. Foreign exchange risk

As Group cash is centralized, BIC holds 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 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, which 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 U.S. 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 BIC through foreign liquidity management. 24-3 As of December 31, 2021, the outstanding 59 million euros NeuCP issue is the only significant debt. 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

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• BIC GROUP - 2021 UNIVERSAL REGISTRATION DOCUMENT •