Compagnies des Alpes // 2019 Universal Registration Document

5 FINANCIAL INFORMATION

Consolidated financial statements

1.2

REPORTING DATE OF CONSOLIDATED COMPANIES

l Other regulatory changes and standards applicable after the fiscal year ending on 30 September 2019 The Group chose not to apply any new standard, interpretation or amendment to existing standards. The IFRS 16 standard on lease agreements is applicable, for the Group, at 30 September 2020. In 2018, the Group initiated the project to implement this standard and completed the analysis of the main impacts. The main contracts concerned are real estate leases, leasing contracts as well as a few specific lease agreements (long-term lease, etc.). The Group will use the simpli fi ed retrospective method at the time of the standard’s fi rst application at 1 October 2019. Lease liabilities will therefore be measured at the present value of residual rental payments, with the application of a marginal borrowing rate agreed at 30 September 2019. This marginal rate speci fi c to each contract will take into account the residual maturity of the rental commitment, as well as the currency area in which the lessee operates. In accordance with the options authorised by the standard, contracts of less than twelve months at 1 October 2019 will not be restated; the same will apply to contracts whose new property value is not signi fi cant. The Group estimates that the application of IFRS 16 will lead to an increase in fi nancial liabilities of €100 to €110 million at 1 October 2019, and to an increase in EBITDA of approximately €13 million and of operating pro fi t of approximately €2 million. This estimate is established on the basis of the facts and circumstances known to date. Key assumptions and estimates The preparation of the consolidated fi nancial statements in accordance with IFRS is based on assumptions and estimates made by the Executive Management to calculate the value of assets and liabilities at the reporting date and the income and expense items for the year. The actual results may di ff er from these estimates. The main sources of uncertainty relating to the key assumptions and estimates concern goodwill (Note 6.1), estimates of the value of associate companies (Note 6.4) and fi nancial assets at fair value (Note 6.7) and the recognition of deferred tax assets (Note 6.13). CONSOLIDATION METHOD The companies in which the Group has exclusive control are fully consolidated. Associate companies are entities that the Group does not control but over which it exercises signi fi cant in fl uence, usually with 20% to 50% of the voting rights. Shareholdings in associate companies are accounted for using the equity method and initially recognised at their acquisition cost. The Group’s interest in associate companies includes goodwill (net of accumulated impairment) as identi fi ed at the time of acquisition. The Group presents its share of net income of associate companies on a separate line of the income statement, below the operating income line. The Group does not have any joint ventures. All internal transactions and positions are eliminated, either in full for fully consolidated companies, or proportionally to the Group’s interest in the case of companies consolidated using the equity method. The list of consolidated companies can be found in Note 4.2. 1.1

The consolidated fi nancial statements cover a 12-month period, from 1 October 2018 to 30 September 2019 for all companies, except for Groupe Compagnie du Mont-Blanc consolidated using the equity method over the period from 1 September 2018 to 31 August 2019.

1.3

TRANSLATION OF FINANCIAL STATEMENTS AND FOREIGN CURRENCY TRANSACTIONS

The fi nancial statements of foreign subsidiaries are translated into the presentation currency (euro) by applying the following methods: l the balance sheet (including goodwill) is translated at the closing rate; l the statement of comprehensive income is translated at the average exchange rate for the period; l all resulting translation gains or losses are recognised in a separate component of shareholders’ equity. Translation gains or losses resulting from the translation of net investments in foreign operations and loans and other currency instruments designated as hedges on said investments are recognised in shareholders’ equity upon consolidation. OPERATING SEGMENTS The operating segments are presented on the same basis as those used in the internal reporting provided to the Group’s Executive Management: l Ski areas: this business mainly consists in the operation of ski lifts and maintenance of ski runs and trails; l Leisure parks: this segment covers the operation of theme parks, combined amusement and animal parks, water parks, wax museums and tourist sites. Its revenue fi gures include admission tickets, restaurants, shops and accommodation; l Holdings and supports: this segment includes holding companies and operational support subsidiaries (including CDA SA and CDA-DS, its fi nancial subsidiary CDA Financement, its reinsurance subsidiary Loisirs-Ré and INGELO), international consulting services activities (CDA Management and CDA Beijing) and lastly the activities of tour- operators, travel agencies and other real estate businesses (including the Travelfactory Group bought in January 2018). A chart showing the Group’s consolidated companies, grouped by segment, is given in Note 4.2. 1.4

1.5

BUSINESS COMBINATIONS AND GOODWILL

The Group recognises the identi fi able assets, liabilities and contingent liabilities of acquired entities at fair value on the date of taking of control. Where the agreement governing the business combination provides for a payment that is contingent on future events, the Group includes the amount of this payment in the cost of the business combination at the vesting date, if the payment is probable and can be reliably measured.

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Compagnie des Alpes I 2019 Universal registration document