DERICHEBOURG - Universal registration document 2018-2019

4

Financial statements Consolidated financial statements for the year ended September 30, 2019, in compliance with IFRS Accounting policies, rules and methods

hedging of future cash flows; p hedging of a net investment in a foreign operation. p

The application of hedge accounting has the following consequences, the derivative always being measured on the balance sheet at its fair value: for fair value hedges of existing assets or liabilities, the change in fair p value of the derivative is recognized in the income statement. This change is offset in the income statement by re-measuring the hedged item on the balance sheet. Any difference between the two changes in value represents the inefficiency of the hedging relationship; for hedges of future cash flows, the “efficient” portion of the p change in fair value of the hedging instrument is recognized directly in shareholders’ equity in a specific reserve account, and the portion of the change in fair value considered “inefficient” is recognized in the income statement. The amounts recognized in the reserve account are entered in the income statement once the hedged cash flows are recognized; for hedges covering net investments in a foreign country, the p “efficient” portion of the changes in fair value of the derivative instrument is recognized in shareholders’ equity under the heading “translation reserve” and the portion considered “inefficient” is recognized in the income statement. The profit or loss on the derivative that was recognized in the translation reserve must be transferred to the income statement in the event of the sale of the foreign entity that was the subject of the initial investment. As part of its trading business in non-ferrous metals, the Group uses forward purchase and sale agreements concluded on the London Metal Exchange (LME) in order to reduce its exposure to the risk of fluctuations in non-ferrous metal prices (copper, aluminum, nickel). Changes in the fair value of the derivative instruments (forward purchases and sales of metals on the LME) are recognized in the income statement.

A fair value hedge covers exposure to the risk of changes in the fair value of an asset, liability or non-recognized firm commitment arising from changes in financial variables (interest rates, exchange rates, share prices, raw material costs, etc.). A future cash flow hedge covers changes in the value of future cash flows related to existing assets or liabilities or to a highly probable forecasted transaction. A hedge of a net investment in foreign currency covers the foreign exchange risk related to a net investment in a consolidated foreign subsidiary. The Group uses several types of interest rate risk management instruments to optimize its financial expenses, to hedge the foreign exchange risk related to loans in foreign currencies and to manage the fixed/variable rate split of its debt. Interest rate swap agreements enable the Group to borrow long-term at variable rates and to exchange the interest rate on the debt incurred, either at the outset or during the term of the loan, against a fixed or variable rate. The Group may purchase interest-rate options, caps and floors as part of its strategy to hedge its debt and financial instruments. Interest rate and foreign exchange derivatives used by the Group to hedge changes in its debt denominated in foreign currencies qualify as hedges in accordance with IFRS 9 because: the hedging relationship is clearly defined and documented from the p date of implementation; the efficiency of the hedging relationship is clearly demonstrated in p the beginning and on a regular basis for as long as it lasts.

Financial instrument

Subsequent valuation method

Recognition of the change in value

Equity interests

Fair value In shareholders’ equity, unless the impairment observed is long-term, in which case it would be recognized in the income statement via an impairment

Marketable securities Loans and receivables

Fair value

On the income statement On the income statement

Amortized cost Amortized cost Amortized cost

Financial debt Other liabilities

or is a subsidiary acquired exclusively to be sold. p At September 30, 2019, assets and liabilities relating to Derichebourg Services & Ingénierie Nucléaire were classified as held for sale for the reason set out in note 1.3 in Chapter 4, Events occurring after year-end. The detail of assets and liabilities classified as held for sale can be found in note 4.24. Employment Competitiveness Tax Credit (CICE) 2.3.21 The employment competitiveness tax credit for the last civil quarter of 2018 is recorded as a deduction to personnel expenses.

Held-for-sale and discontinued operations 2.3.20 Assets and liabilities classified as held for sale are measured at the lower of their carrying value or their fair value less selling costs. The profit (loss) from discontinued operations is recorded on a separate line of the income statement. A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and: represents a separate major line of business or geographical area of p operations; is part of a single coordinated plan to dispose of a separate major p line of business or geographical area of operations;

DERICHEBOURG p 2018/2019 Universal Registration Document 134