DERICHEBOURG - Universal registration document 2019-2020

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Financial statements Consolidated financial statements for the year ended September 30, 2020, in compliance with IFRS Accounting policies, rules and methods

EnvironmentalServices Due to the very nature of its EnvironmentalServices operations,which involve recyclingmetals, the DerichebourgGroup is helping to preserve the planet’snatural resources(iron ore, copper, bauxite, etc.). Recycling metals saves a significantamountof energy comparedwith the primary productionof such metals,with up to 94.8%for aluminumand 16.5% for steel (source: Report on the economicalbenefit of recycling,Bureau of InternationalRecycling). In this way, the Group is helping to reduce greenhousegas emissions,as detailedin section 1.6of Chapter 1of this UniversalRegistration Document. For almost ten years, each regional subsidiary has had an Environmental Officer (reporting to the Environmental Services director), who liaises with the relevant authorities (DREAL, prefectures, water agencies, local councils, waterways, associations, etc.) in order to: check that the Group’s business activities are conducted in p accordance with current legislation and regulations (operating licenses),as poorlymanagedrecyclingactivitiescan cause pollution; learn about regulatorychanges; p ensure that facilities are supervisedand releases to the environment p are monitoredand controlled; train and informcolleaguesabout best practice. p Likewise, operations are often conducted on land with an industrial past, whose history is not always available. Where necessary, soil surveysare conductedin applicationof regulatorychanges. To the Group’s knowledge, no pollution hazards have been revealed for which a provision has not been made or for which a solution has not been found. Financial debt(current andnon-current) 2.3.18 Financialdebt includes: the syndicated loan agreement set up in March 2020 including a p five-year refinancingloan; the non-recourse factoring agreement signed on January 1, 2015, p renewedtwice in April 2016and November 2018; leases; p other borrowingsand bilateral lines. p These debts are valued and recognized at amortized cost using the effective interest rate method. According to this method, the cost of the debt includes issuance costs, originally deducted from the nominal value of the debt as a liability. Also in this method, interest expenses are recognizedon an actuarialbasis.

In the event that the terms of a loan agreement are modified, if the cash flows discountedat the initial effectiveinterest rate under the new terms, including any fees paid and negotiation costs, exceed the discounted value of the flows anticipated under the agreement by more than 10%, the issuance costs and negotiation fees are recognizedas expenses. Financial debt with a term of less than one year is recorded under Current financialdebt. Fair valueof derivative assets andliabilities 2.3.19 (IAS 32–IFRS 9) The Group uses derivatives to hedge its exposure to market risks (interest rates, exchangerates and rawmaterialprices). According to IFRS 9, all derivativesmust be recognizedon the balance sheet at their “fair value”. If derivatives do not meet the criteria for hedge accounting,fluctuationsin their fair value are recognizedin the incomestatement. Derivativesmay be consideredhedginginstrumentsin three situations: hedgingof fair value; p hedgingof future cash flows; p hedgingof a net investmentin a foreignoperation. p A fair value hedge covers exposure to the risk of changes in the fair value of an asset, liability or non-recognizedfirm commitment arising from changes in financial variables (interest rates, exchangerates, share prices, rawmaterial 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 forecastedtransaction. 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 currenciesand to manage the fixed/variablerate split of its debt. Interest rate swap agreementsenable the Group to borrow long-term at variable rates and to exchangethe 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-rateoptions, caps and floors as part of its strategyto hedge its debt and financial instruments.

DERICHEBOURG p 2019/2020 Universal Registration Document 148