EURAZEO_REGISTRATION_DOCUMENT_2017

3 GOVERNANCE

Risk management, internal control and main risk factors

Depending, in particular, on changes in the economic environment and market conditions, exposure to a risk factor and the magnitude of related risks are likely to vary. Accordingly, only those risks considered liable to call into question business continuity or material with respect to activity (financial impact, particularly, on Net Asset Value) and/or the development of the Company (impact, particularly, on its reputation and the human factor) are presented below. Information on financial risks is also presented pursuant to the French Commercial Code (Article L. 225-100). Other risks, not known or not considered material by Eurazeo at the date of this Registration Document, could also impact its activities. In addition, this presentation is supplemented by an overview of disputes and litigation involving the Company (Section 3.4.2.10). Risks relating to the exposure of the 3.4.2.1 portfolio to the equity markets Identification of risks Following the IPO of unlisted investments in 2015 (Elis in February 2015, and Europcar in June 2015), the share of listed securities in Eurazeo’s NAV was 42% as of December 31, 2015. Listed investments represented 31% of the NAV as of December 31, 2016 and 28% as of December 31, 2017. The decrease in the weight of listed investments in the NAV in fiscal year 2017 was due to the partial or total sale of securities: ANF Immobilier, Moncler, Europcar and Elis. In the accounts, Eurazeo is directly exposed to equity risk in the amount of the consolidated net acquisition cost of its portfolio of

listed investments (IFRS), i.e. €1,325.4 million as of December 31, 2017 (see table below). The Company may also be indirectly affected by a downturn in equity markets. Market fluctuations have an impact on the listed peers used to value unlisted assets, and could therefore have a negative impact on the Company’s Net Asset Value. Risk management In addressing this direct exposure to equity risk of its listed securities, Eurazeo has no time constraints and can therefore sell its investments when market conditions are most favorable. In addition, if necessary, Eurazeo can implement hedging strategies. Unlisted securities are valued primarily on the basis of comparable multiples. Such multiples can be based on market capitalization or on recent transactions, which by definition are sensitive to changes in the financial markets and economic conditions. The establishment of a panel of comparable companies necessarily involves estimates and assumptions, insofar as it requires reliance on pertinent comparability criteria. As part of the valuation of the Company’s Net Asset Value (NAV), the fair value of these unlisted securities is measured twice annually (using the methodology presented on p. 83), in accordance with the IPEV (International Private Equity Valuation) guidelines. Accordingly, by their very nature, and however much caution is used in determining them, valuations may prove to be very different from the exit price. To reduce this risk to an acceptable level, a number of internal and external diligences have been defined. Valuations are based on a rigorous internal process, the results of which are reviewed by an independent appraiser on the basis of a multi-criteria approach, at the close of each year and half-year.

Change in value (cumulative)

Value in the consolidated balance sheet as of 12/31/2017

Pre-tax impact of a 10% fall in the share price

Value based on share capital as of 12/29/2017

Acquisition cost, net of impairment

(In millions of euros)

(In millions of euros)

%

Comment

(In millions of euros)

AccorHotels

524.0 352.9 876.8

524.0 352.9 876.8 202.5 591.7 794.1

406.7 194.3

117.3 29% (52.4) 158.5 82% (35.3)

All fair value movements are recognized directly in profit or loss.

Moncler

Financial assets at FV through P&L

601.0 275.8 46% (87.7)

Elis

318.2 573.8 892.0 1,768.8

177.9

24.6 14% 45.2 8% 69.8 10%

No direct impact on the financial statements apart from the need to conduct impairment tests when the share price is below the consolidated value

Europcar

546.5 724.4

Equity-accounted investments

TOTAL LISTED ASSETS

1,671.0 1,325.4 345,6 26%

Restatement of non-controlling interests Total listed assets excluding non-controlling interests (1)

(208.7)

1,560.1 In the NAV, listed investments are valued based on the average, over the 20 days preceding the valuation date, of average daily share prices (1) weighted by traded volumes. As of December 31, 2017, total listed investments are valued in the NAV at €1,552.6 million. The difference compared with “Listed Assets excluding non-controlling interests” in the above table is due to the valuation method: closing share price vs. volume weighted average share price over the last 20 trading days.

194

2017 Registration document

Eurazeo