Eurazeo / 2019 Universal Registration Document

Financial Statements Consolidated Financial Statements for the year ended December 31, 2019

Derivative financialinstruments 16.11 and hedgingderivatives Derivative financial instruments The Group uses derivative financial instrumentsto hedge its exposure to interestrate and foreignexchange risk. Derivativesare initially recognizedat fair value at the date of effect of the derivativecontractsand are subsequentlyremeasuredto fair value at each reporting date. Resulting residual gains or losses are immediately recognized in profit or loss unless the derivative is a designated and effectivehedging instrument,in which case the timing of the recognition of gains or losses in net income depends on the nature of the hedgingrelationship. The fair value of a derivative hedging instrument is classified in non-current assets or liabilities where the residual term of the hedged item is greater than 12 months, and in current assets or liabilitieswhere the residual term of the hedged item is less than 12 months. Derivative instruments not designated as hedging instruments are classified in currentassets or liabilities. Hedge accounting The Group designates certain derivatives as foreign exchange risk or interest rate risk hedging instrumentsas part of fair value hedges,cash flow hedges or hedges of a net investment in a foreign operation, accordingly. Foreign exchange risk hedges associated with firm commitmentsare recognizedas cash flow hedges. At inception of the hedging relationship, the Group documents the relation between the hedging instrument and the hedged item, together with the risk management objectives and its hedging transaction strategy. The Group also documents, at the beginning of the hedging transaction and regularly, whether the hedging instrument effectively offsets fair value gains or losses or the cash flows of the hedged item attributable to the risk hedged, i.e. whether the hedging relationship meets the following hedge effectiveness requirements: there is an economic relationship between the hedged item and • the hedginginstrument; the effect of credit risk does not dominate the value changes that • result from thateconomicrelationship; the hedge ratio of the hedging relationship is the same as that • resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actuallyuses tohedge thatquantityof the hedged item. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio, but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship ( i.e. it rebalancesthe hedge) so thatit meetsthe qualifyingcriteria again. Derivativesincludedin cashflow hedgingrelationships The application of cash flow hedge accounting enables the effective portion of changes in the fair value of the designatedderivative to be deferred ina consolidated equityaccount. The effective portion of fair value changes in derivative instruments which meet cash flow hedge criteria and are designated as such is recognized in equity. The gain or loss relating to the ineffective portion is immediately recognized through profit or loss. The aggregate amounts in equity are released to income in the periods in which the hedgeditem impacts profit or loss.

When a hedging instrument matures or is sold, or when a hedge no longer meets the hedge accountingcriteria, the aggregategain or loss recorded in equity on that date is maintained in equity and is subsequently released to income when the planned transaction is ultimately recognized in profit or loss. Where the completion of the transaction is not planned, the aggregate profit or loss recorded in equity is immediatelyreleasedto the incomestatement. Derivativesincludedin fairvaluehedgingrelationships The applicationof fair value hedge accountingallows the hedged item to be remeasured to fair value up to the amount of the hedged risk, thereby limiting the impact of changes in fair value on profit or loss to the ineffectiveportionof the hedge. Fair value gains and losses on derivative instruments meeting fair value hedging criteria and designatedas such, are recognizedin profit or loss, togetherwith the fair value gains or losses on the hedgedasset or liabilitythat are attributableto the hedged risk. When the hedge no longer meets hedge accounting criteria, adjustments to the carrying amount of a hedged financial instrument for which the effective interest method is used, shall be amortized to profit or loss over theresidualperiodto maturity of thehedgeditem. Derivativesincludedin hedges of a netinvestment in a foreignoperation Hedges of a net investment in a foreign operation are recognized similarly to cash flow hedges. Gains and losses on the hedging instrument relating to the effective portion of the hedge are recognized in other comprehensiveincome. Gains and losses relating to the ineffective portion of the hedge are recognized immediately in profit orloss. The cumulative gain or loss on the hedging instrument relating to the effective portion of the hedge that has been accumulated in the foreign currency translation reserve is released to profit or loss on the disposalor partial disposal of the foreignoperation. Other short-term deposits 16.12 Other short-term deposits include money-market and debt instruments,as well as shares in short-termfunds. They are accounted for and measuredat fair value, with changes in fair value recognizedin profit or loss. The Eurazeo group applies volatility and sensitivity criteria suggested by the French Financial Market Authority (AMF) in its position of September 23, 2011,to differentiate these assets from “cash and cash equivalents”.Accordingly,and even though they are fully liquid, these investmentsare consideredcash allocated to investment transactions from an accounting standpoint, whereas they are actually invested cash balancesfor the Group froman operating standpoint.

Cash, cash equivalents 16.13 and bank overdrafts

“Cash and cash equivalents” include cash, on-demand bank deposits and other very short-term investments with initial maturities of three months or less.These itemspresent negligiblerisk of changein value. Bank overdrafts are recognized in the balance sheet as part of borrowingsunder currentliabilities.

EURAZEO / 2019 UNIVERSAL REGISTRATION DOCUMENT

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