Eurazeo / 2019 Universal Registration Document

Financial Statements Company financial statements

Accounting treatmentof co-investmentplans In line with standard investment fund practice, Eurazeo has created a co-investment mechanism for the members of the Executive Board and the teamsinvolved in theinvestments (“the beneficiaries”). For investments performed after January 1, 2012, this mechanism is structured around a variable capital company grouping together Eurazeo (95% of the share capital) and private individual investors (holding the remaining 5% of the share capital). This company participates in each investment performed by Eurazeo in the amount of 10% (12% from June 2017: CarryCo Capital 2, CarryCo Patrimoine 2 and CarryCoBrands). For investments performed between January 1, 2012 and December 31, 2013 and any additions, the entity is called CarryCo Croissance. For investments performed since January 1, 2014, there are different entities for each division (CarryCo Capital 1, CarryCo Croissance 2, CarryCo Patrimoine, CarryCo Capital 2, CarryCo Brands and CarryCo Patrimoine 2). Within each CarryCo, an agreementwas signed between Eurazeo and the private individual investors stipulating that the private individual investors can only recover their investment after Eurazeo has recovered its investmentin full and that private individual investorswill only receive the full capital gain earned by the CarryCo after Eurazeo has received an overall minimum annual return of 6% (the “hurdle”). These thresholds and capital gains are calculated, as appropriate, either (i) by aggregating the investments performed under the relevant program, or (ii) by allocating them 50% to the observed performanceof each individual investmentand 50% to all investments of the relevantperiod. Under the relevant investment programs, the beneficiaries acquire their rights either immediately or progressively, provided they are still in office at the scheduled anniversary dates. The right to any capital gains will be settled by Eurazeo at a given date or in the event of a change incontrol of Eurazeo. The implementationof these programs gave rise to the commitments detailed in Note 17. Stock options and free share plans In accordance with ANC Regulation no. 2014-03 on the accounting treatment of stock option plans and employee free share plans, treasury shares held and previously classified in account 502 were reclassifiedat net carryingamount in: account 502-1 “Shares earmarked for grant to employees and • allocated to specific plans”for plans “inthe money”; account 502-2 “Sharesavailablefor grant to employees”. • The shares held in account 502-1 are no longer impaired to reflect their market value, but a liability provision is recognized over the vesting period if the strike price of stock options falls below the cost price or the total costprice for free share grants. At the end of the fiscal year, the shares held in account 502-2 are impaired if their costprice exceedstheir marketvalue. Post-employmentbenefits In accordance with the law and standard practice in France, Eurazeo participates in pension schemes as well as plans granting other benefits to employees. These obligations are partially covered by external financing which seeks to progressively constitute funds through the payment of premiums. These premiums are expensed in the year incurred in “Otherpurchasesand expenses”

Obligations are valued using the retrospectivemethod based on final salary estimates and taking account of seniority, life expectancy, attrition rates per employee category and economic assumptions such as theinflationrate and the discountrate. A provision is recognized,where necessary,to cover obligationsnet of plan assets. Supplementary definedbenefit pension plan Eurazeo recognizes in full the obligation represented by the supplementary pension plan reserved for certain Executive Board members, net of funding. Accordingly, actuarial gains and losses arising from changes in assumptions and experience adjustments are recognized immediately and in full in profit or loss (“Other purchases and expenses”). Foreign currency transactions Receivablesand payables as well as securitiesand ownership interests denominatedin foreign currenciesare reported in the accounts at the exchangerate applicableon the date of therelevanttransaction. At the end of the fiscal year, they are translated into euros at the closing exchange rate. Differences resulting from the application of updated exchange rates to liabilities and receivables are reported in the balance sheet under “Unrealized foreign exchange gains and losses”. A contingency provision is set aside for any unrealized losses not offset by gains. Forward financialinstrumentsand hedgingderivatives ANC Regulation2015-05notably providesthat: hedging gains and losses are presented in the Income Statement • in the same section as the hedged items, in accordance with the matching principle; option premiumsand premiums/discountsmay be spreadover the • hedging period in the income statement or recognized in profit or loss at the sametime as the hedged transaction; the overall foreign exchange position is calculated individually for • each currency, including items expiring in the same fiscal year and excludinghedging transactionsand hedgeditems; the fair value of open isolated positions is reflected in the balance • sheet and a provisionfor foreign exchangerisk is recognizedwhen the fair valueis negative. The applicationof this regulationdid not have a material impact on the Eurazeo annual financial statements for the year ended December 31, 2019. Eurazeo uses currency swaps entered into with leading banks in order to grant current account loans and advances in foreign currencies to Group companies. The gains and losses on currency swaps offset the gains and losses arising on the translation at year-end exchange rates of foreign currency-denominatedcurrent account loans and advances.Currency swap premiums/discounts are recognized in net financial expenses over theterm of the hedge. Accrued dividends Dividends voted by the Annual Shareholders' Meetings of companies in which Eurazeo holds an interest and which are not yet paid at the end of the fiscal year are recognized at the date on which they are approvedby the respective Shareholders' Meetings.

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2019 UNIVERSAL REGISTRATION DOCUMENT