GROUPAMA / 2018 Registration document

7 FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

The Group has chosen to postpone the application of IFRS 9 on financial instruments pursuant to the amendment to IFRS 4 “Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts”, which, in particular, allows groups whose primary business is insurance to postpone the applicationof IFRS 9 at the latest until annual periods beginning on or after 1 January 2021. The Group meets the eligibility criterion defined in the amendment to postponethe applicationof IFRS 9 with a ratio of predominance of insurancebusiness,correspondingto the percentageof the total consolidated accounting amount of liabilities related to insurance business in relation to the total consolidatedcarrying amount of all liabilities, greater than 90% at 31 December 2015. The consolidatedtotal carrying amount of liabilities related to insurance consists of the carrying amount of liabilities arising from contracts within the scope of IFRS 4 and the carrying amount of liabilities related to insurancebut not arising from contractswithin the scope of IFRS 4. These liabilities related to insurancebut not arising from contracts within the scope of IFRS 4, with a book value of €4,099 million at 31 December 2015, mainly consist of debt instruments eligible to cover regulatory capital requirements and derivatives used to mitigate risks arising from insurance contracts and the assets backing them. The rules for application of IFRS 9 and its potential impact on the Group’s combined financialstatements are currentlyunder review. The Group has chosen to opt for the temporary exemption from the rule on uniformity of accounting policies ordinarily required by IAS 28 and provided for in paragraph 20O (b) of the amendment to IFRS 4 “Applying IFRS 9 – Financial Instruments with IFRS 4 – Insurance Contracts”. This amendment allows insurance groups that have elected to postpone the application of IFRS 9 and that account for related companies using the equity method to retain the financial statements prepared by these related companies for the purposesof preparingtheir consolidated financial statements. IFRS 16 on leases, adopted in October 2017 by the European Union with an applicationdate of 1 January 2019, was not applied early. An analysis is currently underway to assess its potential impact on the Group’s consolidated financial statements. IFRS 17 on insurance contracts, published in May 2017 by the IASB and intended to replace the current IFRS 4, has not yet been adopted by the European Union. Work to identify problems in implementing this standard is currently in progress. This work is performed in conjunctionwith the IFRS 9 impact assessmentwork and takes into account the IASB’s interim decision of November 2018 to postpone the effective date of both IFRS 17 and IFRS 9 by one yearuntil 1 January 2022. Decisions taken by the Group are based particularly on the summary of the work of January 2007 undertaken by the CNC working groups on the specifics of implementing IFRS by insurance organisations. Subsidiaries, joint ventures, and related companies of the consolidation scope are consolidated within the scope in accordancewith the provisionsof IFRS 10,IFRS 11, andIAS 28.

The Group adopted IFRS for the first time for the preparationof the 2005 financial statements. All amounts on the consolidated balance sheet, the consolidated income statement, the statement of net income and gains (losses) recognised directly in shareholders’ equity, the statement of changes in shareholders’equity, the cash flow statement, and the notes are in millions of euros unless otherwise indicated. These amounts arerounded. Rounding differencesmay exist. In order to prepare the Group’s financial statements in accordance with IFRS, Groupama’s management must choose assumptions and make estimates that have an impact on the amount of assets, liabilities, income, and expenses as well as on the drafting of the related notes. These estimatesand assumptionsare reviewedon a regular basis. They are based on past experience and other factors, including future events which can be reasonably expected to occur under the circumstances. Final future results of operations for which estimates were necessary may prove to be different and may result in an adjustment tothe financial statements. The judgementsmade by managementpursuant to the application of IFRS primarilyconcern: initial valuation and impairment tests performed on intangible ❯ assets, particularly goodwill (paragraphs 3.1.1 and 3.1.2); evaluationof technical reserves (paragraph 3.12); ❯ estimation of certain fair values on unlisted assets or real estate ❯ assets (paragraphs 3.2.1and 3.2.2); estimation of certain fair values of illiquid listed assets ❯ (paragraphs 3.2.1); recognition of profit-sharing assets (paragraphs 3.12.2.b) and ❯ deferred taxassets (paragraph 3.13); calculation of reserves for contingencies and charges and ❯ particularly valuation ofemployee benefits(paragraph 3.10). Scope andmethodsof consolidation 2.3.1 A company is included in the consolidation scope once its consolidation,or that of the sub-groupwhich it heads, whether on a stand-alone basis or with other consolidated businesses, is material in relation to the consolidated accounts of all companies included in the scopeof consolidation. In accordance with the provisions of IAS 10 and IAS 28, mutual funds and property investment companies are consolidated either through full consolidationor through the equity method. Control is examined for each mutual fund on a case-by-case basis. Non-controlling interests pertaining to mutual funds subject to full consolidationare disclosed separately as a special financial liability item in the IFRS balancesheet. Underlying financial assets appear in the Group’s insurance activity investments. Consolidation principles 2.3

192

REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES