GROUPAMA / 2018 Registration document

7 FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

co-insurance and co-reinsurance operations and pooled ❯ management; broker andintermediationtransactions; ❯ contractual sharing ofpremium incomeof Group policies; ❯ reserves for the write-down of equity interests funded by the ❯ Company holding the securities and, if applicable, reserves for

contingencies and charges recognised because of losses sufferedby exclusively controlled companies; transactionson forward financialinstruments; ❯ capital gains and losses from internal transfer of insurance ❯ investments; intra-groupdividends. ❯

ACCOUNTING PRINCIPLES AND VALUATION METHODS USED 3

Intangible assets

control exercised over that company are recorded in the Group’s shareholders’ equity. Goodwill is allocated to the cash-generating units (CGU) of the acquiring company and/or the acquired company which are expected to take advantage of the business combination. A CGU is defined as the smallest group of assets that produces cash flows independently of other assets or groups of assets. With management units, management tools, geographic regions or major business lines, a CGU is created by combiningentities of the same level. Goodwill resulting from the acquisition of a foreign entity outside the eurozone is recorded in the local currency of the acquired entity and translated to euros at the closing rate. Subsequent foreign exchange fluctuations are posted to foreign exchange translation reserves. For entities acquired during the fiscal year, the Group has twelve months from the acquisition date to assign a final value to the acquiredassets and liabilities. In a business combination achieved in stages, the previously acquired stake in control is revalued at fair value and the resulting adjustment recorded through income. Residual goodwill is not amortised,but is subject to an impairment test at least once a year on the same date. The Group reviews the goodwill’s book value in case of an unfavourable event occurring between two annual tests. Impairment is recorded when the recoverable amount of the cash generating unit to which the goodwill is allocated is less than its net book value. Recoverable value is defined as fair value less cost of sales, or value in use, whichever is higher. Fair value, less sales costs, is computedas follows, in accordance

3.1

Goodwill 3.1.1 Goodwill on first-time consolidation corresponds to the difference between the acquisition cost of securities of consolidated companies and the Group’s share in restated shareholders’equity as at the acquisition date. When not assigned to identifiable items in the balance sheet, goodwill is recorded in the balance sheet in a special assetitem as an intangibleasset. Residual goodwill results from the price paid above the Group’s share in the fair value of the identifiable assets and liabilities of the acquired company as at the acquisition date, revalued for the portion of any intangible assets identified in the acquisition accounting according to revised IFRS 3 (fair value of assets and liabilities acquired). The price paid is the best possible estimate of the price supplements (earn-outs, payment deferrals, etc.). The residual balance therefore correspondsto the valuation of the share of income expected on future production. This expected performance, which is reflected in the value of future production, results from the combination of intangible items that are not directly measurable.Such assets are assessedbased on multiples or forecast future income that served as the valuation base for the price paid on acquisition and are used to establish the value of goodwill statedabove. For combinations prior to 1 January 2010, adjustments of future earn-outs are accountedfor as an adjustmentcost, and in income for combinationsmade starting from1 January 2010. For business combinationscompletedon or after 1 January 2010, the costs directly attributable to the acquisition are recorded in expenses whenthey are incurred. For each acquisition, a decision is made whether to value non-controlling interests at fair value or for their share of the identifiable net assetsof the acquiredcompany. The subsequent acquisition of non-controlling interests does not result in the creation ofadditionalgoodwill. Operations for the acquisition and disposal of non-controlling interests in a controlled company that have no impact on the

with therecommendations of IAS 36 (§ 25 to 27): the salesprice shown in afinal sales agreement; ❯

the market value minus sellingcosts if there isan active market; ❯ otherwise, the best possible information, with reference to ❯ comparable transactions. Value in use corresponds to the current expected value of future cash flows to begenerated bythe cash generationunit.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES