GROUPAMA / 2018 Registration document

7 FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

As of 7 June 2018, in accordancewith the provisions of Article 52 of the Sapin law, an additional transaction corresponding to the cancellation and redemption of 99,484 shares held by current employees, former employees, and exclusive agents of Groupama SA resulted in ashare capitalof 411,824,587shares. The conversion resulted in the conversionof Groupama SAshares into mutual certificates of Groupama Assurances Mutuelles. The value of the mutual certificates issued as part of the conversion constitutesthe initial capital of GroupamaAssurancesMutuelles of €3,618 millionand consists of 411,824,587mutual certificateswith a par value of €8.785, wholly owned by the 13 Groupamamember

mutuals. Mutual certificates give the same rights to their holders. This conversion resulted in the recognition in the Group’s shareholders’equity of a differencecorrespondingto the difference betweenthe consolidatedreserves increasedby the Group’s share capital and the amount ofthe initial capital. According to the Group’s analysis, mutual certificates are essentially analysed as equity instruments in accordance with IAS 32. The conversion of Groupama SA’s shares into mutual certificates had no impact on the classification of these instruments.

ACCOUNTINGTREATMENTOF SUBORDINATEDBONDSCLASSIFIEDIN EQUITYINSTRUMENTS The debt classified asequity consistsof a fixed-rateperpetual subordinated bond (TSDI) detailedas follows:

Nominal (in millions of euros)

Next issuer redemption option

Issuer

Issue date

Coupon Coupon rate Step-up clause

Groupama Assurances Mutuelles

1,100

28.05.2014

28.05.2024

Fixed

6.375%

yes

This loan hasthe following special characteristics: unlimitedterm; ❯ the ability to defer or cancel any interest payment to unitholders ❯ in a discretionary manner; an interest “step-up” clause that kicks in following the tenth year ❯ of the bond.

Taking into account its characteristicsand pursuant to IAS 32 § 16 and 17, this bond is considered an equity instrument and not a financial liability. It is therefore recognised under shareholders’ equity. Interest costs net of tax are charged directly against shareholders’ equity in accordance with IAS 32 § 35 (rather than as an expense in the income statement).

Reserves related to changes in fair value recorded in group's equity Note 21.3 The reconciliationbetweenunrealisedcapital gains losses on available-for-saleinvestmentassets and the correspondingreserve in group’s equity maybe broken down asfollows:

31.12.2018

31.12.2017

(in millions of euros)

Gross unrealised capital gains (losses) on available-for-sale assets

5,462

7,113

Shadow accounting

(4,212)

(5,487)

Cashflowhedgeandotherchanges

(40)

(40)

Deferredtaxes

(196)

(322)

Shareof non-controlling interests

(3)

(5)

REVALUATION RESERVE – GROUP SHARE

1,010

1,257

The deferred tax amount shown in the table above correspondsto the application of first, a short-term and long-term tax rate on the unrealised gains on financial instruments classified as “available-for-sale assets”; and second, a short-term tax rate on deferred profit sharing (“shadowaccounting”).Under the new rules for long-term capital gains (losses) applicable as at 1 January 2006, the unrealised capital gains on “strategic” equity interests are exempt for the calculationof the deferred tax up to a maximum percentageof costsand expenses(i.e., an effective rate of3.84%).

“Cash flow hedge and other changes” for -€40 million includes a cash flow hedge revaluation reserve of -€22 million and a net investment hedge revaluation reserve of -€18 million. These reserves correspond to the effective share of hedging operations implementedby the Group in the past and since terminated. They are recycled in income when the hedged items are sold in accordancewith the provisions of IAS 39.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES