GROUPAMA / 2018 Registration document

7 FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

IT services provided by G2S to group entities are invoiced based on the following principles: G2S, as an EIG, invoices all of its costs, whether they be its own ❯ operating costs, costs that are charged by other group entities or costs of technical resources acquired on behalf of third parties; all costs are allocated according to a defined list of services ❯ (operating services, project services) that cover all areas of operation of the EIG. Invoiced amounts are determined based on the following conditions: charged directlywhen possible, ■ otherwise, according to allocation keys that can be modified ■ each fiscal year if necessary, the principle of which is determined by G2S for each cost category based on significantcriteria. Special governance was put into place to ensure the relevance and stability of these invoicing keys. These are reviewed regularly by two different advisory bodies, depending on the nature of the services. Operating services are reviewed by the “Keys Committee” which brings together IT Managers from member companies of the EIG and the various services of the venture in charge of developingand implementing invoicingkeys. For projects, invoicing keys are reviewed by “Business Domain Committees”. Any proposed amendment issued by one of these committees is subject to approval by the Board of Directors of the EIG. Furthermore, a review of the invoicing keys is carried out with the managementcontrollers of the EIG for validation of the distribution of the final invoice, and with the Tax Department to ensure compliancewith the VAT regulations. The auditors also ensure the expenses of the EIG undergo correct analytical allocationfor billing. Based on the provisionabove, €318.7 millionexcludingtaxes were billed as at 31 December 2018, €94.6 million of which to the regional mutuals. 2.5 The amount of premium income generated by the other agreements entered into between the subsidiaries of Groupama Assurances Mutuelles and the regional mutuals in the areas of assistance, legal protection, employee savings and asset management proved immaterial for Groupama Assurances Mutuelles. 3 Groupama Assurances Mutuelles participates in the financing of major community programmesby paying subsidies to the regional mutuals designed as incentives for them to implement an overall policy in the generalinterest. This system results from the Group’s decentralised structure and from the role played in it by Groupama Assurances Mutuelles, whichmanagesthe Group andreinsuresthe regional mutuals. Other agreements Financing of large programmes

The regional mutuals underwritea certain number of commitments aimed at achieving the banking business growth plan in a controlledmanner: mobilising the necessary workforce and seeing to it that they are trained, applying the quality charter, deployingan internal control system as well as a system to fight money laundering, etc. This agreement, which has an initial life of five years, may be renewed by1-year terms. An annual marketing and management agreement (b) This agreement supplementsthe general agreement on the points needing periodic updating: annual production targets of the regional mutual,compensation, quality objectives, etc. The regional mutuals are compensated from the net banking income generated by the products held by customers less the payment processing costs and a percentage of the distribution costs related to thebank’s remote sales centre. The net banking income earned by Orange Bank under its agreements amounted to €41.2 million in 2018. The fees earned by the regional mutuals amounted to€6.67 million. 2.4 The purpose of Groupama Supports & Services is to facilitate the economicactivities of its members, improve or increase the results of these activities by sharing and optimising IT, logistics and purchasingactivities. To this effect, therole of G2S isto: undertakeany preliminarystudies and perform, at the request of ❯ its members, all the IT work necessary for the exercise of their business; ensure the operation and maintenance of IT systems on behalf ❯ of its members; lease andmanage buildings occupied by at least one member; ❯ provide its memberswith all generalservices; ❯ assist its members with their purchasing strategy and ❯ relationshipswith Group suppliers. Most services provided by the EIG are exempt from VAT, except for services corresponding to the supplyof goods. The members of the EIG, which are not charged VAT, are mainly the regional mutuals, Groupama Assurances Mutuelles, and the French insurance subsidiaries.Non-membercustomers,which are charged VAT, are mainly group financial management companies and international subsidiaries and, where appropriate, entities outside the Group affiliated through partnership agreements with Groupama. GroupamaSupportsandServices (G2S)

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES