GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Investment property 3.2.2 The Group has chosen to recognise investmentproperty using the cost method. It isvalued using the component approach. Initial recognition (a) Lands and properties appear on the balance sheet at their acquisition cost. The value of the property includes significant transaction costs directly attributable to the transaction, except in the specific case of investment property representing unit-linked commitmentsthat may be posted, by discretion, to income at fair value. When a real estate asset includes a portion held to produce rental income and another part used for production or administrative purposes, the asset is treated as investment property only if the latter is immaterial. At the time of the initial recognition, property is subdivided by componentsand recorded separately. The impairmentperiods applied by the Group for each component depend on the nature of the property under considerationand are as follows: building shell(impairmentperiodbetween30 and 120 years); ● wind- and water-tight facilities (impairment period between 30 ● and 35 years); heavy equipment (impairment period between20 and 25 years); ● secondary equipment, fixtures and fittings (impairment period ● between10 and 15 years); maintenance (impairmentperiod): 5 years). ● Valuation (b) The cost of the property is the amount at which the property has been recorded at the time of initial recognition, minus cumulative amortisation and corrected for any reserves for impairment. Acquisition cost of the property is the outcome either of outright acquisition,or acquisitionof a company that owns the property. In the latter case, the cost of the property is equal to its fair value on the dateof acquisition ofthe owner company. Each component is identifiedby its duration and depreciation rate. The residual value of the shell component cannot be valued with sufficient reliability, particularly given the uncertainties about the holding horizon; thus, this component is amortisedon the basis of the acquisition cost. Rental income is recognisedusing the straight-linemethodover the term of the lease agreement. The realisable value of investment properties is determinedon the basis of the five-year independent appraisal conducted by an expert approved by domestic regulators (Autorité de Contrôle Prudentiel et de Résolution, in France). During each five-year period, the real estate is subject to an annual appraisal certified by the expert.

For securitiesconsideredstrategicsecurities,held by the Group for the long term, characterisedby the Group’s representationon their governance bodies or significant, lasting contractual relations or a significantstake in the capital (in absoluteor relative value), without significant influence being exercised, this reference period is 48 months. Where such objective evidence of impairmentis observed then the impairment amount corresponding to the difference between the acquisitioncost and the fair value for that fiscal year, less any loss in value previously recognised through income, is automatically bookedto income. These criteria may undergo changes over time, by applying good judgement,in order to take account of changes in the environment in which they were postulated.This should allow for the handlingof abnormalcircumstances(such as a sharp and abnormaldrop in net asset values on thebalance sheet date). In addition, in all other cases in which these thresholds are not reached, the Group identifies securities in its portfolio constantly presenting a significant unrealised capital loss over the last six months based on the volatility of the financial markets.For the thus separatedsecuritiesthe Group then carries out a review, based on its judgement,security by security,and decideswhetherto post an impairment through income or not. In the event that the financial managementof a line of securities is done in a comprehensivemanner at the Group level, even when these securities are held by several entities, the determination of whether objective evidence of impairment exists can be done based on the Group’scost price. The impairment recorded on a group’s equity instrument will only be reversedto income whenthe asset in question issold. INVESTMENTS VALUED AT AMORTISED COST For investments valued at amortised cost, the amount of the reserve is equal to the differencebetweenthe net book value of the assets and the discountedvalue of the future cash flows expected, determinedon the basis of the original effective interest rate of the financial instrument,and correctedfor any reserves.The amount of the loss is included in the net income or loss for the fiscal year.The reservemay be writtenback throughincome. Derecognition (g) Financialassets are derecognisedwhen the contractualrisks expire or the Grouptransfersthe financial asset. Gains or losses on the sale of financial investmentsare determined using the FIFO method, with the exceptionof the securitiescarried by mutualfunds. The methodused for mutualfunds is the weighted average cost method. The gains and losses from disposal are recorded on the income statement on the date of realisation and represent the difference betweenthe sale price and thenet bookvalue ofthe asset.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES