GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

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. IT servicesprovidedby G2S to group entitiesare invoicedbasedon the followingprinciples: G2S, as an EIG, invoicesall of its costs, whetherthey be its own ● operatingcosts,costs that are chargedby other groupentitiesor 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 operationof the EIG. Invoicedamountsare determinedbased on the followingconditions: charged directly whenpossible, ● 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 significant criteria. Special governancewas put into place to ensure the relevanceand stability ofthese invoicing keys.Theseare reviewedregularlyby two differentadvisory bodies, depending on the nature ofthe services. Operating services are reviewed by the “Keys Committee” which brings together IT Managers from member companies of the inter-company venture and the various services of the inter-company venture in charge of developing and implementing invoicing keys. 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 Directorsof the inter-company venture. Furthermore,a review of the invoicing keys is carried out with the management controllers of the EIG for validation of the distribution of the final invoice, and with the Tax Department to ensurecompliance with theVAT regulations. The auditors also ensure the expenses of the EIG undergo correct analytical allocation for billing. Based on the measuresdescribedabove, €403.1 millionexcluding taxes was billed as of 31 December2019, including €111.4 million 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. Other agreements

Orange Bank 2.3 The relationships between Orange Bank, which was 35%-held indirectly by Groupama Assurances Mutuelles in 2019, and the regionalmutualsare governedby identicalbilateralagreementsthat break downinto two components: A general marketing agreement (a) The general agreement lays down the respective roles of the bank and the regionalmutual. It is licencedby OrangeBank to market its offeringunder an intermediarymandatedefininga limitednumberof banking operations that the mutual is permitted to perform. The operations concerned are preparation of or support for banking transactions,given that OrangeBank is the sole party authorisedto accept requests forsubscriptionof bankingand financial products. The regional mutuals underwritea certain number of commitments aimedat achievingthe bankingbusinessgrowthplan in a controlled manner: mobilising the necessary workforce and seeing to it that they are trained, applying the quality charter, deploying an internal control system as well as a systemto fight moneylaundering, etc. This agreement, which has an initial life of five years, may be renewed by1-year terms. A periodic 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 relatedto the bank’sremote sales centre. The net banking income earned by Orange Bank under its agreementsamountedto €49.1 millionin 2019. The fees earnedby the regionalmutuals amounted to €12.8 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, the roleof G2S is to: undertakeany preliminarystudies and perform, at the request of ● its members, all the IT work necessary for the exercise of their business; ensure the operationand maintenanceof IT systemson behalf of ● its members; lease andmanagebuildingsoccupiedby at least one member; ● provide its members withall general services; ● assist its members with their purchasing strategy and ● relationships with Group suppliers. Most servicesprovidedby the EIG are exemptfromVAT, except for servicescorresponding to the supply of goods. Groupama Supports and Services (G2S)

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES