GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

This is particularly the case when, because of completed transactions that are posted in either the individual company statements or only in the consolidated financial statements as restatementsand eliminations of inter-companyincome or losses, differences will appear in future between the tax income and the accounting income of the Company, or between the tax value and the book value of an asset or liability, for example when transactions performed during a fiscal year are taxable only in the following fiscal year. These differences are classified as timing differences. All deferredtax liabilitiesmust be recognised;however,deferredtax assets are only recognisedif it is likely that taxable income (against which these deductible timing differences can be charged) will be available. All deferred tax liabilities are recognised. Deferred tax assets are recognised when their recovery is considered as “more probable than improbable”, i.e. , if it is likely that sufficient taxable income will be available in the future to offset the deductibletiming differences. In general, a 3-year horizon is consideredto be a reasonableperiod to assess whether the entity can recover the capitalised deferred tax. However,an impairmentcharge is bookedagainst the deferred tax assets if their recoverability appears doubtful. Deferred tax assets and liabilities are computedon the basis of tax rates (and tax regulations)which have been adoptedat the balance sheet date. Deferred tax assets and liabilities are not discounted to present value. Segment reporting 3.15 A business segment is a component of an entity whose operating profits are regularly examined by the Group’s principal operational decision-makersin order to assess the segment’sperformanceand decide on the resources to allocate to it. The Group is organised into three operational segments: insurance in France, international insurance, and banking and financial businesses. The banking and financial activity segment, which is also the subject of specific notes (Notes 9.1, 9.2, and 34.2), has been grouped with the insurance segment in France in order to life and health insurance: The life and health insurance business ❯ covers the traditional life insurance business as well as personal injury (largely health risks, disability and long-term care); property and casualty insurance: Property and casualty ❯ insurance covers, by default, all the Group’s other insurance businesses; create an overall operational segment entitled France. The various activities of each segment are as follows:

Outward reinsurance (b) Outward reinsuranceis recognisedin accordancewith the terms of the various treatiesand accordingto the same rules as describedin Note 3.12.1 on insurance policies and financial contracts. A liabilities deposit is recorded for the amount of the corresponding asset received from outward reinsurers and retrocessionaires. Securities from reinsurers (outward reinsurers and retrocessionaires) remitted as collateral are recorded in the statement of commitments given and received. IFRS 16 lease liabilities 3.13 On the contract’s effective date, the debt representing the obligation to pay rent is recognised at an amount equal to the discounted value of the rent over the term of the leasceontract. The amounts included in respect of rents in evaluating this initial liability are: fixed rent; ❯ variable rent, if based on a rate or index, using the rate or index ❯ value on the contract’s effective date; payments to be made by the lessee under a residual value ❯ guarantee; termination or non-renewal penalties; and ❯ the cost of exercisinga purchaseoption if it is reasonablycertain ❯ to be exercised. Rents are discountedat the interest rate implicit in the lease if such is easily determined, otherwise at the lessee’s marginal borrowing rate. Rental debts are subsequentlyvalued at amortised cost using the effective interest rate method. They are re-assessedin the following situations: change to the lease term; ❯ change to the view that the exercisingof a purchaseoption is, or ❯ is not, reasonably certain; fresh estimation of residual value guarantees; ❯ revision to rates or indices on which rents are basedwhen a rent ❯ adjustment takes place. Taxes 3.14 Corporate income tax includesall current and deferredtaxes.When a tax is payable or receivable and payment is not subject to the execution of future transactions, such tax is classified as current, even if the payment is spread over several fiscal years. It appears as an asset or liability on the balance sheet as applicable. Operations carried out by the Group may have positive or negative tax consequences other than those taken into consideration for calculating the payable tax. The result is tax assets or liabilities classified as deferred.

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES