Groupama // 2021 Universal Registration Document

7 FINANCIAL STATEMENTS Combined financial statements and notes

Non-current assets held for sale and discontinued activities A non-current asset (or a group intended to be sold) is considered to be held for sale if its book value will be mainly recovered through a sale transaction rather than through continued use. In order for this to be the case, the asset (or the group intended to be sold) must be available for immediate sale in its current state, and its sale must be highly probable (within the next 12 months). Non-current assets (or a group intended to be sold) classified as held for sale are valued at the lower value between the net book value and the fair value minus transfer costs. Where there is an unrealised capital loss, impairment is recognised in the income statement. In addition, non-current assets cease to be depreciated once they are reclassified as held-for-sale assets. A discontinued activity is considered to include any component from which the entity is separated or that is classified as held for sale and is in one of the following situations: it constitutes a major, separate line of business or geographical ❯ area; or it is part of a single, coordinated plan for divestment of a line of ❯ business or a major, separate geographical area; or it is a subsidiary acquired exclusively in order to be sold. ❯ The following are presented on a particular line of the income statement: net income after taxes from discontinued businesses until the ❯ transfer date; profit or loss after taxes resulting from the divestment and ❯ measurement at fair value less the costs of the sale of the assets and liabilities constituting the discontinued businesses. 3.5 Operating property 3.6.1 The Group has chosen to value directly-owned operating property using the cost method. This property is presented on a line separate from Investment property as assets. The recognition and valuation method is identical to the method described for investment property. Assets related to the right to use leased operating property are initially recognised at cost, comprising the initial amount of the lease liability, any prepayments made to the lessor net of any benefits received from the lessor, the initial direct costs incurred by the lessee in contracting the lease agreement and the estimated costs of dismantling or restoring the leased property. User rights are amortised using the straight-line method over the term of the lease agreement. The lease term equates to the non-cancellable period of each lease plus the periods covered by renewal options where it is reasonably certain these will be exercised, and termination options that the lessee is reasonably certain not to exercise. The estimation of this lease term takes into account the useful life of the significant improvements made and inseparable from the leased property. Tangible fixed assets 3.6

it is settled at a future date. ❯ All derivatives are recorded on the balance sheet at their fair value on the original date and during their subsequent revaluation. Changes in fair value are posted to income except for derivatives designated as cash flow hedges and net foreign investments. Hedging derivatives 3.3.2 The use of hedge accounting is subject to obligations regarding documentation and periodic demonstration of the efficacy of the hedge. Hedging derivatives are recorded at fair value with changes in the income statement, except for cash flow hedges and hedges of net foreign investments considered as effective, for which the changes in fair value are deferred into equity until the cash flows hedges are recognised in the income statement or when the foreign subsidiary is sold. For a fair value hedge of an available-for-sale asset, changes in fair value of the hedged item are recognised in income or loss so that they exactly offset the changes in the hedging derivative. The ineffective portion of hedges is recognised in the income statement. Embedded derivatives 3.3.3 Embedded derivatives are components of compound financial instruments that meet the definition of a derivative product. They are separate from the host contract and recognised as derivatives when the following three conditions are met: the economic features and the risks of the embedded derivative ❯ are not closely linked to the economic features and risks of the host contract; a separate instrument containing the same conditions as the ❯ embedded derivative meets the definition of a derivative; the hybrid instrument is not valued at fair value with recognition ❯ of the changes in the fair value through the income statement. When one of these conditions is not met, there is no separation.

3.4

Investments in related companies and joint ventures under the equity method

Investments in associates and joint ventures are consolidated using the equity method. At the time of acquisition, the investment is recorded at the acquisition cost and its net book value is subsequently raised or reduced to take into account particularly the income or losses as well as the change in fair value of financial assets in proportion to the investor’s stake.

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Universal Registration Document 2021 - GROUPAMA ASSURANCES MUTUELLES