Groupama // Universal Registration Document 2022

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FINANCIAL STATEMENTS Combined financial statements and notes

3.3.3 Embedded derivatives 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. 3.5 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: 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. Investments in related companies and joint ventures under the equity method 3.4

(d) Reserves for impairment On each period end date of its financial statements, the Group determines whether there is evidence of potential loss of value on property recorded at depreciated cost. If this is the case, the realisable value of the property is calculated as being the higher of two values: the sale price net of sale costs and the value in use. If the realisable value is less than the net book value, the Group recognises a loss of value in the income statement for the difference between the two values, and the net book value is discounted to reflect only the realisable value. When the value of the property increases at a later time, the reserve for impairment is written back through income. Derecognition Gains or losses from the disposal of property investments are recorded in the income statement on the date of realisation and represent the difference between the net sale price and the net book value of the asset. (e) 3.3 3.3.1 Derivatives General information A derivative is a financial instrument with the following three features: its value fluctuates on the basis of the change in a specific variable known as the “underlying asset”; ❯ it requires a zero or low initial net investment compared with other instruments that react in the same way to market changes; ❯ it is settled at a future date. ❯ 3.3.2 Hedging derivatives 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. 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.

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Universal Registration Document 2022 - GROUPAMA ASSURANCES MUTUELLES