L'Oréal - 2018 Registration Document

2018 Consolidated Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIALSTATEMENTS 4.6.

Accounting principles

NOTE 1

243

Derivatives and exposure to market risks NOTE 10

281

Main events of the period

NOTE 2

245

Equity – Earnings per share NOTE 11 286 Provisions for liabilities and charges – Contingent NOTE 12 liabilities andmaterial ongoing disputes 291 Off-balance sheet commitments NOTE 13 294 Transactions with related parties NOTE 14 295 Fees accruing to auditors and members of their NOTE 15 networks payable by the Group 296 Subsequent events NOTE 16 296

Operating items – Segment information

NOTE 3

248

Other operational income and expenses

NOTE 4

256

Number of employees, personnel costs and

NOTE 5

employee benefits

257

Income tax

4

NOTE 6

265

Intangible assets

NOTE 7

267

Investments in associates

NOTE 8

276

Financial assets and liabilities – Cost of debt

NOTE 9

277

Accounting principles

NOTE 1

The Group does not anticipate any significant effect on the tax charge from IFRIC 23 Uncertainty over Income Tax Treatments applicable at 1 January 2019. The Group is not affected by the new standards or amendments published and applicable at 1 January 2018 aside from IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. Change in accounting policy applied at 1 January 2016: IFRS 9 Financial Instruments applicable at 1 January 2018 This standard came into effect on 1 January 2018. The Group is primarily affected as follows: the change in the accounting treatment of investments and s their remeasurement through profit or loss or through equity not reclassifiable to profit or loss under the fair value option. The securities affected are mainly the investment in Sanofi but also strategic investments in venture capital funds, for which the “equity” option was chosen. This classification reflects the purpose behind these investments, which are not cash investments but rather investments designed to further L’Oréal's overall strategy;

The consolidated financial statements of L’Oréal and its subsidiaries (“the Group”) published for 2018, have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted in the European Union as of 31 December 2018. On 7 February 2019, the Board of Directors closed the consolidated financial statements at 31 December 2018. The financial statements will not become final until they have been approved by the Annual General Meeting of shareholders to be held on 18 April 2019. The Group did not early adopt any standards or interpretations not mandatorily applicable in 2018. The Group is affected by IFRS 16 “Leases” applicable at 1 January 2019. The Group elected to apply the simplified retrospective approach as well as, for most leases, the option of measuring the right-of-use by determining their carrying amount from the date of commencement of the lease. Note 13.1., which details operating lease commitments, sets the undiscounted amount of commitments at €2,582.1 million including circa €135 million outside the scope of IFRS 16. Over 95% of these commitments comprise property leases including country head offices, stores and distribution centres. The results of the initial simulations make it possible to estimate lease liabilities at around €2.2 billion.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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