NATIXIS_REGISTRATION_DOCUMENT_2017

5 FINANCIAL DATA

Consolidated financial statements and notes

Employee benefits 5.15 In accordance with IAS 19, employee benefits are classified in one of four categories: “short-term benefits” , including salaries, social security a contributions,annual leave, employee profit-sharing,incentive plans, top-upcontributionsand bonusespayablefor the period; “severance payments” , comprising employee benefits a granted in return for termination of a staff member’s employmentbefore the normal retirement age, resulting from a decision by the entity, or a decision by the employee to accept a severance package in exchange for terminatingtheir employment; “post-employment benefits” , such as pensions, other a supplementary retirement benefits applicable to the banking industry, end-of-career awards and other contractual benefits payableto retirees; “other long-termemployeebenefits” , including long-service a awards and deferred compensation payable in cash under EmployeeRetentionand PerformanceRecognitionPlans. Short-termemployee benefits are recognized as an expense in the period in which the employee provides the service in exchangefor said benefits. A provision is accrued for termination benefits when the employer is demonstrablycommittedto providingsuch benefits, or when the employer recognizes the costs of restructuring providingfor the paymentof such benefits. In accordancewith the principlesof recognitionset out in IAS 19, Natixis has identified the following types of post-employment benefit: defined contribution plans, under which an entity has no a obligationto pay a specifiedbenefitamount; defined benefit plans, under which Natixis has a legal or a constructiveobligationto pay a specifiedbenefitamount. Contributionspaid under definedcontributionplans are expensed in the period in which the employee rendered the service in exchangefor said contributions. A provision is set aside for defined benefit plans based on an actuarialassessmentof the benefitobligationusing the projected unit credit method. This method draws on demographic and financialassumptionsreviewedannually(specificallythe discount rate based on the AA Corporate bond rate curve). The value of plan assets is deductedfrom the actuarial debt. This valuation is carriedout on a regularbasis by independentactuaries. Insurance contracts taken up with a related party to Natixis and intended to finance all or part of Natixis’ defined-benefit plan commitmentsare recordedin the asset side of the balancesheet as “Accrualsand other assets”. Revaluationadjustmentsfor actuarial debt related to changes in actuarial assumptions and experience adjustments (impact of differences between actuarial assumptions and actual experience) are booked under items not recycled to comprehensive income among “Gains and losses recognized directlyin equity”.

The annual payroll costs recognizedin respect of defined-benefit plans consistof: the costs of services rendered, representingrights vested by a beneficiariesover the period; past service costs, arising from possible plan changes or a curtailments as well as the effects of possible plan settlements; the net interest cost reflecting the impact of unwinding the a discounton the net obligation. Other long-term benefits are valued using the same actuarial method as that applied to post-employment benefits under defined benefit plans, except that liability revaluation items are recognizeddirectlyas an expense. The estimated amount of the expense related to cash-settled variable compensation, subject to the employee’s continued service in accordance with the Employee Retention and Performance Recognition plans, is recognized over the vesting period. Distinction between debt and equity 5.16 In accordance with IAS 32, issued financial instruments are classified as debt or equity depending on whether or not they incorporatea contractualobligationto delivercash to the holder. Deeply subordinated notes and preference shares are a classifiedin equity in light of the 2009 renegotiationof a clause making the payment of interest non-optional in the event of positive consolidated income and which has since become discretionary; The change over the fiscal year is presented in Note 6.17 “Changes in subordinated debt over the period”, and in Note 12“Capitalmanagement”. However,if an instrumentis consideredequity: a its compensation is treated as a dividend and therefore j affectsequity,as do the taxes relatedto this compensation, if issued in foreign currencies,it is fixed at its historicalvalue j resulting from converting it to euros on the date it was initiallyclassifiedunder equity; The share of third party investorsin the net assetsof dedicated a mutual funds included in Natixis’ consolidation scope comprises a financial liability recorded on the balance sheet under “Financial liabilities at fair value through profit or loss”. The share of third party investors in the profits of the mutual funds is recorded in “Net gains or losses on financial instruments at fair value through profit or loss” in the consolidatedincomestatement; The units held by third party investors in dated funds, which a are fully consolidated by Natixis, entitling the unit-holders to the repayment of a share of the fund’s net assets upon its liquidation, are classified in liabilities on the consolidated balance sheet under “Accrualsand other liabilities”.The share of third party investors in the fund’s profits is recorded under “Interest and similar expenses” on the consolidated income statement.

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Natixis Registration Document 2017