BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT BPCE parent company financial statements

Other long-term investmentsare recognized at acquisition cost, less transaction costs. They are included in the balance sheet at the lower of historical cost or value in use. Value in use is determined for listed and non-listed securities on the basis of the amount the company would agree to pay to obtain the securities,given its investmentobjective, if it were to acquire them. An impairment charge is recognized for any unrealizedcapital losses. Unrealized capital gains are not recognized. Securities classified as other long-term investments may not be In order to harmonize accounting practices and ensure consistency with IFRS, ANC regulation No. 2014-07 reiterates the provisions of Opinion No. 2008-19 of December 8, 2008 related to the reclassification of securities out of the “trading securities” and “available-for-sale securities” categories. The reclassification out of the “Trading securities” category to the “available-for-salesecurities” and “debt securities held to maturity” categories is nowallowed inthe followingtwo cases: under exceptionalmarket circumstancesnecessitatinga change of ● strategy; where fixed-incomesecuritiesare no longer, after their acquisition, ● tradable on active markets, and provided that the companyhas the intentionand the capacityto hold them in the foreseeablefuture or until theyreachmaturity. Reclassificationsfrom the “available-for-salesecurities” category to the “debt securities held to maturity” category are effective as from the reclassification date in either of the following conditions: under exceptionalmarket circumstancesnecessitatinga change of ● strategy; where fixed-incomesecurities are no longer tradable on an active ● market. It should be noted that in its March 23, 2009 press release, the Conseil national de la comptabilité (CNC – French National AccountingBoard) specifiedthat “the possibilityof portfoliotransfers, in particular from available-for-sale securities portfolios to held-to-maturitysecurities portfolios as specified under Article 19 of CRBF regulationNo. 90-01 before it was updated by CRC regulation No. 2008-17, remains in force and is not repealed by ANC regulation No. 2014-07. As CRC regulation No. 2008-17, replaced by ANC regulation No. 2014-07, provided for additional possibilities of transfers between portfolios, these new transfer possibilities are added, as of the regulation’seffective date of July 1, 2008, to those previously defined”. As a consequence,reclassificationof the available-for-salesecurities portfolio as a held-to-maturityportfolio remains possible through a simple change of intention if, on the day of the transfer, all of the criteria for aheld-to-maturity portfolio are met. 2.3.4 Accounting rules for intangible assets and property, plant and equipmentare defined by ANCregulation No. 2014-03. Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are recorded at cost (purchase Intangible assets and property, plant and equipment transferred toany other accountingcategory. Reclassification of financial assets

price includingcosts). These assets are amortizedover their estimated useful lives. In particular, software is amortized over a maximum period of five years. Any additional amortization that may be applied to software using the acceleratedmethod permittedfor tax purposes is recorded, where applicable, under accelerated amortization. Goodwill is not amortized but is subject, as appropriate, to impairment tests. Leasehold rights are amortized on a straight-line basis over the residual term of the lease and, if necessary,are tested for impairment relative to marketvalue. Property, plant and equipment Property,plant and equipmentconsistsof tangibleassets that: (a) are held for use in the production or supply of goods and services, for rental to others or for administrativepurposes; and (b) are expected to be used during more than one fiscal year. Insofar as buildings are assets consistingof a number of components that have different uses at the outset, each componentis recognized separately at cost and a depreciation schedule specific to each component is used. The depreciable amount is the gross value less the residual value where the latter is material, lasting and can be measured reliably. Other property, plant and equipment is recorded at cost, production cost or revalued cost. The cost of assets denominated in foreign currencies is translated into euro at the exchange rate prevailing on the transaction date. These assets are depreciated or amortized in order to reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity, which generally corresponds tothe asset’s useful life. Where applicable,assetsmay be subject to impairment. Investment property corresponds to non-operating assets. 2.3.5 Debt securities are presented based on the nature of the underlying: retail certificatesof deposit, interbankand negotiabledebt securities, bonds and other debt securities,apart from subordinateddebt, which is recordedseparately ina specific line item under liabilities. Accrued interest on these instruments is disclosed separately as a related payable, as abalancingentry to the income statement entry. Issue premiums are recognized in their entire amount during the period or are spread out on a straight-linebasis over the life of the debt. Issue and redemption premiums are spread out on a straight-line basis over the life of the debt via a deferred expenses account. For structured debt, applying the principle of prudence, only the certain portion of remunerationor principal is recognized.Unrealized gains are not recorded. Unrealized losses are subject to a provision. 2.3.6 Subordinated debt comprises proceeds from issues of subordinated debt securities, both term and perpetual subordinateddebt, together with mutual guarantee deposits. In the event of liquidation of the debtor, the repayment of subordinateddebt is only possible after all other creditorshave been satisfied. Debt securities Subordinated debt

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Registration document 2017