EURAZEO_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements

legal terms and conditions of investments (subordination, commitments, etc.). On the sale of financial assets or investments in associates, the first-in, first-out (FIFO) method is applied to assets of the same company. Impairment of financial assets The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are measured at amortized cost or at fair value through other comprehensive income. No impairment is recognized on investments in equity instruments. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since the initial recognition of the financial instrument. The Group recognizes all expected credit losses on trade receivables over their lifetime. Recognition of borrowings Borrowings are initially recognized at fair value, net of transaction costs incurred and are subsequently measured at amortized cost; any difference between income (net of transaction costs) and the repayment value is recognized in profit or loss over the term of the borrowing using the effective interest method. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer payment of the liability by at least 12 months after the balance sheet date, in which case these borrowings are classified as non-current liabilities. Transfers of financial assets and liabilities The Group derecognizes financial assets whenever the rights that make up the assets expire or are relinquished, or when the Group transfers or assigns its rights and is no longer affected by most of the associated risks and rewards. The Group derecognizes financial liabilities when a debt is extinguished or transferred. Whenever a liability is exchanged with a creditor for one with materially different terms and conditions, a new liability is recognized. Derivative financial instruments and 16.9 hedging derivatives Derivative financial instruments The Group uses derivative financial instruments to hedge its exposure to interest rate and foreign exchange risk. Derivatives are initially recognized at fair value at the date of effect of the derivative contracts and are subsequently remeasured to fair value at each reporting date. Resulting residual gains or losses are immediately recognized in profit or loss unless the derivative is a designated and effective hedging instrument, in which case the timing of the recognition of gains or losses in net income depends on the nature of the hedging relationship. The fair value of a derivative hedging instrument is classified in non-current assets or liabilities where the residual term of the hedged item is greater than 12 months, and in current assets or liabilities where the residual term of the hedged item is less than 12 months. Derivative instruments not designated as hedging instruments are classified in current assets or liabilities.

attributable to the acquisition or issue of financial assets and financial liabilities at fair value through profit or loss are expensed immediately to profit or loss. Recognition of financial assets All recognized financial assets are subsequently measured either at amortized cost or fair value, depending on their financial asset classification. A debt instrument is subsequently measure at amortized cost if both the following conditions are met: the financial asset is held within a business model whose objective • is to hold financial assets in order to collect contractual cash flows; the contractual terms of the financial asset give rise on specified • dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A debt instrument is subsequently measure at fair value if both the following conditions are met: the financial asset is held within a business model whose objective • is achieved by both collecting contractual cash flows and selling financial assets; the contractual terms of the financial asset give rise on specified • dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. All financial assets are subsequently measured, by default, at fair value through profit or loss. Notwithstanding the above, the Group may make the following choices or irrevocable elections at initial recognition of a financial asset: the Group may make an irrevocable election to present in other • comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies; the Group may irrevocably choose to designate a debt instrument • meeting the measurement criteria for recognition at amortized cost or fair value through other comprehensive income as measured at fair value through profit or loss, if this designation eliminates or significantly reduces a recognition inconsistency. The Group has designated all its investments in equity instruments at fair value through profit or loss. Financial assets designated at fair value through profit or loss are measured at fair value at the end of each reporting period, with fair value gains and losses taken to profit or loss unless they form part of a designated hedging relationship. The net gain or loss recognized in profit or loss includes dividends or interest earned on the financial asset recognized in “Revenue”, and fair value gains and losses recognized in “Other income”. Listed securities are valued at their last market price on the balance sheet date. The Colyzeo and Colyzeo II investment funds are measured, at the valuation date, based on the most recent information communicated by fund managers. Unlisted investments are measured at fair value (market value or the value at which market traders would agree to buy and sell them), in compliance with IPEV recommendations (International Private Equity Valuation Guidelines) and the net asset value calculation methodology. The values obtained are then adjusted to reflect the

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2017 Registration document