BPCE - 2018 Registration document

5 FINANCIAL REPORT

IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2018

Note 8

Employee benefits and similar

Accounting principles There are four categories of employee benefits:

of undiscounting the net obligation for interest income generated by plan assets) and the effect of pension drawdowns. Revaluation differences on actuarial liabilities caused by changes in demographic and financial assumptions and past-experience effects are recorded in gains and losses recognized directly in other comprehensive income not recyclable to income. Other long-term employee benefits include awards accruing to ● current employees and payable 12 months or more after the end of the period in which the employee renders the related service. They mainly include long-service awards and deferred variable remuneration payable in cash and not indexed to the share price. These benefits are calculated using the same actuarial method as that applied for defined-benefit pension plans. The accounting method differs in terms of revaluation differences on actuarial liabilities, which are recorded under expenses. Termination benefits are granted to employees on termination ● of their employment contract before the normal retirement date, either as a result of a decision by the Group to terminate a contract or a decision by an employee to terminate a contract in exchange for a severance package. They are covered by a provision. Termination benefits that are not expected to be paid within the 12 months following the balance sheet date are discounted to present value. Share-based payments include payments in equity instruments or cash where the amount of the cash payment is indexed to the share price. A personnel expense is recorded for an amount equal to the fair value of the benefit awarded, spread over the vesting period.

Short-term employee benefits such as wages, salaries, paid ● annual leave, bonuses, and profit sharing and incentive schemes which are expected to be paid within 12 months of the end of the period in which the employee renders the service are recognized in expenses. Post-employment benefits paid to retired staff break down into ● two categories: defined-contribution plans and defined-benefit plans. Defined-contribution plans such as French national plans are those for which Groupe BPCE’s obligation is limited to payment of a contribution; there is no obligation for the employer regarding a certain level of benefits. Contributions paid into these plans are recognized as an expense for the period. Defined-benefit plans are those for which Groupe BPCE has undertaken to provide a given amount or level of benefits. Defined-benefit plans are subject to provisions calculated based on an actuarial assessment of the amount of the obligation, taking into account demographic and financial assumptions. When these plans are funded by external funds meeting the definition of plan assets, the amount of the provision is reduced by the fair value of these assets. The cost of defined-benefit plans recorded in expenses for the period includes: the service cost (representing the rights acquired by beneficiaries over the period), the service cost for prior periods (revaluation differences on actuarial liabilities following an amendment or reduction in the plan), the net financial cost (effect

PAYROLL COSTS 8.1 Payroll costs include all personnel expenses and the associated social security contributions and taxes. They include expenses for employee benefits and share-based payments.

Fiscal year 2018

Fiscal year 2017

in millions of euros

Wages and salaries

(6,557)

(6,416)

Expenses for defined-benefit and defined-contribution pension plans and other long-term employee benefits

(710)

(690)

Other social security costs and payroll-based taxes

(2,783)

(2,628)

Profit-sharing and incentive schemes

(579)

(593)

TOTAL PAYROLL COSTS

(10,629)

(10,327)

The Employment and Competitiveness Tax Credit (CICE) is deducted presented in section 6 “Social, environmental and societal from payroll costs. It came to € 102 million in respect of information” of the registration document. fiscal year 2018 ( € 120 million for 2017). The use of this tax is

326

Registration document 2018