CFM INDOSUEZ Wealth Management - 2019 annual report

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S N o t e 1 : Principles and methods applicable to the Group, judgements and estimates used 1. 1 a p p l i c a b l e s ta n d a r d s a n d c o m pa r a b i l i t y Pursuant to Regulation (EC) No. 1606/2002, the consolidated financial statements have been prepared in accordance with IAS/IFRS and IFRIC interpretations applicable on 31 December 2019, as adopted by the European Union (the carve-out version), thus using certain exemptions to the application of IAS 39 for macro-hedge accounting. These standards are available on the website of the European Commission at the following URL: https://ec.europa.eu/info/business- economy-euro/company-reporting-and-auditing/company-reporting/financial-reporting_en The standards and interpretations applied are the same as those used in the Group’s financial statements at 31 December 2018. They have been supplemented by the provisions of IFRS as adopted by the European Union on 31 December 2019, the application of which is mandatory for the first time in 2019. These relate to: Standards, Amendments or Interpretations Date of publication by the European Union Date of first application: fiscal year starting on Applicable to the Group IIFRS 16 Leases Replaces IAS 17 on Leases and all its related interpretations (IFRIC 4 Determining whether an Arrangement contains a Lease, SIC 15 Operating Leases – Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease) 31 October 2017 (UE 2017/1986) 1 January 2019 Yes Amendment to IAS 19 Employee Benefits Clarifications on the consequences of plan amendment, curtailment or settlement on the measurement of current service cost and net interest 14 March 2019 (UE 2019/402) 1 January 2019 Yes Amendment to IFRS 9 Financial Instruments Prepayment features with negative compensation 22 March 2018 (UE 2018/498) 1 January 2019 (1) Yes IFRIC 23 Uncertainty over Income Tax Treatments Clarifications to IAS 12 Income taxes 24 October 2018 (UE 2018/1595) 1 January 2019 Yes (2) (1) The Group decided to apply the amendment to IFRS 9 in advance as of 1 January 2018. (2) The application of IFRIC 23 did not have a material impact on the Group’s equity at January 1, 2019. There were no reclassifications of provisions for tax risk relating to income tax from Provisions to Current tax liabilities in the balance sheet as of this date. 58 CFM Indosuez Wealth Management CFM Indosuez Wealth is publishing its IFRS financial statements in accordance with IFRS 16 Leases for the first time as of 1 January 2019 (see Chapter 1.2, Accounting principles and policies). IFRS 16 Leases replaces IAS 17 and all its related interpretations (IFRIC 4 Determining whether an Arrangement contains a Lease, SIC 15 Operating Leases – Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease). The main change brought about by IFRS 16 is the lessee accounting model. IFRS 16 requires that lessees record all leases in the balance sheet, recognising a lease liability representing the commitment over the term of the lease, and the right to use the leased asset, amortised over the life of the lease. For the first-time application of IFRS 16, the Group chose to use the modified retrospective method without restating comparable information, in accordance with paragraph C5(b) of IFRS 16 for contracts previously recorded as operating leases under IAS 17. In accordance with this approach, at 1 January 2019, the Group recorded a lease liability equal to the present value of remaining lease payments and a right-of-use asset representing the amount of the lease liability adjusted, as applicable, by the amount of any prepaid or accrued lease payments that were recognised in the balance sheet immediately before the date of initial application. The application of IFRS 16 had no impact on shareholders’ equity. At the transition date, the Group chose to apply the following simplified measures allowed by the standard: • No adjustment for leases with a remaining term of less than twelve months at the date of application. This notably applies to so-called 3/6/9 leases which are automatically renewed as of the date of initial application. In accordance with the IFRIC Update of March 2019 and AMF recommendation 2019-13, the Group did not take into consideration IFRS IC decision of 26 November 2019 regarding the assessment of the IFRS 16 lease term in the financial statements at 31 December 2019, so it can take the time needed to analyse the accounting impacts of this decision during 2020. As a result, the accounting principles and policies applied in the annual financial statements at 31 December 2019 were not impacted. • No adjustment for leases of low value assets. • Exclusion of initial direct costs from the valuation of the right- of-use asset. The Group also opted not to reassess whether or not a contract contains a Lease at the transition date. For contracts set up before the transition date, the Group applied IFRS 16 to contracts identified as being leases under IAS 17 and IFRIC 4. The discount rate applied to calculate the right-of-use asset and the lease liability is the incremental borrowing rate as of the first- time application of IFRS 16 over the remaining term of the contract at 1 January 2019.