FINANCIAL STATEMENTS 3Consolidated financial statements as of December 31, 2017 The consolidated financial statements to December 31, 2017 are IFRS 9 “Financial Instruments” will replace the standard IAS 39. IFRS 9 presented in the form of complete accounts including all the provides a new classification of financial instruments and a model information required by the IFRS. of impairment of financial assets based on expected losses. This The document also includes the financial statements of Klépierre SA standard also provides a different treatment of hedge accounting. and its subsidiaries. The financial statements of subsidiaries are The standard IFRS 15 “Revenue from Contracts with Customers” prepared for the same accounting period as that of the parent was published on May 8, 2014. This standard replaces the standards company using consistent accounting methods. IAS 11 and IAS 18. This standard could include impacts on revenue The consolidated financial statements are presented in €m, with all recognition rules (excluding rents). amounts rounded to the nearest hundred thousand unless otherwise At Group level, during the period trainings on IFRS 9 and IFRS 15 indicated. Slight differences between figures could exist in the have been organized for operational and financial teams impacted by different statements due to rounded amounts. the new standards. Following the review and analysis of the existing financial instruments and contracts, no significant impacts has been 2.2.1 Standards, amendments and applicable identified at this stage. interpretations as of January 1st, 2017 IFRS 16 “Leases” will replace the standard IAS 17. It will remove the The accounting principles applied to the consolidated financial distinction between finance leases and operating leases. This standard statements as of December 31, 2017 are identical to those used in the is very close to the existing standard for the treatment of leases lessor consolidated financial statements as of December 31, 2016, with the side. exception of the following new standard and interpretations, for which application is mandatory for the Group: 2.3 Use of material judgments and estimates > Amendment to IAS 7: Disclosure Initiative: Statement of Cash Flows In preparing these consolidated financial statements in accordance > Amendment to IAS 12: Recognition of Deferred Tax Assets for with IFRS, the Group management used estimates and made Unrealized Losses a number of realistic and reasonable assumptions. Some facts and circumstances may lead to changes in these estimates and > Amendment to IFRS 4: Applying IFRS 9 Financial Instruments with assumptions, which would affect the value of the Group’s assets, IFRS 4 liabilities, equity and earnings. 2.2.2 Standards, amendments and interpretations The principal assumptions made in respect of future events and other of not compulsory application as from sources of uncertainty relating to the use of year-end estimates for which there is a significant risk of material change to the net book January 1st, 2017 values of assets and liabilities in subsequent years are presented The following amendments were published by the IASB but have not below: yet been adopted by the European Union: Measurement of goodwill > Amendments to IFRS 2: Classification and Measurement of Share- based Payment Transactions; The Group tests goodwill for impairment at least once a year. This requires to estimate the value in use of the cash-generating units > Annual improvements of IFRS: Cycle 2014-2016; to which the goodwill is allocated. In order to determine their value > Annual improvements of IFRS: Cycle 2015-2017; in use, Klépierre prepares expected future cash flows for each cash- generating unit and applies a pre-tax discount rate to calculate the > Amendment to IAS 40: Transfer of Investment Property; current value of these cash flows (see note 5.1). > IFRIC 22: Foreign Currency Transactions and Advance Consideration; Investment property > IFRIC 23: Uncertainty over Income Tax Treatments; The Group appoints independent appraisers to perform half-yearly > Amendment to IAS 28: Long Term Interests in Associate and Joint appraisals of its real estate assets in accordance with the methods Venture; described in note 5.4. The appraisers make assumptions concerning > IFRS 17: Insurance Contracts. future flows and rates that have a direct impact on the value of the buildings. The following standards and amendments have been adopted by the European Union as of December 31, 2017 but with a later effective Financial instruments date of application: The Group assesses the fair value of the financial instruments it uses > IFRS 15: Revenue from Contracts with Customers including in accordance with the standard models practiced on the market and amendments and clarifications to IFRS 15; IFRS 13 described in note 5.11.1. > IFRS 16: Leases; > IFRS 9: Financial Instruments; > Amendment to IFRS 9: Prepayment Features with Negative Compensation and Modifications of Financial Liabilities. The Group is currently assessing the implementation of these new standards and their impact on the consolidated accounts. 78 KLÉPIERRE 2017 REGISTRATION DOCUMENT