FINANCIAL STATEMENTS 3Consolidated financial statements as of December 31, 2017 Share-based payments According to IFRS 2, all share-based payments must be recognized as expenses when use is made of the goods or services provided in return for these payments. For the Klépierre Group, this standard applies primarily to the purchase of shares to meet the commitments arising from its employee stock option scheme. Stock subscription options granted to employees are measured at their fair value determined on the date of allocation. This fair value is not subsequently remeasured for equity-settled share-based payment transactions, even if the options are never exercised. This value, which is applied to the number of options eventually vested at the end of the vesting period (estimate of the number of options canceled owing to departures from the Company) is booked as an expense, with a corresponding increase in equity which is spread over the vesting period (i.e. the period during which employees must work for the Company before they can exercise the options granted to them). This employee expense reflecting the options granted (corresponding to the fair value of services rendered by employees) is measured by a specialist independent third-party company. The model adopted complies with the basic assumptions of the Black & Scholes model, adapted to the specific characteristics of the options concerned. 10.3.1 Defined contribution pension plans In France, the Klépierre Group contributes to a number of national and inter-profession basic and supplementary pension organizations. 10.3.2 Defined benefit pension plans The provisions recognized for defined benefit pension plans totaled €13.4 million at December 31, 2017. Allowances Write-backs Write-backs Changes in for the (provision (provision Other the scope of In €m 12/31/2016 period used) unused) movements consolidation 12/31/2017 Provisions for employee benefit commitments > Defined benefit schemes 11.1 1.4 -0.7 -1.4 10.4 > Other long term benefits 2.1 0.9 3.0 TOTAL 13.2 2.3 -0.7 -1.4 13.4 The defined benefit plans in place in France are subject to Until December 31, 2014, Scandinavia had both public and independent actuarial appraisal, which uses the projected unit credit supplemental pension plans. Both required annual contributions to method to calculate the expense relating to rights acquired by pension funds. In addition to these plans, Steen & Strøm had put in employees and the outstanding benefits to be paid to pre-retirees place a private plan for some employees in Norway. According to and retirees. The demographic and financial assumptions used when IAS 19R, this system enters the definition a defined benefit pension estimating the discounted value of the plan obligations and financed plan. As of December 31, 2015, the subsidiaries in Norway has schemes’ assets reflect the economic conditions specific to the terminated their defined benefit plan and started with a defined monetary zone concerned. contribution pension plan. Under defined contribution plans the Klépierre has set up supplementary pension plans under a corporate entity’s obligation is now limited to the amount that it agrees to agreement. Under these supplementary plans, employee beneficiaries contribute to the fund who’ll assume the payment of the obligation. will, on retirement, receive additional income over and above their In Spain, a provision for retirement commitments may be recognized national state pensions (where applicable) in accordance with the where specific provision is made in the collective agreement, but this type of plan they are entitled to. does not affect the staff working in the Spanish subsidiaries of the Group employees also benefit from agreed or contractual personal Klépierre Group. The existing commitments for post-employment protection plans in various forms, such as retirement gratuities. medical assistance plans are measured on the basis of assumed rises in medical costs. These assumptions, based on historical observations, In Italy, Klépierre Management Italia operates a “Trattamento di take into account the estimated future changes in the cost of medical Fine Rapporto” (TFR) plan. The amount payable by the employer on services resulting both from the cost of medical benefits and inflation. termination of the employment contract (as a result of resignation, dismissal or retirement) is calculated by applying an annual coefficient for each year worked. The final amount is capped. Since the liability is known, it can be recognized under other liabilities and not as a provision for contingencies. 116 KLÉPIERRE 2017 REGISTRATION DOCUMENT