The discount rate applicable when calculating the right-of-use asset and the lease liability is, by default, the lessee’s marginal debt ratio over the term of the contract on the date it was signed, where the implicit rate cannot be easily established. The marginal debt ratio takes account of the rent payment structure. It reflects the terms of the lease (duration, guarantees, economic environment, etc.). The cost of leases is broken down into interest and amortised capital. The right-of-use of the asset is valued at the initial value of the lease liability plus the initial direct costs, advance payments and restoration costs, minus any lease incentive benefits. It is amortised over the estimated term of the lease. The lease liability and the right of use may be adjusted in the event of any amendment to the lease, re-estimation of the lease term or rent review related to the application of indices or rates. Deferred taxes are recognised as temporary differences in right-of-use and rental liabilities by the lessee. In accordance with the exception provided for by the standard, short-term leases (initial term of less than twelve months) and leases for which the replacement value of the leased asset is low are not recognised on the balance sheet. The corresponding leasing expenses are recorded on a straight-line basis in the Income Statement under “operating expenses” In accordance with the provisions of the standard, the Group does not apply IFRS 16 to leases of intangible assets. 1.3 CONSOLIDATION PRINCIPLES AND METHODS (IFRS 10, IFRS 11 AND IAS 28) SCOPE OF CONSOLIDATION The consolidated financial statements include the accounts of CFM Indosuez Wealth and those of all the companies over which, according to the provisions of IFRS 10, IFRS 11 and IAS 28, CFM Indosuez Wealth has the power to control, joint control or significant influence, with the exception of those that are not significant in relation to all the companies included in the consolidation scope. DEFINITION OF CONTROL Under IFRS, all entities that are controlled, jointly controlled or significantly influenced are consolidated, provided that they do not fall within the scope of the exclusions described below. Control over an entity is presumed to exist when CFM Indosuez Wealth is exposed to, or entitled to, variable returns from its involvement with the entity and its power over the entity enables it to influence those returns. Power in this context means substantive rights (voting or contractual). Rights are deemed substantive if the holder of the rights can, in practice, exercise them when decisions are being taken about the entity’s relevant activities. CFM Indosuez Wealth is deemed to control a subsidiary governed by voting rights when its voting rights give it the actual ability to direct the subsidiary’s relevant activities. CFM Indosuez Wealth generally controls a subsidiary when it holds more than half the existing or potential voting rights in an entity, whether directly or indirectly through subsidiaries, except when it can be clearly demonstrated that holding such rights does not give it the power to direct the entity’s relevant activities. Control is also deemed to exist where CFM Indosuez Wealth holds half or less than half the voting rights, including potential rights in an entity but is, in practice, able to direct the entity’s relevant activities at its sole discretion, notably because of the existence of contractual agreements, the relative size of its stake in the voting rights compared with the stakes held by other investors, or for other reasons or in other circumstances. Control of a structured entity is not only assessed on the basis of the percentage of voting rights which, by nature, have no effect on the entity’s returns. Analysis of control takes into account not only the contractual arrangements and risks of CFM Indosuez Wealth, but also the involvement and decisions of CFM Indosuez Wealth in setting up the entity, rights under agreements that give the investor the power to direct the relevant activities only when particular circumstances arise, and other facts or circumstances that indicate that the investor has the ability to direct the relevant activities of the entity. Where there is a management mandate, the extent of the decision-making powers related to the delegation of power granted to the manager and the remuneration accorded under the contractual arrangements are analysed to determine whether the manager is acting as an agent (with delegated powers) or as a principal (on their own account). Accordingly, when decisions on the entity’s relevant activities are due to be taken, the analysis indicators used to assess whether an entity is acting as agent or principal are as follows: the extent of the decision-making powers relative to the delegation of power to the manager with regard to the entity; the remuneration provided for under the contractual agreements, but also any substantive rights held by other parties involved in the entity that may affect the decision-maker’s capacity; and exposure to variability in returns from other interests in the entity. Joint control is deemed to exist when there is a contractual division of control over an economic activity. Decisions affecting the entity’s relevant activities require unanimous agreement of the joint controllers. In conventional entities, significant influence results from the power to be involved in the financial and operating policies of a company without having exclusive or joint control. CFM Indosuez Wealth is presumed to have significant influence if it owns 20% or more of the voting rights in an entity, whether directly or indirectly through subsidiaries. Annual Report 2024 83
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