epic bpi-groupe annual report 2013 - bpifrance · investment, innovation and the...

EPIC BPI-GROUPE

ANNUAL

REPORT

2013

EPIC BPI-Groupe Annual Report | 2

CONTENTS

1. FOREWORD BY THE PRESIDENT OF THE EPIC BPI-GROUPE AND THE CEO OF THE LIMITED COMPANY BPI-GROUPE 5

1.1. Message from the President of the EPIC BPI-Groupe 5 1.2. Message from the CEO of the limited liability company SA BPI-Groupe 6

2. BPIFRANCE’S KEY FIGURES 7

3. MANAGEMENT REPORT 8

3.1. Corporate Governance 8 3.2. Functions of the Management Board 9 3.3. Activity Report for both Bpifrance and its subsidiaries for the year 2013 10

4. ORGANISATIONAL CHART OF BPIFRANCE 47

4.1. Functional organisational chart 47 4.2. Network Structure 48

5. CONSOLIDATED FINANCIAL STATEMENTS 49

6. INDIVIDUAL FINANCIAL STATEMENTS 84

7. REPORTS FROM STATUTORY AUDITORS 99

7.1. Report on the consolidated financial statements 99 7.2. Report on the individual financial statements 102

1. FOREWORD BY THE PRESIDENT OF THE EPIC BPI-GROUPE AND THE CEO OF THE LIMITED COMPANY BPI-GROUPE

1.1. Message from the President of the EPIC BPI-Groupe

Continuing its efforts to rationalise the support structures available to SMEs while promoting the development of

investment, innovation and the internationalization of companies, the EPIC BPI-Groupe (formerly EPIC OSEO) was

extensively involved in 2013 in the creation of the Public Investment Bank (BPI) that brought in the State alongside

the Caisse des Dépôts et Consignations.

The limited company BPI-Groupe SA, known as Bpifrance, is now the parent company of the group’s operational

subsidiaries, Bpifrance Financement and Bpifrance Investissement. It was approved as a financial company after the

group’s capital operations carried out on 12 July 2013. At the same time, the EPIC BPI-Groupe lost its capacity as a

financial company and is no longer subject to all the regulations applicable to credit institutions, and particularly the

provisions of regulation 97-02 of the Consultative Committee on Financial Legislation and Regulations.

In 2013, the governance of the EPIC BPI-Groupe was modified: Bruno Durieux was appointed as Chairman and Chief

Executive Officer of the EPIC BPI-Groupe by decision of the Minister for the Economy and Finance on 12 July 2013

and until 31 December 2013. Similarly, the composition of the establishment’s Board of Directors was renewed by

decree dated 15 July 2013.

In 2014, the EPIC BPI-Groupe will pursue its general interest mission, namely promoting and supporting innovation,

contributing to the transfer of technologies, and encouraging the development and financing of SMEs.

François AUVIGNE Chairman and CEO of the EPIC BPI-Groupe

since 1 January 2014


1.2. Message from the CEO of the limited liability company SA BPI-Groupe

Throughout this first year of its existence, Bpifrance built on its legal, financial and operational foundation while pursuing the mission entrusted to it for the financing of companies. Bpifrance pursued its structuring efforts with zeal: the set-up of various governance bodies, the validation of the doctrine after its presentation to Parliament, the roll-out in the regions, the legal and financial organisation are but some of the efforts carried out in 2013, thanks to the mobilisation and commitment of the teams. These actions in no way slowed the group’s activities relative to its mission of financing companies. In a still tense economic context, Bpifrance mobilised all of its tools in order to play its role as an actor in the marketplace, namely a contra-cyclical

role of financing the economy and impacting on the market’s imperfections. As such, the credit activity attained an historical level of €5 billion of medium to long-term commitments, which served to leverage the mobilisation of €16 billion of lending operations. With regard to the short-term lending operations, €4 billion were committed, which is also unprecedented. The CICE (Competitiveness and Employment Tax Credit) Pre-financing, resulting from the National Pact for Growth, Competitiveness and Employment, attained €860 million of agreements for the benefit of more than 12,000 companies, 60% of which are VSEs. The guarantee activity, for its part, increased by 5% relative to 2012. The efforts in the area of innovation financing were also strengthened by the roll-out of new loan offers. In addition, Bpifrance put together an innovation action plan, the “NOVA” plan, based on three key aspects: simplification, support, financing continuum. A new organisation was implemented for the investment division in 2013, and it is now structured around four business lines: funds of funds, direct investment in SMEs, direct investment in innovation capital, and direct investment in medium-sized companies (mid-tier companies) and large companies (LC). This organisation will take final shape in April 2014 when more than 300 employees from CDC Entreprises, the FSI and FSI Regions will be transferred to Bpifrance Investissement, the group’s single management company looking after nearly €20 billion of assets. In 2013, Bpifrance continued its fund of funds efforts against a backdrop marked by the attrition of capital for SMEs, while fully playing its role of encouraging private subscribers in order to ensure the structuring of the financing chain for growing SMEs: the level of subscriptions carried out in partner funds increased to €444 million. Despi te a difficult market, investment in the own funds of SMEs resisted well: 91 operations were carried out during the fiscal year for €121 million invested. The activity of the ETIGE own funds business line continued at a similar pace as in 2012: €368 million for 16 operations, versus €356 million invested the previous year. Moreover, the direct innovation capital activity led to subscriptions of €111 million for 35 operations, i.e. 54% growth relative to 2012, notably thanks to the creation of the Large Venture activity. With the adoption of the 2014-2017 Strategic plan by the Board of directors, Bpifrance now has a clear roadmap for the coming years. The major challenge for our efforts will be the resumption of corporate investments within our country.

The Bpifrance teams will be fully and entirely devoted to bringing this about.

Nicolas DUFOURCQ

General Manager of the SA BPI-Groupe

2. BPIFRANCE’S KEY FIGURES

“Investment” Division

“Financing” Division

(In millions) 2011 2012

2012 change

2013 2013

change

ACTIVITY

Innovation aid (AI, ISI, FUI, FIS, PSPC) 658 744 13.1% 634 -14.8%

Guaranteed Loans 8,826 8,500 -3.7% 8,968 5.5%

Guaranteed loans provided by Bpifrance Régions

534 611 14.4% 768 25.7%

Investment co-financing 4,164 4,701 12.9% 5,073 7.9%

CICE advances (Competitiveness & Employment Tax Credit)

- - N/A 737 N/A

Short-term financing (advances) 6,302 7,001 11.1% 7,810 11.6%

PERSONNEL (1) 1641 1641 -

(1) Average personnel on permanent contracts, paid as full-time equivalent on 31 December

In millions of euros 2012 2013

Authorized Commitments 1 353 912

Fund of funds 479 405

SME Equity Financing 222 176

Innovation 136 106

Mid-caps & large companies’ equity financing 517 224

Subscriptions 1 776 1 044



Innovation 74 111

Mid-caps & large companies’ equity financing 1 152 367

Distributions 519 1 186



Innovation 1 2

Mid-caps & large companies’ equity financing 400 1 001

Capital increases or decreases 94 417

Fund of funds 4 3


Innovation -2 1

Mid-caps & large companies’ equity financing 91 398

Assets under management 20 626 20 039

Fund of funds 5 195 5 065

SME Equity Financing 1 570 1 848

Innovation 543 639

Mid-caps & large companies’ equity financing 13 317 12 487

* For direct holdings concerning « Mid-caps & Large Companies » and the « Innovation » line of business, amounts indicated

correspond to the valuation process used according to the IFRS standards applied at the end of each financial period.


3. MANAGEMENT REPORT

3.1. Corporate Governance

3.1.1. Board of Directors on 1 January 2014

Chairman of the Board François AUVIGNE

1

Inspector General of Finances at the Inspectorate-General for Finance Board members representing the State

2

Juliette D’ABOVILLE Head of the Legal Division at the “Agence des Participations de l’Etat” (State Holdings Agency) Delphine D’AMARZIT Inspector General of Finances at the Inspectorate-General for Finance Benjamin GALLEZOT Assistant General Manager for Competitiveness, Industry and Services at the Directorate General for Competitiveness, Industry and Services (DGCIS) Laurence HARTMANN Assistant to the Department Head for Partnerships and Valutation at the Ministry for Higher Education and Research

Vincent MOREAU Deputy Director of the Budget Department’s 3rd Sub-Department Guests Jean-François GUTHMANN Head of the Economic and Financial Control Service Olivier BUQUEN

3

Economic and Financial General Controller Statutory Auditors MAZARS, represented by Virginie CHAUVIN KPMG Audit FS I, represented by Philippe SAINT-PIERRE and Marie-Christine FERRON-JOLYS

3.1.2. General Management

General Manager François AUVIGNE

1Appointed by decision of the Minister for the Economy and Finance on 31 December 2013

2 Appointed by decree dated 15 September 2013

3 Since 27 January 2014

3.2. Functions of the Management Board Chairman and Chief Executive Officer François AUVIGNE Inspector General of Finances at the Inspectorate-General for Finance Member of the Supervisory Board representing the State of the EPIC Société du Grand Paris (SGP) Director representing the State at the Laboratoire Français du Fractionnement et des Biotechnologies (LFB SA), its subsidiary LFB Biomédicaments and the Société Nationale des Poudres et Explosifs (SNPE)

4

Chairman of the LFB SA Audit Committee Board members representing the State Juliette D’ABOVILLE Head of the Legal Division at the Agence des participations de l’Etat Director representing the State to the company TSA, to the Compagnie Générale Maritime et Financière (CGMF) and to the Société de Gestion de Garantie et de Participations (SGGP) Delphine D’AMARZIT Inspector General of Finances at the Inspectorate-General for Finance Director representing the State to the SA BPI-Groupe, to Dexia and to the Agence Française de Développement (AFD)

5

Benjamin GALLEZOT Assistant General Manager for Competitiveness, Industry and Services at the Directorate General of Competitiveness, Industry and Services (DGCIS) Laurence HARTMANN Assistant to the Department Head for Partnerships and Valutation - Innovative companies and Emerging sectors at the Directorate General for Research and Innovation within the Ministry for Higher Education and Research Permanent invited member of the Board of Directors of the Association des Instituts Carnot Vincent MOREAU Deputy director of the Budget Department’s 3rd Sub-department Director representing the State to Bpifrance Financement Director of the CNRS, CNES, CEA, ANR and of the Etablissement public de Paris Saclay

4 Until December 2013

5Until June 2013


3.3. Activity Report for both Bpifrance and its subsidiaries for the year 2013

3.3.1. The group’s highlights in 2013

2013 was the year of the creation of the Banque Publique d’Investissement (BPI - Public Investment Bank), jointly held by the EPIC BPI-Groupe and the Caisse des Dépôts et Consignations.

In terms of financing-related business lines, 2013 was marked by the roll-out of new financing, pre-financing and

guarantee products, and on the investment side, by the creation of new investment funds.

Set-up of the Bpifrance group The main steps of the set-up of the Bpifrance group are summarized below:

Law of 31 December 2012 relative to the creation of the Bank for Public Investment (BPI);

21 February 2013: the first Bpifrance board of directors is held in Dijon and appoints its chairman, Jean-Pierre Jouyet, General Manager of the Caisse des Dépôts and Consignations.

21 February 2013: appointment of the Bpifrance executive committee.

17 April 2013: the first meeting of the National Orientation Council (CNO) in Caen. The task of the CNO is to give an opinion on the strategic orientations, intervention doctrine and provisions whereby BPI-Groupe and its subsidiaries carry out their general interest missions, and on the implementation of the ecological and energy transition.

15 May 2013: Bpifrance intervention doctrine presented to Parliament. It was then adopted by the Board of Directors on 25 June.

38 meetings of the regional orientation committees organised as of the spring of 2013.

May 2013: launch of the Bpifrance Export label, a new financing and support offer intended for SMEs and mid-tier companies, in partnership with Coface and UBIFRANCE, in order to make it easier for companies to export and become more international.

June 2013: signing of a partnership with the European Investment Bank (EIB) in order to develop cooperation that will encourage investment and financing amongst SMEs and mid-tier companies. This agreement took concrete shape in September, with the release to Bpifrance of a credit line of €750 million by the EIB, and a guarantee envelope from the European Investment Fund (EIF). This will make it possible to grant loans to innovative SMEs for a total of €200 million.

Delivery of authorisations from the Prudential Control and Resolution Authority (28 June 2013) and the Financial Markets Authority (10 July 2013).

12 July 2013: set-up of the Bpifrance group SA by completion of a process of contributions, whereby:

(a) the State contributed to BPI-Groupe SA 49% of the share capital and voting rights of Bpifrance Participations and its equity interest in Sofired,

(b) EPIC BPI-Groupe contributed to the BPI-Groupe SA 62.81% of the share capital and voting rights of OSEO and

(c) the Caisse des Dépôts et Consignations notably contributed to BPI-Groupe 51% of the share capital and voting rights of Bpifrance Participations, all of the share capital and voting rights of CDC Entreprises-1, 62.81% of the share capital and voting rights of OSEO as well as additional assets.

After these contributions, the State and the Caisse des Dépôts et Consignations are henceforth equal shareholders of BPI-Groupe, with each holding 50% of the capital and voting rights (subject to five shares loaned in order to comply with the rules applicable to public limited companies), the capital of which is equal to €20,981,406,140. BPI-Groupe has the capacity of a financial company.

(d) BPI-Groupe SA allocated to the Strategic Investment Fund (FSI) (now Bpifrance Participations) the assets received that same day from the Caisse des Dépôts et Consignations.

October / November 2013: finalising of the group’s organisation and installation of the teams. The Bpifrance teams in Paris are located at a single site (6/8 boulevard Haussmann - 75009 Paris), while the central functions are gathered at the head office in Maisons-Alfort.

Preparation of partnership master agreements with the Regions. 2 agreements signed in 2013: Auvergne and Poitou-Charentes.

November 2013: kick-off of the Nova action plan for innovation financing, with the aim of accelerating the creation of national champions. Nova is intended to strengthen the intervention possibilities of Bpifrance, to simplify the assistance tools and systems, to support innovative entrepreneurs and provide continuity between all of the available types of financing for innovation: innovation aid, innovation loans, collaborative programmes and investments in own funds.

26 November 2013: signing of the best practices charter between the French Private Equity Investors Association (AFIC) and Bpifrance with shared commitments between private and public actors in the service of the development of non-listed SMEs and mid-tier companies.

20 December 2013: approval of the first Bpifrance strategic plan by the Board of Directors. This proactive plan gives concrete shape to the group’s strategic ambitions looking ahead to 2017, in keeping with its general interest missions.

Key events for the “Financing” division: For the “financing” division, 2013 was the year of the roll-out of new financing, pre-financing and guarantee products.

New financing products: Prêt développement export (PDE) (Export Development Loan)): As part of simplifying the support procedures

for companies as decided upon by the State, the EDL was created in order to meet the need to strengthen the financial structure of companies that are developing internationally. Systematically associated with external financing tools in the same amount, the EDL results from the merger of 3 pre-existing products: the export loan, the international development contract and the participatory development contract.

Prêt numérique (Digital Loan), as part of the “Investing in the Future” Programme (Programme

d’Investissements d’Avenir). Endowed with €300 million, this guaranteed loan, systematically associated with external financing in the same amount, will finance the investments of SMEs and mid-tier companies involved in structuring projects for the integration of digital solutions.

Prêt pour l’industrialisation des pôles de compétitivité (PIPC) (Loan for the Industrialization of

Competitiveness Clusters (LICC) : set up in late 2013 as part of the Investing in the Future Programme (PIA), the LICC finances the downstream expenses of a collaborative R&D project, intended to result in the marketing of an innovative product, process or service. It therefore improves the financing of the industrialization and marketing phase for new products or services developed by companies, as part of collaborative projects within competitiveness clusters.

Deployment of the measures related to the national growth, competitiveness and employment pact:

Pre-financing of the CICE(Competitiveness and Employment Tax Credit), in the form of direct pre-financing and of a guarantee system encouraging the pre-financing and deployment of a specific offer for VSEs.

Fonds de redressement de la trésorerie des PME (SME cash position recovery fund): €500 million of short-term credit facilities for the benefit of VSEs and SMEs.


Key events for the “Investment” division: 2013 saw the set-up of a new organisation within the Bpifrance “investment” division, that resulted in the creation of the 4 following business lines:

Funds of funds, this business line primarily looks after the management of the equity interests in affiliated funds and private funds of funds subscribed via the funds of funds managed in connection with of the following investment programmes:

o PMEI programme (FPCR 2000, FCIR, FFT3 and FPMEI), o FSI France Investissement programme (FFIA, FFIB and FFI 2), o FSI France Investissement 2020 programme (FFFI 3).

The funds of funds business line is also in charge of asset management on behalf of third parties such as the Fonds National d’Amorçage (national priming fund), hereinafter referred to as the “FNA” (PIA) that was not subscribed by Bpifrance.

SME Own Funds, this business line is in charge of the management of the following funds:

o France Investissement Croissance (FCID, FCID 2 and OC+A), o Sector-specific funds (including Patrimoine et Création, FSFE, Croissance Rail, FDEN, Fonds Stratégique

Bois, Mode et Finance, Patrimoine and Création 2…), o France Investissement Croissance Régions (AED, AEM, OC+B, FSI Régions 1 and FSI Régions

Mezzanine),

Innovation, the innovation teams are in charge of managing the Large Venture activity as well as the funds subscribed by Bpifrance such as the Bioam and Innobio funds, and the funds raised as part of the PIA (FSN PME Ambition Numérique, Fonds Ecotechnologies and Fonds Biothérapies Innovantes et Maladies Rares).

ETI / GE(Entreprises de Taille Intermédiaire et Grandes Entreprises) Own Funds is the fourth business line of the “investment” division that was distinguished at the time of the creation of Bpifrance; its portfolios are subscribed by Bpifrance Participations. This division’s teams look after the management:

o of the strategic equity interests in large companies (e.g.: Orange) o of the equity interests acquired in mid-tier companies with the ETI 2020 fund to which €3 billion have

been allocated, including a contribution of assets historically held by the former FSI, for approximately €850 million.

o of the sector-specific funds in charge of providing support to equipment makers in the automobile sector, on ranks 1 and 2 (FMEA and FMEA rank 2).

Key events for the EPIC BPI-Groupe: Appointment of the Chairman and Chief Executive of the EPIC BPI-Groupe: By decision dated 31 December 2013, the Minister for the Economy and Finance appointed Mr. François AUVIGNE, Inspector General of Finances, as Chairman and Chief Executive of the Public Establishment BPI-Groupe on an interim basis as of 1 January 2014. He thereby succeeds Mister Bruno DURIEUX, also an Inspector General of Finances, whose term of office has come to an end. Bruno DURIEUX had himself been appointed by a decision of the Minister of Economy and Finance dated 12 July 2013, as successor to François DROUIN.

3.3.2. The missions and business lines of Bpifrance

A public group in the service of the financing and development of companies, Bpifrance acts in support of the policies implemented by the State and Regions. Law n°2012-1559 of 31 December 2012 assigned to it the mission of promoting innovation, the seed stage, development, and internationalization, transformation and transfer / buy-out of companies, by contributing to their financing through loans and own funds. The SA BPI-Groupe is a holding company that acts through its subsidiaries Bpifrance Financement (financing division), and Bpifrance Participations and Bpifrance Investissement (investment division). The missions and business lines of these two divisions are presented below, along with their intervention provisions. 3.3.2.1. “Financing” division

The missions and business lines of Bpifrance Financement

Missions of the Financing division Bpifrance Financement is a neutral marketplace actor, whose purpose is to bring in, for the benefit of companies, all of the financing partners beginning with the banks, as well as the innovation development networks, while providing co-financing along with private banks. With respect to private players and the rules of the competition law, Bpifrance Financement provides companies with financing during their riskiest phases, such as the creation of a company or its transfer / buy-out, or their innovation and internationalization phases, but also as part of capacity investments. To this end, it relies on endowments from public actors on various levels: State, local authorities (notably the regions) and the European Union. Its general interest mission requires Bpifrance Financement to work as closely with the territories as possible, in favour of VSEs, SMEs and mid-tier companies, irrespective of their legal status (including ESS

6 and local public

companies7

with a retail activity), in all business sectors except financial services. Its public nature also implies particular openness to the companies in each region, and a search for solutions with all partners. Bpifrance Financement is subject to the regulations regarding State assistance (guarantee funds, research-development and innovation, subsidized loans) that most notably govern the financing of companies facing demonstrable difficulties or ones that are not up-to-date in their social and fiscal contributions. As a lending institution, Bpifrance Financement is subject to banking regulations (CRBF 97.02) that result in many obligations, such as the obligation to operate on an arm’s length basis, without improper support or unfair loans, the requirement for a risk prevention system (financial, image and operational risks), separation of the roles, as well as systems for measuring the supervision and control of risks. Its activity and operation are subject to oversight by the Prudential Control and Resolution Authority.

Financing division business lines The three main business lines of the Bpifrance “financing” division are the financing of investments and of the operating cycle, guarantees and innovation support, with a growing international focus. The financing of investments and of the operating cycle In partnership with banking and financial establishments, Bpifrance Financement contributes to investment financing:

for tangible or intangible capital assets provided in the form of medium or long-term loans and real estate or equipment financial leasing operations, as well as financial rentals,

for immaterial investments, as well as the financing of working capital requirements, in the form of Development Loans (Growth, Transfer / buy-out, Innovation), long and patient, without guarantee or surety taken on the company or its directors.

6 Special status companies (cooperatives, SCOP, mutual companies, associations) or that have a strong social impact

7 SEM, SPL, SPLA


Specific financing tools in partnership with the Regions and the Commissioner General for Investment were developed in order to encourage investment during the most critical high-potential phases: export, digital, revitalization… Finally, the business start-up loan (PCE) has been providing support for the creation of companies since 2000. Bpifrance Financement contributes to financing the operating cycle:

it finances the cash needs of small and medium-sized enterprises that are customers of large public and private principals, and for financed contracts, it provides signature commitments: sureties and first demand guarantees.

for the first time in 2013, Bpifrance pre-financed the CICE (Competitiveness and Employment Tax Credit) . Guarantee Bpifrance Financement provides guarantees for bank financing (including leasing and financial leases), and for interventions by equity investors:

with regard to creation. The interest-free loans granted to creators by company creation support networks are also eligible,

with regard to innovation, with regard to development, with regard to transfers / buy-outs with regard to international actions, including bank sureties on the export markets and the risk of failure for French

subsidiaries established abroad (GPI – guarantee for international projects). In 2013, Bpifrance set up a guarantee fund intended to strengthen the cash positions of companies, whereby their bank consolidates their short-term outstandings in a new medium-term loan. The guarantee quota is between 40 and 60%. It can be up to 70% with the assistance of the guarantee fund established by the regions with Bpifrance Financement. Innovation support The mission of the Bpifrance Financement innovation branch is to provide a response to the financing needs of innovative individual or collaborative projects, from the idea through to the market, in case of any failure with regard to classical financing tools. Bpifrance Financement provides a financing solution that is suited to the company on the basis of its distance from the market (subsidy, repayable advance, guaranteed loan,…), in close partnership with the Regions. The innovation financing of the activities of companies is divided into 2 main categories:

individual assistance (in the form of subsidies, repayable advances and zero rate loans) and loans (Start-up equity loan, CIR pre-financing, Industrialization loan, etc.), provided by the Bpifrance network established throughout the country.

and the financing of collaborative projects (FUI, ISI, PSPC) carried out by the Bpifrance head office in Paris, in the form of subsidies and repayable advances.

In terms of individual and collaborative assistance, the agreements amounted to €634 million. The objectives were exceeded in terms of individual assistance (€364 million), whereas the collaborative programmes proved to be more difficult to implement (€270 million). Bpifrance also put together the “Nova” cross-functional action plan for innovation. As such, in 2013, the innovation teams were mobilised around 3 priorities:

Simplification: increasing the offer’s legibility and the processing speed for the entrepreneur customer, Support: Highlighting Bpifrance’s support role, and in particular that of the case officers, Financing continuum: providing a response to all of the entrepreneur’s financing needs, at every development

stage (investment, innovation financing). With regard to Nova’s simplification axis, a new simplified and dynamic presentation of the offer was prepared. It is based on the company’s need and is focused on a “customer journey” that highlights the financing solutions on the basis of the maturity of the company and of its project.

The simplification of the collaborative programmes also notably began with the ISI and PSPC merger in 2014 and an acceleration of the set-up of assistance tools (maximum 6 months) after receipt of the complete file. Moreover, for simplification purposes, the management of the FSN SAR programme (support for major collaborative projects in the digital field), previously managed by the Caisse des Dépôts et Consignations, has now been taken over by Bpifrance, given its consistency with the assignments entrusted to it. With regard to the actions targeting better support for financed companies, Bpifrance is a major player in the French Tech initiative launched in November 2013 by Fleur Pellerin, Deputy minister to the Minister for Productive recovery, in charge of Small and Medium-Sized Companies, Innovation and the Digital Economy, as the operator of the French Tech Accélération fund but also as a contributor to the project’s creation and implementation since its start. Last November, Bpifrance also opened a start-up area in its offices in order to directly accommodate customer companies of Bpifrance and, together with UBIFRANCE, it launched an acceleration programme in San Francisco, Ubi I/O, in order to help high-potential innovative companies to establish themselves in the United States. Moreover, the Bpifrance network teams previously dedicated exclusively to financing began to receive training in order to be able to better orient customer companies in search of own funds. In terms of financing continuum, Bpifrance sought to complete its range of loans for companies in the seed-stage and growth phases in order to better respond to the market’s needs, with two new loans in response to the specific needs of innovative companies, that are available as of 2014. Also, the Loan for the Industrialization of Competitiveness Clusters (LICC) was set up in late 2013 as part of the Investments for the Future Programme, in order to finance the downstream expenses of a collaborative R&D project. Bpifrance is also the operator of the Worldwide Innovation Contest (Innovation 2030) intended to assist with the emergence of the leading companies of tomorrow, through major high-potential innovations in the 7 areas identified by the commission. Finally, Bpifrance defined a strategy regarding non-technological innovation in order to implement, in 2014, tools, guidelines and training within its network in order to be able to support the relevant projects as well as possible.

Intervention means of the Financing division’s various business lines Bpifrance Financement is active in three main business lines (financing of investments and of the operating cycle, guarantee, innovation support) that have a common objective of working with entrepreneurs during the riskiest phases of their projects, from the company’s creation through to its transfer / buy-out, and including its innovation and international expansion:

innovation support, support and financing for innovative projects with a technological component, and that have concrete prospects of completion,

investment and operational cycle financing alongside banking institutions, bank financing guarantees and the involvement of equity investors. Bpifrance Financement has pooled all of its know-how, while combining the various financing techniques in order to design solutions in response to shortcomings in the market. This applies to the financing of the seed-stage, to the bank financing of innovation (mezzanine loans and mobilisation of the CIR for mid-tier companies), over and above any assistance, as well as bringing innovative SMEs into contact with key accounts or equity investors. Its efforts are characterized by its ability to have a ripple effect amongst the private actors in the financing of SMEs and innovation, while optimising the leverage provided by public resources. Bpifrance Financement networks with all of the public and private actors who are working to support the development of SMEs and innovation. Bpifrance Financement has signed a partnership agreement with local authorities, first and foremost, the Regional Councils.


Bpifrance Financement “networks” with:

banking and financial establishments, as well as equity investors, competitiveness clusters, research institutions, universities, engineering institutes, major companies, business incubators and breeding grounds, chambers of commerce, industry and skilled trades, chartered accountants, federations and professional trade unions, associations involved in company creation assistance and support networks, public and private actors working to distribute information technology within SMEs, European structural funds and Community research programmes. 3.3.2.2. “Investment” division

The missions and business lines of Bpifrance Investissement

Missions of the Investment division

As part of the creation of Bpifrance, the investment doctrine was clarified during the first half of 2013, then adopted by

the BPI-Groupe board of directors on 25 June 2013. Applying to the entire Bpifrance “investment” division, this

doctrine can be summarized as follows.

By means of its capital transactions, the Bpifrance “investment” division finances the development and growth of

VSEs and SMEs, carrying on from the FSI France Investissement 2020 programme, with the aim of promoting the

emergence, consolidation and multiplication of mid-tier companies, an essential link in the competitiveness of the

French economy and the development of exports.

The investments of Bpifrance, both within funds and within companies, are carried out selectively, in compliance with

professional best practices, and on the basis of the potential for value creation (for investors and for the national

economy) of the financed companies or funds. However, Bpifrance is not an investor like any other. As an informed

investor operating on an arm’s length basis in the service of the collective interest, it completes the investment offer in

market segments that are characterized by a lack of sufficiently qualified private funds. As such, Bpifrance devotes a

significant part of its capital transactions, using its own resources and those of third party investors managed by it, to

segments including the seed-stage, venture capital, growth capital and capital transfer / buy-out, as well as to funds

that target profitable companies within the social and interdependent economy, that spontaneously attract few

classical investors as a result of their status. Bpifrance also strives to provide the market with an offer of mezzanine

funds as a supplement or replacement for own funds investments, for companies whose shareholders do not wish to

open the capital to third party investors.

Within this framework, all of the operations in which Bpifrance is involved within the framework of its “investment”

business line, adhere to the following guidelines:

Via acquisitions of minority interests, Bpifrance attempts to use public investment in order to draw in private

investment. Whether investing its own resources or those of other public or private subscribers managed by it,

Bpifrance systematically seeks out private co-investors to which it leaves the bulk of the shares, in an effort to

stimulate the investment market;

Bpifrance is an informed investor that operates on an arm’s length basis. When it invests, Bpifrance applies the

same financial and legal provisions as the co-investors (pari passu). Insofar as possible, it holds a seat on the

boards of directors of the companies in which it invests, and within the consultative and strategic committees of

the partner funds;

Bpifrance is a patient investor. It adapts its investment horizon most notably to the company’s technological

context, and can accept to see the profitability of its investments only take shape over a longer horizon than

would be acceptable for most private investors. This is notably the case in the very risky market segments (seed-

stage, venture capital, strong R&D intensity). It focuses on long-term support for the companies in which invests,

which does not exclude a rotation of the portfolio of assets in sync with the private co-investors, for the purposes

of good risk management, of generating manoeuvring margins in order to finance new investments, and of

enhancing the value of its assets;

Bpifrance is in the service of the collective interests. In addition to necessarily assessing the financial

performance of the companies (profitability, sustainability, liquidity), its investment decisions are taken in view of

how the projects will impact the competitiveness of the French economy as valued with the help of a multi-criteria

analysis grid that includes extra-financial criteria such as the export and international development potential, the

contribution to innovation, ESG practices (environmental, social and corporate governance), the effects on

employment and territorial development, the role within the sector, the development of family companies, etc.

To ensure that its investments are efficiently contributing to the growth and development of companies, Bpifrance

prefers to contribute new money to the companies in which it invests, alongside other investors. As such,

Bpifrance aims to serve as a relay for private venture capital, or to bring about the de-listing of a target through

the purchase of shares, in the following three cases:

- the generational transfer of a SME, - the withdrawal of some historical investors from within companies with high growth potential, notably innovative ones, - the purchase of equity interests in order to maintain a significant presence of French investors within the capital of companies that are considered to be sensitive or strategic.

Bpifrance does not invest in the capital of certain categories of companies:

- Companies dedicated to the financing of infrastructure construction projects. On the other hand, Bpifrance can invest in companies involved in the construction or operation of infrastructures; - Companies for which the main activity is real estate promotion or administration; - Banks and insurance companies; - Editorial press bodies or polling companies, in order to prevent any conflict of interest and to maintain its neutrality; - Mixed economy companies (SEM) that can nevertheless be the subject of investments by the Caisse des Dépôts et Consignations,

with the understanding that any investment decision likely to result in competition with other entities of the Caisse

des Dépôts et Consignations group will be the subject of specific coordination.

Exceptionally, Bpifrance can be involved in the turnaround segment that targets the recovery of companies facing

difficulties, particularly SMEs and the smallest mid-tier companies, but only while taking particular precautions.

Indeed, by their very nature, such investments violate the Bpifrance guidelines for three reasons:

- They generally require a majority investment in order to be in possession of all of the levers for action; - Public investments in companies in difficulty are the subject of a presumption of State aid and must, as such, be systematically declared to the competition authorities; this results in longer timeframes, and even the potential non-completion of the investment operation; - As a public investor, Bpifrance would be subject to considerable image risks if involved in the restructuring of companies in difficulty.

In view of these elements, Bpifrance will give preference to turnaround investments by means of a minority

investment, alongside private investors, within funds that are managed by specialised independent teams.


The application of this doctrine also takes into account the notion of a socially responsible investor, which it promotes

with its partner funds and the finance companies as part of a clear ethical framework.

The Investment division’s business lines The Bpifrance “Investment” division is structured around four business lines:

Fund of funds, this business line primarily looks after the management of the equity interests in affiliated funds and private funds of funds subscribed via the funds of funds managed in connection with of the following investment programmes:

o PMEI programme (FPCR 2000, FCIR, FFT3 and FPMEI), o FSI France Investissement programme (FFIA, FFIB and FFI 2), o FSI France Investissement 2020 programme (FFFI 3).

The fund of funds business line is also in charge of asset management on behalf of third parties such as the FNA (PIA) that was not subscribed by Bpifrance.

SME Own Funds, this business line is in charge of the management of the following funds:

o France Investissement Croissance, o Sector-specific funds, o France Investissement Croissance Régions.

Innovation, the innovation teams are in charge of managing the Large Venture activity as well as the funds subscribed by Bpifrance such as the Bioam and Innobio funds, and the funds raised as part of the IFP (FSN PME Ambition Numérique, Fonds Ecotechnologies and Fonds Biothérapies Innovantes et Maladies Rares hereinafter (“FBMIR”)).

ETI / GE (Mid-Caps and Large Companies) Own Funds is the fourth business line of the “investment” division that was distinguished at the time of the creation of Bpifrance; its portfolios are subscribed by Bpifrance Participations. This division’s teams look after the management:

o of the strategic equity interests in large companies (e.g.: Orange) o of the equity interests in mid-tier companies acquired via the ETI 2020 fund. o of the sector-specific funds in charge of providing support to equipment makers in the automobile sector,

on ranks 1 and 2 (FMEA and FMEA rank 2).

Intervention means of the Investment division’s various business lines

The Bpifrance group’s investments are carried out either directly by Bpifrance Participations (former FSI), or through

funds, for which the intervention provisions differ according to the business lines.

In general, the investments of the ETI / GE own funds business line are carried out by the Bpifrance Participations

teams, involving the Bpifrance Participations balance sheet. In keeping with the set-up of a new organisation (in the

first half of 2014), the investments in mid-tier companies will be carried out through the ETI 2020 fund, the actual

creation of which will occur in the 1st quarter of 2014.

The SME Own funds and Funds of funds business lines primarily invest through funds. These fund are mostly

financed via an intermediate holding company (FSI PME Portefeuille entirely held by Bpifrance Participations) and

managed by investment companies from the Bpifrance group (Bpifrance Investissement and Bpifrance

Investissement Régions, which will be absorbed by Bpifrance Investissement on 31 March 2014).

The Innovation business line carries out its investments either through funds managed by Bpifrance Investissement or

directly, within the Bpifrance Participations balance sheet (Larger Venture Innovation activity).


3.3.3. The activity by division and key figures

In a still tense economic context, the Bpifrance group mobilised all of its various financial tools in order to play its role as an actor in the marketplace and to ensure, through its “investment” and “financing” divisions, a contra-cyclical role of financing the economy and impacting on the market’s imperfections. 3.3.3.1. “Financing” division The activity of the BPI-Groupe “financing” in 2013 is presented below around this division’s three business lines, while also considering its international activity.

Innovation activity Subsidies / advances / loans distribution:

(in millions of €) 2012 2013

Individual Aids 395 364

. Grants 90 85

Including partners 42% 42%

. Repayable Advances 123 127

Including partners 24% 26%

. Zero Interest-rate Loans 182 152

Development Loans 18 113

. Seeding Loans 18 19

. Pre-financing of the CIR (Research Tax Credits) 36

. Innovation Loans 58

Financing collaborative projects 349 270

. Single Inter-Ministerial Fund (FUI) (grants) 122 104

. Strategic Industrial Innovation (ISI) 109 92

including grants 41% 29%

including repayable advances 59% 71%

. R&D Structuring Projects for Competitiveness (PSPC) 82 54

including grants 56% 46%

including repayable advances 44% 54%

. FSI (grants) 36 20

Distribution of the beneficiary companies by major sectors (excluding ISI):

2013

Industry 47.65 %

Life sciences 20.43 %

ICT 31.05 %

Other 0.86%

Comments on the evolution of the activity

Thanks to the means provided both by the State and by its partners, in 2013, Bpifrance made full use of the

assistance tools and loans in the amount of €767 million (-2% relative to 2012), thereby providing the financing for

projects equalling €2.1 billion.

In terms of individual and collaborative assistance, the agreements amounted to €634 million. The objectives were

exceeded in terms of individual assistance (€364 million), whereas the collaborative programmes proved to be more

difficult to implement (€270 million).

A new loan, the Prêt à l’Innovation (Innovation Loan), was rolled out in 2013 (€58 million). The kick-off of the new

subsidized rate Innovation Loan in 2014 is intended to revive the activity of innovation loans, that is somewhat below

the stated objective.

The slowdown of the PSPC programme (-35%) can be explained by the complexity of the procedures, that are being

simplified.

Overall, the collaborative assistance tools dropped by 20%, while individual assistance dropped by 8%, whereas

loans multiplied by a factor of 6.

2014 should see an overall recovery of the activity, with budgeted growth of 25%, notably for individual assistance.

Guarantee Activity Key figures:

ACTIVITY (excluding overall line) 2012 2013 Change as a

%

Amount of guaranteed loans 8,465 8,925 5.4%

Creation 2,580 2,482 -3.8%

Transfer / buy-out 1,557 1,539 -1.1%

Development 2,920 2,928 0.3%

Innovation 510 403 -21.0%

International 588 472 -19.8%

Strengthening of permanent capital 310 1,102 255.1%

Distribution by type of guarantee action 8,465 8,925 5.4%

Bank loans 7,565 7,948 5.1%

Own funds 278 263 -5.6%

Short-term 621 715 15.1%

Number of guaranteed loans 83,805 86,049 2.7%

Net amount of covered risks 4,157 4,394 5.7%

Total risk outstandings on 31 December (sound) 12,226 12,719 4.0%


Distribution of the guaranteed loans by purpose:

2013

Creation 27.8%

Transfer / buy-out 17.2%

Development 32.8%

Innovation 4.5%

International 5.3%

Cash 12.3%

Total 100%

Distribution of the guaranteed loans by business sector (excluding Recovery plan mechanism):

2013

Industry 25.4% Construction 9.2% Trade – Transportation 27.9% Services for companies 10.9% Services for persons 15.2% Tourism 11.4%

Comments on the evolution of the activity

The guarantee activity increased by 5% relative to 2012.

It is down by 4% for the purposes excluding support for the cash position, for which the overall share tripled to 12% of

the global activity in 2013, thereby underscoring the tension within the economic environment.

Another indicator of this tension is the weakening scene with the creation and transfer / buy-out purposes, though the

development purpose has been stable.

The distribution of the financing by activity sector also confirms this trend, with the share of Industry declining from

30% in 2012 to 25% in 2013, while the trade-transport sector became the leading activities supported in 2013.

Financing activity Distribution by financing type:

(In millions €) 2012 2013 2013 change

ACTIVITY

Financing

New production 4,701 5,073 7.9%

Outstandings as at 31 December (1) 15,358 17,842 16.2%

Medium and Long-Term Co-financing 3,486 3,697 6.0%

Long and medium-term loans 2,128 2,413 13.4%

Finance lease 1,358 1,284 -5.5%

Development loans (2) 1,215 1,376 13.3%

Of which Growth loan 725 791 9.0%

Of which the PCE, or business start-up loan 70 63 -9.9%

Short term

Mobilisation of Receivables 2,944 3,244 10.2%

Pre-financing of the CICE - 795 ns

Breakdown of assistance excluding PCE by business sector:

2013

Industry 25.4%

Construction 5.1%

Trade – Transportation 27.7%

Services for companies 11.2%

Services for persons 23.9%

Tourism 6.6%

Breakdown of assistance including only PCE by business sector:

2013

Industry 5.6%

Construction 21.7%

Trade – Transportation 31.0%

Services for companies 11.2%

Services for persons 18.6%

Tourism 11.8%

Comments on the evolution of the activity 2013 was marked by a new record with more than €5 billion of new commitments, a 7.9% increase relative to the previous year. This growth was driven by co-financing and even more so by development loans, that now represent more than a quarter of the new production. As such, the medium / long-term outstandings increased by 20%, to €17.8 billion.


The medium / long-term co-financing reached an unheard-of activity volume of €3.7 billion (+6%), with a strong increase in the Energy-Environment domain, thereby confirming Bpifrance’s contra-cyclical market role. Development Loans increased by 13% to nearly €1.4 billion of commitments, thanks to the momentum of the Growth Loan (known as “CDP”; €791 million) and despite the discontinuation of the Green Loan, and to the relays with the international side (Export Loan) as well as, to a lesser degree, in terms of innovation (Innovation Loan, launched at the start of the year, or Pre-financing of the CIR). The only downturn in this table, where all of the products are higher, is the PCE that continues to drop by close to 10% each year, despite the very good Creation momentum. In 2013, short-term financing via the mobilisation of receivables experienced double-digit growth (+10.2%), an indication of both the conquest of new customers and better usage of the lines. The CICE Pre-financing, a product created in early 2013 as part of the National Pact for Growth, Competitiveness and Employment, reached €795 million of agreements for the benefit of more than 12,000 companies, 60% of which are VSEs.

International Focus 2013 was the year in which the public authorities ratified the international actions of Bpifrance. At this time, on 22 May 2013, the Bpifrance Export label was created. This label takes in all of the public support mechanisms targeting exports and the internationalization of companies, distributed by the Bpifrance Regional Network; this is excellent recognition for our group that is now assuming a clearly central position within this vital market for the growth of our customers, which means that the Bank is one of the very rare institutions in the world to provide financing, insurance and international support all under one roof. On this occasion, the financing products were simplified. In order to provide the best possible service to entrepreneurs, the network has already welcomed 25 (40 by March 2014) Ubifrance employees and 22 Coface employees who, working closely with the Bpifrance case officers, are contributing their respective skills in the areas of international accompaniment and insurance for export contracts and actions. Their integration within the regional teams was remarkable. The initial results to 31 December 2013 speak for themselves: out of meetings with 420 companies, 260, i.e. two thirds, gave their approval for a long-term support project, 91 of them have already initiated their recommended action plan, and the number of companies receiving financing or specific guarantees relative to their international development increased by more than 20%. In partnership with Ubifrance in the relevant countries, Bpifrance also simultaneously organised 2 thematic missions for the benefit of some 40 of the bank’s entrepreneur customers, i.e. technological “gems” in their fields, particularly ICTs in South Korea and cleantechs in China. These two transactions received a strong satisfaction rate from companies, several of which experienced commercial successes in their wake. Technical assistance, that is now provided by the Strategy Department, also experienced interesting results, with the Tunisian, Russian and Egyptian markets being covered in a manner satisfactory to our customers, with new possibilities coming to light in 2014.

3.3.3.2. “Investment” division The activity of the Bpifrance “Investment” division is presented below, in two parts. First of all as part of a summary analysis (I) that brings to light the major features of the activities of the “Investment” division in 2013, then as part of a detailed analysis (II) of the assets and portfolio under management in 2013 and of their evolution during the fiscal year, relative to each business line. I. Summary analysis – Main variables a) “ETI / GE own funds” business line Intermediate-sized companies offer many strengths: agility when faced with cyclical fluctuations, ability to innovate, level of internationalisation, strong contribution to greater employment, strong regional anchoring. However, these companies are not very numerous in France, and smaller than is the case with our neighbours: as such, there are 3 times more of them in Germany and twice as many in the United Kingdom. In this context of the attrition of private initiative, the Bpifrance group wishes to mobilise its resources, in the service of both current and future mid-tier companies, in order to release this reservoir of growth for the French economy. In 2013, the Bpifrance group initiated measures in response to 3 major stakes:

• increasing the strategic weight of mid-tier companies within the French economy by preparing a mapping and segmentation that will bring to light the specific features and growth challenges of this group,

• identifying the strengths and roadblocks for the growth of mid-tier companies, while relying on the Bpifrance group’s grassroots network,

• contributing to the continuum of the Bpifrance group’s overall offer, by accompanying mid-tier companies throughout their growth trajectories.

In 2013, the activity of the ETI / GE own funds business line continued at a similar pace as in 2012 (€366.5 million subscribed versus €358.9 million the previous year, excluding exceptional operations and excluding FMEA). This activity evenly involved new investments (subscriptions of €192 million) and support for existing equity interests (€175 million). The relatively significant number of reinvestments, i.e. 11 out of 16 operations, is therefore indicative of the Bpifrance group’s positioning as a patient investor that accompanies projects over time, and at various key moments. In 2013, the ETI / GE own funds business line continued the dynamic management of its portfolio with 12 disposals, double the 2012 figure. b) “SME own funds” business line Bpifrance acquires minority interests in companies, from the seed-stage through their transfer / buy-out, in order to provide them with means for their growth. It intervenes indirectly in SMEs. Despite a difficult market, the investment in the own funds of SMEs activity resisted well in 2013: 91 operations were carried out during the fiscal year for €121 million invested. In particular, we note that:

• 65% of the operations were carried out in the regions, an indication of the strong territorial anchoring of the Bpifrance action.

• The management of the portfolio, consisting of 409 companies, also mobilised the teams and notably led to 43 disposals in 2013.

2013 was also marked by the set-up of 3 thematic funds:

• Fonds pour le Savoir Faire d’Excellence (FSFE - Excellence Know-How Fund): the fund, with €20 million of allocations, is intended to accompany craft and industrial companies in possession of rare know-how as a result of their manufacturing experience;

• Croissance Rail (Rail Growth): the fund has an allocation of €40 million. It is co-financed by Alstom, Bombardier, SNCF, RATP and Bpifrance;

• Fonds de Développement des Entreprises Nucléaires (FDEN – Nuclear Companies Development Fund): the fund has a target allocation of €133 million. It is co-financed by EDF, Areva, Alstom, Eiffage, Vinci and Bpifrance.

In a context of a considerable French growth capital sector, the activity of the SME own funds business line once again demonstrated a certain degree of resiliency, thereby indicating the contra-cyclical role played by Bpifrance.


c) “Innovation” business line In terms of innovation, 2013 was characterized by strong momentum. The direct innovation capital activity led to subscriptions of €111 million for 35 operations, i.e. 54% growth relative to 2012. This growth was particularly carried by the momentum in the digital field (FSN PME Ambition Numérique) and by the proactive actions of the Large Venture pocket set up in 2013 by Bpifrance. As such, Large Venture works with companies having a major capital need in order to accelerate their commercial developments, international deployment or the industrialization of their technology. The invested amounts are most often greater than the turnover of the companies in question, thereby demonstrating the venture capital dimension of the Large Venture activity and its purpose of encouraging the emergence of French champions, future worldwide leaders in their markets. Endowed with €500 million, Large Venture takes part in operations beginning at €10 million, and in the vast majority of cases as a co-investment with private partners. The business line actions of Bpifrance are accompanied by an innovation action plan called Nova (cf. above, page 14). d) “Fund of funds” business lines Bpifrance acquires minority interests in companies, from the seed-stage through to their transfer / buy-out, in order to provide them with means for their growth. It intervenes indirectly, notably through the company FSI PME Portefeuille, in more than 270 national or regional private funds. In 2013, Bpifrance continued its funds of funds action within a recurring context of increasing scarcity of private subscriptions within the growth capital segment intended for SMEs considered to be “growing”. The level of subscriptions carried out in partner funds (funds of funds activity) was high in 2013; €444 million were invested in 41 investment vehicles, including 15 regional vehicles that work as closely with the territories as possible. This amount will gradually filter through the economy, in keeping with the calls for funds initiated by the partner funds of Bpifrance. Bpifrance is committed to the economic fabric at each stage in the development of growing French companies. As such, seed-stage capital, venture capital and growth capital each represented 1/3 of the amounts subscribed in funds of funds in 2013. Within this framework, we note a strong recovery of subscriptions in venture capital funds, with €143.5 million subscribed (cf. below) in 2013 versus €65 million in 2012. After seeing strong growth until 2011, to €2.9 billion (source: AFIC), the growth capital market dropped by 34% in 2012, a trend that was confirmed in 2013. This decline affects all categories of companies, including ones with turnover of less than €5 million. Faced with this very noticeable negative growth of the offer, the potential demand remains high and legitimizes the efforts of Bpifrance with SMEs:

The transfer / buy-out of SMEs is an economic and societal issue at a time when the average age of directors is increasing, and when many such operations fail entirely,

French SMEs are suffering from a recurring shortfall of own funds; the net indebtedness of 1/4 of them is in excess of 150% of their own funds,

SMEs must invest in order to restore their margins: ones that have opened up their capital have double the margins of companies that have not.

II. Detailed Analysis

a) Assets under management

Assets managed (in €M)

To the end of December 2013

To the end of December 2012

Total ETI GE own funds Funds of funds SME own funds Innovation Total ETI GE own funds Funds of funds SME own funds Innovation

Funds of funds direct equity interests 127,2 - 127,2 - - 48,7 - 48,7 - -

FSI PME Portefeuille 138,7 - 138,7 - - 133,9 - 133,9 - -

Averroes Finance holding 0,1 - 0,1 - - 0,1 - 0,1 - -

FPMEI 920,5 - 920,5 - - 920,5 - 920,5 - -

FCPR 2000 95,0 - 95,0 - - 95,0 - 95,0 - -

FFT3 150,0 - 150,0 - - 150,0 - 150,0 - -

FCIR 70,0 - 70,0 - - 70,0 - 70,0 - -

FFI A 330,0 - 330,0 - - 330,0 - 330,0 - -

FFI B 229,8 - 229,8 - - 229,8 - 229,8 - -

FFI II 638,8 - 638,8 - - 638,8 - 638,8 - -

FFFI III 1 560,6 - 1 560,6 - - 1 800,0 - 1 800,0 - -

FCPR 91,5 - 91,5 - - 91,5 - 91,5 - -

EIB funds 45,7 - 45,7 - - 45,7 - 45,7 - -

NPF 579,8 - 579,8 - - 599,8 - 599,8 - -

FFI3+ 50,3 - 50,3 - - - - - - -

Averroes Finance 1 6,9 - 6,9 - - 11,1 - 11,1 - -

Averroes Finance 2 30,0 - 30,0 - - 30,0 - 30,0 - -

ETI GE direct equity interests 11 861,6 11 861,6 - - - 12 692,2 12 692,2 - - -

FMEA 575,0 575,0 - - - 575,0 575,0 - - -

FMEA rank 2 50,0 50,0 - - - 50,0 50,0 - - -

FCID 180,1 - - 180,1 - 180,1 - - 180,1 -

FCID 2 180,0 - - 180,0 - 180,0 - - 180,0 -

OC+ A 220,0 - - 220,0 - 220,0 - - 220,0 -

SME direct equity interests (former CDC Elan) 37,5 - - 37,5 - 42,2 - - 42,2 -

AEI 3,0 - - 3,0 - 3,7 - - 3,7 -

AE1 38,9 - - 38,9 - 38,9 - - 38,9 -

AT 11,1 - - 11,1 - 15,0 - - 15,0 -

AED C4 140,0 - - 140,0 - 140,0 - - 140,0 -

AEM 60,2 - - 60,2 - 60,2 - - 60,2 -

OC+B 290,0 - - 290,0 - 290,0 - - 290,0 -

FSI REGIONS 1 200,0 - - 200,0 - 100,0 - - 100,0 -

FSI REGIONS MEZZANINE 200,0 - - 200,0 - 100,0 - - 100,0 -

FCJE 90,0 - - 90,0 - 90,0 - - 90,0 -

Fonds stratégique Bois (Wood strategic fund) 20,0 - - 20,0 - 20,0 - - 20,0 -

Patrimoine and Création 40,2 - - 40,2 - 40,2 - - 40,2 -

Patrimoine and Création 2 45,0 - - 45,0 - 45,1 - - 45,1 -

Mode et Finance (Fashion and Finance) 7,0 - - 7,0 - 4,9 - - 4,9 -

FSFE 20,0 - - 20,0 - - - - - -

Croissance Rail (Rail Growth) 40,0 - - 40,0 - - - - - -

FDEN 25,0 - - 25,0 - - - - - -

Innovation risk capital direct equity interests 144,1 - - - 144,1 98,2 - - - 98,2

FCPR bioam 44,2 - - - 44,2 44,2 - - - 44,2

Bioam 1 Bis Compartiment 1 7,0 - - - 7,0 7,0 - - - 7,0

Bioam 1 Bis Compartiment 2 5,0 - - - 5,0 5,0 - - - 5,0

Innobio 139,0 - - - 139,0 139,0 - - - 139,0

Ecotechnologies fund 150,0 - - - 150,0 150,0 - - - 150,0

FSN PME 100,0 - - - 100,0 100,0 - - - 100,0

FBIMR 50,0 - - - 50,0 - - - - -

20 038,8 12 486,6 5 064,9 1 848,0 639,3 20 625,8 13 317,2 5 194,9 1 570,3 543,4


At the end of 2013, the assets under management were equal to more than €20 billion, consisting of the following:

ETI / GE own funds, €12.5 billion,

Funds of funds, €5.1 billion,

SME own funds, €1.8 billion,

Innovation, €0.6 billion. For direct equity interests, the presented data correspond with the valuation (IFRS) used at the closing of each fiscal year. For the funds, this refers to the size of the funds (total subscriptions), restated for the subscriptions carried out in the managed direct funds.

b) Evolution of the portfolio under management

In 2013, the Bpifrance “Investment” division authorised €912 million of investments distributed as shown below:

€405 million for the funds of funds,

€224 million for the ETIGE own funds,

€106 million for Innovation,

€176 million for the SME own funds. The subscriptions relative to 2013 were equal to approximately €1.04 billion, consisting of the following:

€444 million for the funds of funds,

€367 million for the ETIGE own funds,

€111 million for Innovation,

€122 million for the SME own funds.

In 2013, the Bpifrance “Investment” division carried out disposals for €1,186 million, including €417 million of net capital gains. The disposal proceeds more than doubled relative to 2012. This change was driven by the ETI / GE own funds division that carried out twice as many disposals in 2013 as in 2012.

912 1 044

845

1 186

1 353

1 776

1 616

519

Authorizations Commitments Cash out Disposals**

Activity of Bpifrance Investissement division from 2012 to 2013 in M€

2013 2012

c) Evolution by business line

Fund of funds

Authorisations of commitments and subscriptions in 2013:

In 2013, €405.5 million in commitments were authorised, including €378.5 million in affiliated funds (including international) that will be subscribed by Bpifrance. The balance corresponds to the commitments authorised for the

405

176 106 224

479

222 136

517

444

122 111

367

390

161

74

1 152

248

122 108

367

228

162

75

1 152

111

73

2

1 001

82

36

1

400

Fondsde fonds

PME Innovation ETI/GE * Fondsde fonds

PME Innovation ETI/GE*

2013 2012

Activity of Bpifrance Investissement from 2012 to 2013 by business linesin M€

Authorizations Commitments Cash out Disposals**

378,5

299,4349,0

251,7

27,0144,5

130,0

137,8

Authorizations Commitments Authorizations Commitments

2013 2012

Authorizations and commitments on Funds of funds portfolio(in M€)

479

390405 444

PIA program Bpifrance assets


funds managed on behalf of third parties (National Seeding Fund (FNA) in connection with the “Investing in the Future Programme” (PIA)). These authorisations break down as follows:

Seed-stage, €27 million authorised (via the FNA) versus €137.3 million in 2012 (including €130 million via the PIA excluding FBMIR),

Venture capital, €38.3 million authorised versus €164.5 million in 2012,

Growth capital, €248.2 million authorised versus €126.5 million in 2012,

Generalist, €82 million authorised versus €50.7 million in 2012,

Mezzanine, €10 million authorised in 2013. 2012 was marked by a concentration of the investment projects on the seed and venture capital funds (nearly €327 million authorised). In 2013, however, there was a greater concentration of investment projects in the growth capital funds, with more than 60% of the authorisations (versus 26% in 2012).

The new subscriptions in 2013 were primarily carried out by the funds during investment periods, namely the FFFI 3 (that succeeded the FFI 2 fund) (€243.3 million) and the FNA (€133.5 million) funds. It should nevertheless be noted that the FFI 2 carried out 3 new subscriptions in 2013 (€18.5 million), for which the commitments had previously been authorised. The total subscriptions for the funds of funds business line in 2013 (including international funds) amounted to €444 million versus €390 million in 2012. Change of the gross value of the funds of funds portfolio as on 31.12.2013 The following charts present the evolution of the gross value of the funds of funds portfolio as on 31.12.2013. This illustrates the evolution of the stock of investments in the affiliated funds, with the outstandings relative to the managed direct funds having been restated.

2698,2

3142,1

0,00,7

0,0 0,02,1

18,5 2,6

243,3 14,817,4 0,0

133,511,1

2000

2200

2400

2600

2800

3000

3200

Commitments as of 31/12/2012

FPMEI FPCR 2000 / FFT 3 / FCIR

FFI A / FFI B FFI II FFFI III Autres* FNA Commitments as of 31/12/2013

Commitments on Funds of funds portfolio from 2012 to 2013(in M€)

New commitments

Reinvestments

The portfolio calls carried out in 2013 were equal to €248 million and the portfolio distributions amounted to €111 million for an amortisation of €107.7 million. The gross value of the portfolio of the funds of funds division (including international funds) was equal to €1.34 billion. The evolution of the gross value of the funds of funds portfolio presents the outstandings (calls / amortisations) restated for the direct fund flows. For example, the calls and amortisations of the FFI B fund were restated for the flows relative to the AEM and FCID funds. Relative to the FPCR 2000, FCIR and FFT 3 funds, the chart presents all of the activities of these funds that are only partly held by FSI PME Portefeuille (respectively 33.33%, 57.1% and 33.33%). The portfolio calls remain concentrated on the funds that are no longer in their investment period, for which the level of total calls is still relatively low (FFT 3, FFI II), and on the funds in their investment period for which the activity is ramping up (FNA and FFFI 3). The portfolio distributions also remain concentrated on the funds in the PME Innovation programme (FPCR 2000, FFT 3, FCIR and FPMEI), that account for nearly half of the year’s distributions (amortisations of fund units). Other Funds were also distributed, including FFI A (€15 million), FFI 2 (€26.8 million related to the disposal of the equity interest in ADS by the FCDE) and the private and international funds of funds (€9 million). Few affiliated funds exited from the funds of funds portfolio in 2013, with the completed operations involving the following portfolio of funds:

FPMEI,

o FEMERTEC 1 for which the liquidation generated a capital loss of €2 million, o DEMAIN TV that generated a capital loss of €1,7 million.

It should be noted that the FPMEI also received several distributions from its underlyings funds, resulting in a capital gain of €1.2 million.

1 199

1 339

10,5

-36,1 22,5 -16,7

63,5

-16,0

78,3

-26,8 26,4

21,0 -11,9

26,3

-

1 000

1 050

1 100

1 150

1 200

1 250

1 300

1 350

GV as of 31/12/2012 FPMEI FPCR 2000 / FFT 3 / FCIR FFI A / FFI B FFI II FFFI III Autres* FNA GV as of 31/12/2013

Evolution of the gross value of the funds of funds portfolio from 2012 to 2013 (in M€)

Cash out

Amortization


Public funds / EIB,

o MATIGNON TECHNOLOGIES resulting in a capital gain of €0.1 million, o GALILEO 2 and GALILEO 2 Bis resulting in capital losses of €0.1 million.

It should be noted that these two funds also received several distributions from underlyings funds (SEEFT VENTURES, TECHFUND CAPITAL EUROPE), resulting in a capital gain of €2.9 million.

SME own funds

The following chart presents the evolution of the gross value of the portfolio of the SME direct funds as on 31.12.2013 and managed by Bpifrance Investissement, the Bpifrance group management company. These funds are indirectly subscribed by FSI PME Portefeuille via the funds of funds (FPMEI, FFIB, FFI 2, FFFI 3…).

The investments carried out in 2013 were equal to €122 million and the portfolio disposals (gross value exits) amounted to nearly €57.1 million. The gross value of the SME own funds division’s portfolio therefore stands at nearly €740 million at the end of 2013. The calls are down relative to 2012 (€161.7 million) and are primarily concentrated within the sub-divisions:

Generalist, the FCID reduced its reinvestments. It also carried out fewer investments while the average ticket increased, coming in at €7.1 million (+1.7 million), with OC +A carrying out no new investments in 2013,

Regional, the OC+B fund invested appreciably less in 2013 and the average ticket of the new investments fell by €0.8 million (for a decline of -€0.4 million). It should be noted that the AED C4 and AEM funds completed their investment periods in 2012, which in 2013 resulted in a reduction of new investments that was not offset by the FSI Régions 1 and FSI Régions Mezzanine funds.

The portfolio distributions increased relative to 2012 (€42.6 million). They were concentrated on the Generalist (FCID) and Regional (AED fund) sub-divisions.

675,6

740,0

50,4 -28,9

8,6 -11,3 - -17,0

500

550

600

650

700

750

800

GV as of31/12/2012

Generalist Sectorial Regional GV as of31/12/2013

Evolution of the gross value of the SME own funds portfolio from 2012 to 2013

(in M€)Cash out

Amortization

Innovation

The following chart presents the evolution of the gross value of the portfolio of funds managed by the Bpifrance Investissement Innovation business line teams.

The subscriptions carried out in 2013 by the Innovation business line amounted to €111 million, of which €108 million were paid up. Nearly half of the investments (€52.9 million ) were carried out via the Large Venture activity. This activity’s ramp-up should be confirmed in 2014 and in the subsequent years. Innobio’s investments were comparable to the ones in 2012, i.e. €19 million in 2013, thereby confirming its accompaniment policy for its equity interests with nearly €13 million of reinvestments carried out in 8 companies. The IFP programme funds invested €35.6 million in 2013 versus nearly €27 million in 2012:

The FSN PME Ambition Numérique fund carried out 11 investments in 2013, including 5 reinvestments pour €4.7 million. It is interesting to note that the fund carried out fewer new investments relative to 2012 (-3) but that at the same time, the average ticket increased from €1.9 million to €3.6 million,

In 2013, the investments carried out by the Ecotechnologies fund were stable at €9.3 million in 3 companies, with an average ticket that was also stable,

The FBMIR made its first investment with a subscription of €3 million (out of an authorised commitment of €4 million), of which €1.7 million were called by the end of 2013.

224,1

331,4

0,6 -

19,0 - 0,9

26,2 -

7,7 -0,9 1,7 -

52,9

-

50,0

100,0

150,0

200,0

250,0

300,0

350,0

GVas of 31/12/2012

Fonds BIOAM INNOBIO FSN PME ECO- TECHNOLOGIES

FBIMR LARGE VENTURE GV as of 31/12/2013

Evolution of the gross value of the Innovation portfolio from 2012 to 2013 (in M€)

Cash out

Amortizations


ETI / GE own funds

To the end of 2013, 16 firm investment / reinvestment commitments were authorised for €223 million in mid-tier and large companies (ETI / GE) versus 14 firm investment commitments to the end of December 2012, for €475 million. The December 2012 figure included the investment in CMA-CGM and the reinvestment in Paprec that were actually carried out in 2013, for a total of €165 million. Excluding these two commitments, the commitments assumed in 2012 were equal to €310 million.

In 2013, five new investments were carried out amongst the ETI / GE for a total of €192 million. Nine new investments had been carried out by this same date in 2012 for €1,050 million, including the investment in Eramet for €764 million (€286 million excluding Eramet). The main new investments in 2013 were the following:

Naturex (€12 million): n°1 worldwide mid-tier company for speciality natural plant-based ingredients intended for the agri-food, pharmaceutical and cosmetics industries (company development support theory),

Technicolor (€54 million): strengthening and stabilisation of the capital of this mid-tier company that is on the cutting-edge of digital innovation, with a significant portfolio of patents,

In June 2013, investment in CMA-CGM ($150 million, i.e. €116 million): accompaniment for one of the three worldwide leaders in maritime transport,

In December 2013, investment in Talend for €10.5 million (out of a commitment of €12.4 million), a company that produces and markets data integration software programs.

Eleven reinvestments were carried out in 2013 within mid-tier companies and LCs for €174 million (seven in 2012 for €72.5 million):

Windhurst Industries and Clestra, TDF and four operations with listed companies for a total of €23 million,

Constellium (€52 million): this large company, one of the worldwide leaders in aluminium, had its IPO in May 2013. The reinvestment carried out at this time, that served to increase the equity interest to 12.5% of the capital, resulted from the desire to maintain the group’s French anchoring,

Paprec for nearly €49 million in September 2013, on a commitment assumed in 2012 as indicated above,

Nexans for €46 million in November 2013 and participation in the Alcatel capital increase for €3 million in December.

83,1192,3

402,8

1 050,4

140,2

174,2

72,5

72,5

Authorizations Commitments Authorizations Commitments

2013 2012

Authorizations and commitments - ETI / GE (without FMEA) in M€

New authorizations / Commitments

Reinvestments

In December 2013, the FMEA funds carried out a €0.6 million reinvestment in DELFINGEN INDUSTRY(worldwide automotive equipment manufacturer for protection systems, fluid transfer systems and assembly services). Let us recall that in 2012, nearly €42 million of commitments had been authorised in 8 companies and €29.2 million had been subscribed in 10 companies.

To the end of December 2013, twelve mid-tier companies and LCs, mostly listed, had been the subject of disposals for an overall inflow of €1 billion (to the end of December 2012, the disposals had involved six lines for a total of €400 million). The FMEA funds carried out a partial disposal in December 2013 (ELECTROPOLI GROUP) for a gross value outflow of €6 million resulting in a capital losses in the same amount. Let us recall that in 2012, the FMEA had performed a disposal that resulted in a capital loss of €9 million.

582,9

291,0

423,1

107,0

2013 2012

Disposals and capital gains / losses(in M€)

Gross value outflows IFRS Capital gains


3.3.4. Financial data and results

The consolidated financial statements

As indicated in the appendix to the consolidated financial statements, fiscal 2013 is no longer comparable with fiscal

2012 as a result of the exit from the scope of consolidation of Bpifrance Financement (former SA OSEO) and of the

recognition, using the equity method, of the shares of the SA BPI-Groupe as part of the contribution transactions.

As on 31 December 2013, the consolidated financial statements of the EPIC BPI-Groupe include the securities of the

SA BPI-Groupe booked using the equity method and the operations that it directly manages. The balance sheet total

represents an amount of €13.7 billion versus €30.7 billion in 2012.

The earnings of the EPIC BPI-Groupe consist of the share of the earnings of Bpifrance equal to €193.4 million, the

earnings from discontinued operations for €5.2 million and from the earnings on its own operations.

The group share of net earnings is therefore equal to €193.9 million, versus €63.4 million in 2012.

The individual financial statements

The individual financial statements published by EPIC BPI-Groupe are presented in compliance with the General

Chart of Accounts. They have been restated according to a banking format in order to be integrated into the

consolidated financial statements.

This year’s earnings include an exceptional capital gain of €328 million booked at the time of the contribution

operations relative to the Bpifrance Financement securities as part of the set-up of Bpifrance in July.

The financial result of the EPIC BPI-Groupe is equal to €7.9 million and represents the compensation for the

guarantee given for the benefit of Bpifrance Financement for the issues performed by it.

For €0.7 million, the operating expenses primarily represent the recourse to external services and €0.2 million of

invoicing by Bpifrance Financement for the services provided to the EPIC BPI-Groupe that has no employees.

Finally, in 2013, the EPIC BPI-Groupe was entrusted with the set-up of two new programmes concerning future

investments known as “Programmes d’Investissement d’Avenir” (PIA) that resulted, thanks to a capital endowment

from the State, in a matching contribution from two guarantee funds for a total amount of €12 million for the benefit of

Bpifrance Financement. As such, an exceptional charge was booked.

The net income was equal to a profit of at €322.8 million.

After the contribution operations, the balance sheet of the EPIC BPI-Groupe – now a 50% shareholder of Bpifrance –

shows an increase equal to €13.3 billion, versus €3.9 billion in 2012. The off-balance sheet commitments consist

primarily of guarantees given for the amount of €15.7 billion to 31 December 2013. This €4.5 billion increase can

notably be explained by the new issue programmes carried out by Bpifrance Financement and guaranteed by the

EPIC BPI-Groupe.

On the asset side, the equity interest of the EPIC BPI-Groupe in Bpifrance is recorded in the amount of €10.5 billion,

financed on the liabilities side by the increase of the issued capital. Finally, thanks to the new IFP programmes and

the payments from the State, the EPIC BPI-Groupe has €0.97 billion with which to finance its subsidiary’s general

economic interest missions, primarily as part of the Investments for the Future Programme. These resources are

primarily deposited on account with the State.

3.3.5. Outlook for 2014

3.3.5.1. The 2014-2017 Strategic Plan After preparatory work undertaken in the summer of 2013, involving tens of employees as well as shareholders, the State and the Caisse des Dépôts et Consignations, the board of directors approved, during its meeting on 20 December 2013, the Bpifrance strategic plan for the 2014-2017 period.

This plan presents the development axes and strategic objectives for which Bpifrance is ramping up its capacity in

order to reach them by 2017, without prejudging the fact of obtaining associated budgetary means. It therefore plans

to accompany the expected recovery of investment by French companies and the mobilisation of French actors in the

service of this key factor for growth and the competitiveness of the economy.

This ambition is based on 3 strategic axes: a) The first task is to support the growth of the companies in order to allow them to develop, by:

providing financing solutions that are complementary to the ones from the classical banking market,

encouraging the opening of company capital and the mobilisation of equity investors.

b) It is also a priority for Bpifrance to prepare for the competitiveness of tomorrow by contributing to the resolution of the economy’s more structural difficulties, while paying special attention to innovation and to the sectors of the future, by:

increasing the number and the size of mid-tier companies,

encouraging innovation,

supporting the energy and environmental transition,

accompanying and supporting the sectors of the future, as well as the social and interdependent economy,

providing companies with the resources for their international development.

c) Finally, Bpifrance promotes company spirit and contributes to the development of an ecosystem favourable to entrepreneurial efforts, in sync with the other economic development actors, first and foremost the Regions, by:

accompanying companies during all the steps of their growth,

strengthening the partnerships with the Regions in favour of companies,

becoming the reference public actor for the responsible financing of companies. 3.3.5.2. 2014 prospects As the first year of the implementation of the strategic plan adopted in late 2013, 2014 will be marked by significant growth of the activity, in order to accompany the economic recovery, with a development of all interventions involving financing and own funds investments, with a particular focus on the Development Loans, Cash Products, Innovation and Growth Capital within SMEs and mid-tier companies. The growth of the Development Loans will be one of the major axes for strengthening the financing activity in the coming years. After an excellent performance in 2013, the short-term financing products, and notably the pre-financing of the CICE, will once again grow appreciably in 2014. In 2014, the guarantee activity for the classical funds and regional funds should also increase. In the wake of the Nova plan and of the guidelines set in November 2013 by the public authorities, the innovation financing activity should see a clear rebound in 2014. 2014 will also be marked by the continuing development of the international financing and support for companies. With regard to the prospects of the “investment” division for 2014, in a context of an expected recovery of economic activities, Bpifrance is readying itself to work with SMEs, mid-tier companies and large companies that might wish to finance their development by strengthening their own funds, both through direct investments and via partner funds. For 2014, the prospects of the “investment” division’s various business lines are the following:


- For the “funds of funds” business line, subscriptions should increase in 2014 notably via the FFFI 3 fund that

remains in its investment period until the end of 2015 and the FNA for which the investment period will end in mid-2015 (barring two possible annual extensions), with the understanding that an annual envelope of €30 million will also be released as of 2014 (over 5 years) in order to invest in private funds of funds.

Distributions should accelerate in 2014 under the impetus of the funds issued as part of the PMEI programme (primarily the FPMEI) and the intensification of the distributions of the funds from the FSI France Investissement (primarily the FFI A and private funds of funds).

- The activity of the SME Own Funds business line should intensify with i) the raising of new sector-specific funds

(in particular the Fonds Stratégique Bois 2 and Mode et Finance 2), ii) the ramp-up of the sector-specific funds raised in 2013 (FSFE, Croissance Rail and FDEN), iii) the raising of the OC+A successor fund, iv) the confirmation of the investment effort of the FCID 2, for which the investment period should come to an end in late 2014 (unless extended) and, finally, v) the intensification of regional investments with the €100 million size increase carried out in 2013 for the FSI Régions 1 and FSI Régions Mezzanine funds and the raising of the AEM successor fund.

- For the “Innovation” business line, 2014 should also see a ramp-up of the investments of the Large Venture

activity. The average investment of the Large Venture activity was estimated at €12/13 million.

The Innobio fund, in its investment period until 2016, should continue to support the portfolio equity interests (reinvestments) and its investments in new equity interests. To this end, the size of this fund is scheduled to increase in 2014.

- For the ETI / GE own funds business line, the investment ambition in 2014 is in the area of €1 billion. The

business line’s disposals will concentrate on lines carrying significant unrealised capital gains, and that are very liquid.

Detailed information on the 2014 prospects of the various Bpifrance business lines are provided in the annual reports of the group’s main subsidiaries, namely Bpifrance Financement, Bpifrance Participations and Bpifrance Investissement.

3.3.6. Internal control and risk management

Approved as a financial company until 12 July 2012, the EPIC BPI-Groupe was subject to all provisions relative to internal control contained in regulation 97-02 from the Consultative Committee on Legislation and Financial Regulation. The establishment also produces an annual report on internal control and on risk measurement and surveillance, in compliance with the provisions of articles 42 and 43 of regulation 97-02. This work resulted in an exercise coordinated by the Bpifrance Financement Risk Permanent Control Department (DCPR) and the Bpifrance Compliance – Permanent Control department. Approved by the executive body, this report is presented to all of the governance bodies then conveyed to the Prudential Control and Resolution Authority. It analyses the situation of the credit, financial and accounting risks as well as of the operational risks, notably as they relate to the information systems.

Organisation and operation of the Bpifrance internal control The Bpifrance group’s internal control mechanism revolves around a series of means, procedures, functions and actions suited to the characteristics of the group and of each of its subsidiaries. This system, that contributes to the control of the activities, to the efficiency of the processes and to the efficient usage of the resources, provides for appropriate consideration of the significant risks, whether operational, financial or compliance-related. Its definition, implementation and monitoring are the responsibility of the directors and of the management. It notably includes the three following functions: A group Compliance-Permanent Control department that relies on corresponding functions within the subsidiaries:

- the Permanent Control - Risks Department (DCPR) for Bpifrance Financement, - the function of Compliance and Internal Control Manager (RCCI) for Bpifrance Investissement.

This organisation also includes permanent control units present in several operational departments.

The compliance system refers to all of the procedures, systems and controls implemented by the establishment in order to ensure the compliance of its operations, its adherence to the laws and regulations, as well as the marketplace rules and ethics, in addition to its control of the risks of all kinds to which the group is exposed. It corresponds with the systems described by the Monetary and Financial Code, the CCRLF regulation 97-02 and the AMF General Regulation.

A Risks department for the Group, coordinated by the Risk Consolidation Department (DCR).

The Group Risk Committee, chaired by the General Manager, holds quarterly meetings involving the main business lines in charge of risk management, measurement and control. It provides surveillance of the main risks inherent to the activities of Bpifrance or its subsidiaries.

A periodic control system, provided by the Bpifrance General Inspection and Audit (GIA) department, covers all of

the activities and companies in the Bpifrance group.

The role of the GIA is to verify the quality and correct operation of the compliance, permanent control and risk management systems. It neither defines nor manages these systems, but contributes to improving them through the recommendations that it formulates.

The Bpifrance group internal control system is governed by the Compliance - permanent control charter, the Audit

charter and the DCR Intervention doctrine.

Completed by their application procedures, these three documents generally describe the components and objectives of each of the three business lines.

They were validated by the General Manager, presented to the audit committee of the companies in question, then disseminated within the group.


The bodies involved in internal control are the Bpifrance Audit Committee, as well as two specific committees: the Group Risk Committee and the Group Internal Control Committee.

The Bpifrance group Compliance – Permanent Control department This department’s perimeter simultaneously includes:

- the verification of the commitments and business line risks: it ensures compliance with the regulations, general standards as well as the standards specific to the Bpifrance business lines (financing, guarantee, innovation and investment),

- compliance, that notably measures the risk resulting from the products and any new legal actions, and gives its opinion on their compliance,

- operational risks and the associated risk control systems, - ethics, which is in charge of defining the group’s principles and standards, then verifying the compliance with

them, - the follow-up of the essential outsourced services, - the anti-money laundering and terrorist financing (AMLTF) efforts.

Permanent control itself consists of two levels. The first permanent control level is based on all of the participants looking after operational tasks and/or functional responsibilities. They must firstly see to the proper execution of the tasks and to the control of the risks falling into their activity domain. This requires: vigilant compliance with a certain number of principles: a clear organisation based on documented, secure and

verifiable procedures, the independence of the various functions (commitment – scheduling – posting – payment – control), and the availability of relevant, objective and verifiable information.

the implementation of follow-up and steering tools that will make it possible to justify the proper control of the

activities undertaken as part of the delegated competencies. The second permanent control level, exercised on a continual basis, is performed by employees exclusively dedicated to this function. To ensure their independence relative to the operational business lines and to the periodic control, the group department manager and the managers in charge of compliance – permanent control at Bpifrance Financement and Bpifrance Investissement respectively report to the General Manager of the SA Bpifrance and to the Chairman and Chief Executive of both subsidiaries. When a department’s size or the level of its risks do not justify the creation of a full time permanent controller position, a “Permanent Control” correspondent will be appointed. This person serves as a relay with the group Compliance - Permanent Control department (or its representatives within the subsidiaries, the DCPR and the RCCI), and can carry out verifications if necessary. The manager of the group Compliance - Permanent Control department coordinates the activity of the subsidiaries, to ensure consistency and efficiency. The Charter and permanent control procedures The Charter of the Bpifrance Compliance - Permanent Control department lists this business line’s characteristic principles, objectives and methodologies. An annual control plan defines the verifications having to be performed, and their frequency. It is determined together with the permanent control managers and correspondents, and in collaboration with the Operational departments. It is validated by the group Internal Control Committee then implemented by the Compliance – Permanent control department and the managers of the DCPR and RCCI, for the relevant subsidiaries.

An IT tool is available in order to ensure the follow-up of the implementation of the recommendations issued by the Bpifrance departments in question, and to produce reports. The annual summary on changes to the system A report on internal control, risk measurement and monitoring is prepared during each fiscal year, as required by the regulations. The General Management submits it for the approval of the various supervisory organs, after which it is sent to the Prudential Control and Resolution Authority. The report traces the main changes to the internal control system, whether with regard to financial risks (credit, market, exchange...), risks relating to the preparation of financial statements or operational risks (including relative to the security of information systems). The Anti-Money Laundering and Terrorist Financing (AMLTF) system is also described therein. In this domain, training and awareness-raising actions for all employees were carried out using an “e-learning” process. The implemented system is regularly audited and updated in order to take into account any changes resulting from the national and European directives, for all of the group’s business lines. In 2013, the verifications by the Compliance – Permanent control department related to all of the group’s activities, in the network departments and in the head office departments. By means of examining documents, they generally focused on the compliance with procedures, the management and compliance of the operations, the data quality, the security or confidentiality of the management or IT processes, the formalization of the first level controls… Their objectives included ensuring the implementation of the recommendations issued by the department, and the recommendations provided by the General Inspection and Audit department.

Risks department BPI-Groupe SA (Bpifrance) is required to comply with the general principles applicable to financial companies (cf. articles 2 and 17 of regulation 97-02) regarding the management of risks from the viewpoint of their measurement, monitoring and control on a consolidated basis. The notable outcome of this is that the prudential supervision will be carried out on the basis of the BPI-Groupe SA consolidated financial statements. To the extent that there is no supervision exemption on an individual basis, the supervision will continue to be carried out directly on the level of Bpifrance Financement. To direct the group Risks department, Bpifrance has set up a central function that reports to the executive body: the Risk Consolidation Department (RCD). This department relies on the contributions or resources of the corresponding functions that are already present in the Bpifrance subsidiaries. Within Bpifrance, the adopted general principle is the compartmentalisation of the activities that continue to be carried out by the separate business line subsidiaries and the consolidation of the risks of a similar nature. Through its efforts and interventions, the RCD is intended to be:

- an engine for proposals with regard to defining and monitoring the general risk management framework.

The intention is for the RCD to provide proposals to the Group Risk Committee on the consolidation of the risk policies of the business lines and to thereby deduce the evolution of the limits, for validation by the executive body.

This mission also involves ensuring the consistency of the risk policy with the Bpifrance Strategic plan, while taking into account the oversight guidelines relative to risks as provided by the Board of Directors and the Executive Committee.


- central actor in the risk consolidation, notably the counterparty risk

This mission includes: (i) assessing the group’s consolidated exposure, notably to the counterparty risk, with the use of a dedicated information system. This includes collecting all of the existing commitments for a customer or group within the various business lines: investment, financing, guarantee and innovation; (ii) providing the operational teams with the information that is necessary and indispensable for a correct review of the files; (iii) setting up a watch list system together with the business lines.

- contributor to the counter-analysis of the most significant risks

The intention is for the RCD to detect, as far upstream as possible, files considered significant that are of interest to both investment and financing business lines, above a certain consolidated commitment threshold, and then to draft, for the relevant committees, a Consolidated Position Report (CPR) containing the results of this analysis on the consolidated commitments and the points to watch.

Moreover, the RCD implements an ex-post control process relative to the counterparties for which Bpifrance has made a commitment in both business lines, above a certain threshold.

- supervisor and coordinator of the Risks department

As part of this mission, the RCD (i) prepares the file for the Group Risk Committee (GRC), (ii) provides the GRC Secretariat, and (iii) participates in the oversight of the Risks department, through regulatory monitoring together with the Permanent Control department and the reflection groups on specific topics or cross-functional projects.

Moreover, the RCD prepares the Major Risks declaration and ensures the preparation of the regulatory reports relating to its domain by the bodies and entities in charge of doing so.

As part of its current relations, the RCD also serves as coordinator for the external bodies or regulator, with regard to subjects relating to the dimensions of the Bpifrance consolidated risks.

Periodic Control The operation of the General Inspection and Audit (GIA) department, in charge of the Bpifrance group periodic control, is based on the following principles and processes: An Audit charter describes the aims, powers, responsibilities and organisation of the GIA, as well as the general

rules applicable to the periodic control. It is completed by a procedure that defines the relations existing between the GIA and the audited units, during a mission.

An annual and multi-year audit plan, based on the group’s organisation and the organisational chart that

describes it, plans the content and perimeter of the GIA’s mission, with the objective of covering all of the group’s activities and subsidiaries within a maximum interval of three years. For each domain, the rhythm of the missions is determined by the combination of its risk level and an audit frequency.

The annual audit plan is validated by the General Manager, the Executive Committee and by the Audit and Risk Committee.

A reference base describes the GIA’s operation and the implemented methodologies, which combine on-site

controls and/or document verifications, and lead to findings from which recommendations result. The missions revolve around an analysis of the components of the audited domain’s permanent control system and an assessment of the risk levels.

The mission ends with a report, together with a list of recommendations. The above are managed using a

dedicated tool, that looks after the total preparation and production of reports.

These recommendations are implemented by the audited units, under the responsibility of their management. The management periodically reports to the GIA, during the latter’s three annual follow-ups, regarding its progress and it must justify their complete realisation.

A mission is only closed once all of the recommendations have been implemented.

The GIA reports to the executive and deliberating bodies of Bpifrance and the subsidiaries on the performance of

the audit plan, the conclusions of the completed verifications and the implementation of the recommendations. In 2013, as part of its audit plan, the General Inspection and Audit department carried out several missions involving Departments at the head office or within the network, involving all or some of their activities. Three campaigns to follow up the implementation of recommendations were also carried out, in February, June and October. A special verification was made of the reliability of the responses received from the departments, and their considerable reliability was confirmed. Moreover, several inspections or studies were carried out in 2013, by the Court of Auditors or the Inspectorate-General for Finance. They related to certain of the group’s contributions to the public mechanisms for the support and development of SMEs. With regard to Alsabail, the specialised lending institution in which Bpifrance is the reference shareholder, the General Inspection and Audit department carried out a mission in 2013 as part of the periodic control agreement signed in 2011 between the company and Bpifrance. Moreover, an agreement was signed with the Caisse des Dépôts et Consignations, that defined the relations maintained between the CDC General Audit Department (DGAU) and the Bpifrance General Inspection and Audit department.

Outlook for 2014 The 2014 permanent control plans prepared by the various functions in question (DCPR, RCCI and the permanent control units) call for verifications within all business lines of the Compliance – Permanent control department (innovation, guarantee, financing and investment) and the head office departments. They will relate to the application of the procedures and compliance with the various regulations relating to these business lines, the performance of the first level controls, the data quality, the security of the processes, the implementation of the recommendations... In order to have a Group Risk map that is relevant, efficient and harmonised, the operational departments will revise the content of their mapping of the activities and risks, which will then be consolidated on the group’s behalf. In 2014, the General Inspection and Audit department’s audit plan calls for missions that will include several head office departments in their entirety, for all or certain of their activities within several group business lines (financing and investment). Verifications will also involve all of the Network Departments, as well as the subsidiaries, including Alsabail. At the same time, three follow-up campaigns will be launched with all departments in order to measure the implementation of the recommendations, while the reliability of the responses received from the departments will be the subject of a specific audit.

The innovation business line By its very construction, the activity involving the granting of innovation aid and aid for industrial strategic innovation includes one main risk: the project may fail, either totally or partially. Its risk is therefore defined as the probability level of a total or partial failure to pay back the amount of the delivered aid, if the project does not reach its initially envisaged technical and economic objectives. This risk is monitored by the General Management, that updates the risk reference text by activity sector, as well as the legal Community and national intervention thresholds. The Regional departments implement the strategy for granting innovation aid while relying on the aid reference text and all of the texts on the aid-related doctrine. Similarly, the Appraisal Department ensures the quality of the decisions with regard to industrial strategic innovation.


The general diagram for the appraisal and decision process regarding innovation projects to be aided, depends on the amount of the aid likely to be granted and on the beneficiary’s commitment to Bpifrance, based on internal ethical rules. For the industrial strategic projects, all decisions are taken by the Executive Director of the Bpifrance Innovation Department. The decision considers the aid applications, the technical / economic and financial assessment reports, both internal and external, as well as the analysis of the project risk and of the company-risk, as contained in a standardised appraisal medium and an appraisal form. As such, the decision-maker has all of the indicators relative to the applicant’s ability to see its project through, and to the regulatory framework for granting aid.

The guarantee business line The risks are monitored on several distinct levels: Based on a proposal from the Commitment Department, the General management defines a guarantee granting

policy within the framework of the risk policy relative to operations involving the clientele. This policy is updated on a regular basis, while notably listing the decision delegations entrusted to the regional levels.

The Decision-Aid Tool (French acronym OAD) assigns two ratings to this segment: one for the counterparty and

one for the project, which measures the investment’s impact on the counterparty. It provides for computerised management of all of these ratings.

For files with small amounts, and while adhering to properly defined criteria and limits, delegation agreements can

be signed with partner banks under the responsibility of the Banks and Investors Management Department.

The Capital and Balance Sheet Department that looks after estimating the management of the regulatory and

economic capital, calculates and updates the commitment potential allowed by the annual allocations received from the Public Authorities, while also taking a probability of loss into account. The commitments are determined each year such that the risk budget determines the activity budget.

The Department also monitors the commitment and production rhythm of the overall guarantee portfolio. It

monitors the changing risk value of the guarantee portfolio in order to ensure its solvency. Using its ALM model, it also simulates the flow of liabilities in the scenario, in order to deduce the maturities at

which assets can be invested, and it calculates the “fair value” of future bad debts. Moreover, Bpifrance Financement also controls the activity and risks of its subsidiary Bpifrance Régions through

its representation on the subsidiary’s Board of Directors by the General Management or qualified persons.

The financing business line Credit risk and financial risk are two major aspects of the Bpifrance activity. As such, analysis, follow-up and measurement tools have been implemented: Based on a proposal from the Commitments Department, the General management defines the risk policy relative

to operations with the clientele, as well as the delegations of powers granted to the network. The application of the above is reported to the Risk Committee on a regular basis.

The Commitments Department has a “support and process” domain that is in charge of maintaining and

monitoring the Decision-Support Tool (OAD). This OAD tool is used to rate the counterparties and projects for the entire range of products. The appraisal and

decision are based on this tool. The Capital & Balance Sheet Department models loan portfolios in order to define the hedging level of the risks

by the relevant capital (State allocations, own funds) and it calibrates the statistical model used by the OAD.

The financial risks management policy is under the responsibility of the financial division. Its framework is

provided by a financial activities memorandum that is updated each year, for each risk type (liquidity, rate and price), and by a limits policy examined and decided upon by the relevant committees (ALM Committee, Financial Management Committee and Counterparty Risks Committee).

Regarding the Basel II system, Bpifrance Financement has decided that the ratio calculated using the standard

method is currently best-suited to the specifics of its business lines.

The investment business line It must be recalled that this activity consists of managing and advising funds and vehicles that invest in own funds (equities) or quasi-equity capital (bonds and equivalents) in listed or non-listed companies. The risks resulting from the investment business line are monitored on several distinct levels: The investment decisions, that must align with the various investment strategies of the funds and vehicles on

behalf of which the said investments are carried out, are the responsibility of the investment committee. It first assesses each operation’s significant risks, on the basis of the prior analysis by the investment teams and the completed due diligence reviews.

Monitoring is shared between the investment teams, the control teams and the independent valuation team, on

the investments carried by the funds and vehicles for as long as they hold these assets (irrespective of the nature of the financial instruments that are held). This notably makes it possible to identify and manage the various risk factors generated by the assets and to take into consideration, if relevant, their impact on the valuation of the said assets.

Specific monitoring is being set up, provided by a risk management function, the roles and perimeter of which are

being defined in order to comply with the AIFM Directive that took effect on 22 July 2013.

The other risk domains The verifications carried out by the Compliance - Permanent Control department and the missions undertaken by the General Inspection and Audit department can include an analysis of the risks presented below, or more generally relate to their control mechanisms. The audit and permanent control missions can report on any image, reputation and ethical risks, when any are

identified. The rules applicable to the organisation and verification of the outsourced essential services (French acronym:

PSEE) are presented in instructions that define the characteristics of the PSEE and anticipate the insertion, in the contracts, of the clauses required by the regulations.

In terms of operational risks, and as required by regulation 97-02, the executive body has set a limit for each

entity (Bpifrance Financement and Bpifrance Régions), which is then indicated to the Audit and Risk Committee.

In 2014, for the investment activities, this limit will be enhanced such as to have a group limit that will be based on a harmonised quantification of the operational risks within the various subsidiaries.

Within its domain, the Information Systems Security domain contributes to the control of operational risks inherent to IT processes and to data management. Moreover, since 2006, Bpifrance has had a Business Continuity Plan (BCP) and committees dedicated to security steering. In view of the operations to group the various companies that were carried out in 2013, this PCA is being reviewed (notably in order to integrate all sites currently comprising Bpifrance).

2013 Bpifrance Financement Annual Report | 43

3.3.9. Legal information

Group perimeter

EPIC

BPI Groupe

Banking

Institutions

10%

50%

Caisse des

Dépôts

50%

90%

Bpifrance

Financement

Bpifrance

Participations

Bpifrance

Bpifrance

Investissement

Bpifrance

Régions Régions

1%

99% 100%

100%

4. ORGANISATIONAL CHART OF BPIFRANCE

4.1. Functional organisational chart


4.2. Network Structure

5. CONSOLIDATED FINANCIAL STATEMENTS

Publishable consolidated balance sheet of the EPIC BPI-Groupe

ASSET (in millions of euros) Notes 31/12/2013 31/12/2012

Cash, central banks

0,0 115,0

Financial assets at fair value through profit or loss

0,0 81,5

Derivative hedge instruments

0,0 503,9

Non-current assets available for sale

0,0 472,0

Loans and receivables due from credit institutions 6.1 1 756,6 394,7

Loans and receivables due from customers 6.2 1 029,9 16 391,8

Finance lease and equivalent operations

0,0 4 821,8

Innovation financing aids

0,0 645,4

Revaluation discrepancies of the rate-hedged portfolios

0,0 486,0

Financial assets held to maturity

0,0 5 349,3

Current and deferred tax assets

0,0 56,0

Accruals and miscellaneous assets 6.4 16,9 1 291,5

Non-current assets held for sale

0,0 0,0

Interests in companies accounted for using the equity method 6.3 10 943,6 7,7

Investment property

0,0 12,3

Tangible fixed assets

0,0 80,7

Intangible fixed assets

0,0 41,4

Goodwill

0,0 4,6

TOTAL ASSETS

13 747,0 30 755,6


Publishable consolidated balance sheet of the EPIC BPI-Groupe

LIABILITIES (in millions of euros) Notes 31/12/2013 31/12/2012

Cash, central banks

0,0 3,0

Financial liabilities at fair value through profit or loss

0,0 5,1

Derivative hedge instruments

0,0 593,4

Debts to lending institutions 6.5 323,7 10 672,6

Debts due to customers 6.6 1 316,0 2 153,2

Debt securities

0,0 5 572,6

Revaluation discrepancies of the rate-hedged portfolios

0,0 412,1

Current and deferred tax liabilities

0,0 1,8

Accrued expenses and other liabilities 6.4 2 124,2 3 646,4

Debts related to non-current assets intended to be sold

0,0 56,0

Provisions

0,0 1 759,8

Net innovation intervention resources

0,0 951,4

Public guarantee funds 6.7 67,5 2 212,7

Subordinated debts

0,0 14,7

Shareholders equity

9 915,6 2 756,5

Group share of shareholders equity

9 915,6 1 735,4 - Capital and related reserves

9 083,4 1 350,8

- Consolidated reserves

380,5 310,3 - Gains and losses directly recognised in the shareholders equity

257,8 10,9

- Earnings

193,9 63,4

Minority interests

0,0 1 021,1 - Reserves

0,0 982,6

- Earnings

0,0 38,5

TOTAL LIABILITIES

13 747,0 30 755,6

Publishable consolidated profit and loss statement of the EPIC BPI-Groupe

Notes 31/12/2013 31/12/2012 31/12/2012 (in millions of euros) RESTATED

Interest and related income 7.1 56,1 51,6 1 502,5 Interest and similar expenses 7.1 -48,1 -48,5 -1 076,6 Commissions (income) 0,0 0,0 14,2 Commissions (expenses) 0,0 0,0 -0,4 Net gains or losses on financial instruments at fair value through profit or loss 0,0 0,0 1,7 Net gains or losses on financial assets available for sale 0,0 0,0 4,6 Income from other activities 0,0 0,0 120,6 Expense on other activities 7.2 -12,0 0,0 -57,6

NET BANKING INCOME -4,0 3,1 509,0

Operating general expenses 7.3 -0,7 -0,3 -270,8 Amortisation & depreciation allowances on tangible & intangible fixed assets 0,0 -0,3 -19,3

GROSS OPERATING EARNINGS -4,7 2,5 218,9

Cost of risk 0,0 0,0 -64,7

OPERATING INCOME -4,7 2,5 154,2

Share of net income from companies accounted for using the equity method 7.4 193,4 0,0 0,7 Net gains or losses on other assets 0,0 0,0 0,0 Changes to the value of the goodwill 0,0 0,0 0,0

PRE-TAX EARNINGS 188,7 2,5 154,9

Corporation tax 0,0 -0,7 -53,0 Income net of taxes from discontinued activities or activities undergoing disposal 7.5 5,2 61,6 0,0

NET EARNINGS 193,9 63,4 101,9

Minority interests 0,0 0,0 38,5

GROUP SHARE OF NET INCOME 193,9 63,4 63,4

(*) : cf. note 1.1.2. paragraph "Comparability of the financial statements"


Net earnings and gains and losses recognised directly in the EPIC BPI-Groupe shareholders equity

(in millions of euros) 31/12/2013 31/12/2012

NET EARNINGS 193,9 101,9

Elements that could be reclassified through net profit or loss

Revaluation of the financial assets available for sale 0,0 -3,2

Revaluation of derivative hedge instruments 0,0 0,0

Translation differences -21,3 0,0

Share of unrealised or deferred gains or losses on companies accounted for using the equity method 257,8 0,0

Elements that could not be reclassified through net profit or loss

Revaluation of fixed assets 0,0 0,0

Actuarial gains and losses on defined benefit plans 0,0 0,0

Share of unrealised or deferred gains or losses on companies accounted for using the equity method 0,0 0,0

TOTAL GAINS AND LOSSES DIRECTLY RECOGNISED IN THE SHAREHOLDERS EQUITY 236,5 -3,2

NET EARNINGS AND GAINS AND LOSSES RECOGNISED DIRECTLY IN THE SHAREHOLDERS EQUITY 430,4 98,7

* Of which Group share 430,4 61,6

* Of which minority interests 0,0 37,1

Change of the shareholders equity (group share)

(in millions of euros)

Capital and

related reserves

Reserves Gains and losses

directly recognised in

the shareholders

equity

Allocation Total

Situation to 31 December 2011 985,5 244,8 12,8 0,0 1 243,1

2011 earnings 63,2 63,2

Earnings allocated to reserves 0,0 63,2 0,0 -63,2 0,0 Change to the gains and losses directly recognised in the shareholders equity 0,0 0,0 -1,9 0,0 -1,9 Value change of financial instruments, affecting the shareholders equity 0,0 0,0 -1,1 0,0 -1,1 Value change of financial instruments as related to the earnings 0,0 0,0 -0,8 0,0 -0,8 Distribution of dividends 0,0 0,0 0,0 0,0 0,0 Acquisition / disposal of treasury shares 0,0 0,7 0,0 0,0 0,7 Change in interest percentages 0,0 25,9 0,0 0,0 25,9 Avenir Entreprises & Avenir Tourisme capital reduction 0,0 2,4 0,0 0,0 2,4 EPIC BPI-Groupe capital increase 365,3 0,0 0,0 0,0 365,3 SA OSEO capital increase 0,0 -26,7 0,0 0,0 -26,7

Situation to 31 December 2012 1 350,8 310,3 9,0 0,0 1 670,1

2012 earnings 63,4 63,4

Earnings allocated to reserves 0,0 63,4 0,0 -63,4 0,0 Capital increase 7 732,6 0,0 0,0 0,0 7 732,6 Change to the gains and losses directly recognised in the shareholders equity 0,0 0,0 257,8 0,0 257,8 Value change of financial instruments, affecting the shareholders equity 0,0 0,0 329,5 0,0 329,5 Value change of financial instruments as related to the earnings 0,0 0,0 -71,8 0,0 -71,8 Translation differences -21,3 0,0 0,0 -21,3 Entry into / exit from the perimeter 0,0 28,1 -10,9 0,0 17,2

Situation to 31 December 2012 9 083,4 380,5 257,8 0,0 9 721,7

2013 earnings 193,9 193,9


Variation in minority interests

Minority interests on 31 December 2011 816,6

Change to the gains and losses directly recognised in the shareholders equity -1,3

Value change of financial instruments, affecting the shareholders equity -0,1

Value change of financial instruments as related to the earnings -1,2

Change in interest percentages -25,7

Share of minority interests in the dividends paid -6,1

Acquisition / disposal of treasury shares 0,4

SA OSEO capital increase 200,3

Avenir Entreprises & Avenir Tourisme capital reduction -1,6

Share of earnings on 31 December 2012 38,5

Minority interests on 31 December 2012 1 021,1

Exit from the perimeter -1 021,1

Minority interests on 31 December 2013 0,0

Cash flow table The cash flow table is presented using the indirect method model. The operational activities are representative of the activities that generate earnings for the group, which includes the assets inventoried in the portfolio of investments held until maturity. The tax flows are entirely presented with the operational activities. The investment activities represent the cash flows for the acquisition and disposal of interests in the consolidated and non-consolidated companies, tangible and intangible assets, and buildings held for investment. This compartment includes the strategic equity securities listed in the portfolio of “Financial assets available for sale”. The financing activities result from the changes related to the financial structure operations involving the shareholders equity and the long- term borrowing. The notion of net cash includes the cash, liabilities and debts with central banks and postal accounts, as well as the demand accounts (assets and liabilities) and loans with lending institutions.

Cash flow statement of EPIC BPI-Groupe

(in millions of euros) 31/12/2013 31/12/2012

Pre-tax earnings 188,7 154,9

Net depreciation/amortisation expense on property, plant and equipment and intangible assets 0,0 19,6 Depreciation of the goodwill and other fixed assets 0,0 0,0 Net allocations to provisions 9,8 -205,7 Share of the earnings related to companies accounted for using the equity method -193,4 -0,7 Net loss / net gain from investment activities 0,0 1,0 Other movements 0,7 -89,0 Other movements (specific to the guarantee funds) 14,0 378,2

Total of the non-monetary elements included in the net income before taxes, and of the other adjustments -168,9 103,4

Flows related to operations with credit institutions -1 760,5 7,4 Flows related to operations with the clientele -195,1 -6 564,1 Flows related to other operations affecting the financial assets or liabilities 154,8 3 427,4 Flows related to other operations affecting the non-financial assets or liabilities 1 328,5 115,5 Flows related to the other operations affecting the innovation activity 0,0 -38,9 Taxes paid -0,7 -15,3

Net decrease / (increase) of the assets and liabilities resulting from operational activities -473,0 -3 068,0

Flows from discontinued operations -2 803,1 0,0

Total net cash flows generated by the operational activity (A) 3 256,3 -2 809,7

Flows related to financial assets and equity interests 0,0 1,5 Incidence of the perimeter change -182,1 0,0 Flows linked to investment buildings 0,0 0,0 Flows related to the tangible and intangible fixed assets 0,0 -22,9 Flows from discontinued operations -4,9 0,0

Total net cash flow related to investment operations (B) -187,0 -21,4

Cash flows coming from or going to the shareholders 453,2 534,0 Other net cash flows coming from financing activities 0,0 2 480,4 Flows from discontinued operations 2 724,8 0,0

Total net cash flow related to financing operations (C) 3 178,0 3 014,4

Effects of exchange rate variations on the cash and cash equivalent (D) 0,0 0,0

Net increase / (decrease) of the cash and cash equivalents (A + B + C + D) -265,3 183,3

Net cash flows generated by the operational activity (A) -3 256,3 -2 809,7 Net cash flow related to investment operations (B) -187,0 -21,4 Net cash flow related to financing operations (C) 3 178,0 3 014,4 Effects of exchange rate variations on the cash and cash equivalent (D) 0,0 0,0

Cash and cash equivalents upon opening 382,2 198,9

Cash, central banks (assets & liabilities) 112,0 0,1 Accounts (asset and liability) and demand loans / borrowing with lending institutions 270,2 198,8

Cash and cash equivalents upon closing 116,9 382,2

Cash, central banks (assets & liabilities) 0,0 112,0 Accounts (asset and liability) and demand loans / borrowing with lending institutions 116,9 270,2

Change in net cash position -265,3 183,3


Accounting Appendix

NOTE 1 – SIGNIFICANT EVENTS THROUGHOUT THE FISCAL YEAR AND EVENTS OCCURRING AFTER CLOSING OF ACCOUNTS 57

NOTE 2 – APPLICABLE ACCOUNTING STANDARDS 60

NOTE 3 – CONSOLIDATION PRINCIPLES AND METHODS 61

NOTE 4 – SCOPE OF THE CONSOLIDATION 63

NOTE 5 – ACCOUNTING PRINCIPLES AND VALUATION METHODS 63

NOTE 6 – NOTES REGARDING BALANCE SHEET 66

NOTE 7 - NOTES REGARDING PROFIT & LOSS STATEMENT 73

NOTE 8 – RISK EXPOSURE, MANAGEMENT AND ASSESSMENT 76

NOTE 9 – DISCLOSURE ON STAKES IN OTHER ENTITIES 77

NOTE 10 - INFORMATION BY SECTOR 81

NOTE 11 – FINANCING AND GUARANTEE COMMITMENTS 81

NOTE 12 – OTHER INFORMATION 82

Note 1 - Significant events during the fiscal year and events after the closing 1.1. Significant events during the fiscal year

1.1.1. Establishment of Bpifrance

Legal framework Law n°2012-1559 of 31 December 2012 amending order n°2005-722 of 29 June 2005 established the legal framework providing for the creation of the Banque Publique d’Investissement (BPI), as well as its governance provisions. Holding company held by the EPIC BPI-Groupe for 50% and by the Caisse des Dépôts (CDC) for 50%, it includes OSEO, CDC Entreprises (CDCE) and the Fonds Stratégique d’Investissement (FSI – Strategic Investment Fund). During the first quarter of 2013, the EPIC BPI-Groupe and the CDC acquired equal equity interests in the entity SNCF B2 (entity with no significant activity), that is intended to become BPI-Groupe (trade name Bpifrance) as a result of the contribution operations carried out on 12 July 2013. The Bpifrance group was set up at the end of the following steps:

contribution by the State to Bpifrance of its securities of FSI (renamed Bpifrance Participations) and of its securities intended for the group’s financing activity;

contribution by the EPIC BPI-Groupe to Bpifrance of its securities of OSEO (renamed Bpifrance Financement);

contribution by the CDC to Bpifrance of its securities of FSI, OSEO, CDCE (renamed Bpifrance Investissement) and of a set of securities intended for the group’s investment and financing activities;

Bpifrance capital increase reserved for the CDC, for €231.5 million;

Bpifrance capital increase shared equally between the CDC and the EPIC BPI-Groupe, for €3,066 million;

contribution by Bpifrance of the securities intended for the group’s investment activity, to Bpifrance Participations (former FSI);

Bpifrance Participations capital increase, for €2,730.8 million. In addition, the State contributed its securities of Bpifrance to the EPIC BPI-Groupe on 21 October 2013. After completion of all of the above operations, Bpifrance directly holds nearly 90% of the capital of Bpifrance Financement, and all of the capital of Bpifrance Investissement (former CDCE) and of Bpifrance Participations. As such, the EPIC BPI-Groupe and the CDC hold equal shares of the voting rights and powers within Bpifrance. The reference shareholder of the credit institution Bpifrance Financement is henceforth Bpifrance, that has the status of a financial company as replacement for the EPIC BPI-Groupe.

Accounting framework Operation date In compliance with the resolutions of the ordinary and extraordinary general meeting held on 12 July 2013, the operations relative to the set-up of the Bpifrance group were actually completed on this date, to the extent that the conditions precedent resulting from the contribution agreements signed on 25 June 2013 were actually lifted on 12 July 2013.


Notion of the activity All of the operations for the set-up of Bpifrance are considered as an “activity contribution”, in compliance with the provisions of the IFRS 3 standard relative to business combinations. Indeed, these contributions constitute an integrated set of operations and assets intended to be managed such as to directly provide the participants with a rate of return. Principles used for the valuation of the contributions Since all of the contributions relative to the set-up of Bpifrance meet the “activity” definition pursuant to the IFRS 3, Bpifrance has chosen to post them at their historical netbook values, while considering that this method is an extension of the activity previously performed by the various contributing entities (the EPIC OSEO and the CDC). The gaps between these historical values and the fair value of the contributions at the time of the operation are posted within the shareholders equity. 1.1.2. Accounting impact on the EPIC BPI-Groupe from the set-up of Bpifrance

Sale of the securities of OSEO SA For the EPIC BPI-Groupe, the operation results in a loss of control of OSEO SA. All of the disposal capital losses were booked through profit or loss, in compliance with the IAS 28 standard “investments in associates and joint ventures”. The sale of the OSEO SA securities held by the EPIC BPI-Groupe falls under the IFRS 5 standard “Non-current assets held for sale and discontinued operations”. The disposable earnings, as well as the earnings from the first quarter of 2013 generated by OSEO SA, were therefore recorded in the item “Earnings net of taxes from discontinued activities or activities undergoing disposal”. Accordingly, the goodwill booked to 31 December 2012 on the OSEO SA securities held by the EPIC BPI-Groupe was neutralized in the profit and loss statement to 31 December 2013.

Adopted consolidation method As the EPIC BPI-Groupe has, since 12 July 2013 exercised joint control over Bpifrance along with the CDC, the EPIC BPI-Groupe consolidates this joint venture using the equity method, in compliance with the IFRS 11 standard “Joint arrangements”.

Comparability of the financial statements Within this context, the scope of consolidation of the EPIC BPI-Groupe changed considerably between 31 December 2012 and 31 December 2013. Indeed, on 31 December 2012, the EPIC BPI-Groupe (parent company) included, using the full consolidation method, the former OSEO SA, a lending institution held 62.8%, whereas on 31 December 2013, the EPIC BPI-Groupe included, using the equity method, Bpifrance, a holding company that holds the group’s operational subsidiaries (Bpifrance Financement, Bpifrance Participations and Bpifrance Investissement). As such, the contributions to the consolidated financial statements of the EPIC BPI-Groupe involved:

- to 31 December 2013, the financial statements of the parent company and the use of the equity method for the Bpifrance group. (headings of the balance sheet and profit and loss statement of associates accounted for using the equity method);

- to 31 December 2012, the full consolidation of the OSEO SA group (headings of the balance sheet and of the profit and loss statement specific to the banking activity).

In compliance with the IFRS 5 standard, the profit and loss statement to 31 December 2012 was restated for the OSEO SA group that is now present on the line “Earnings net of tax from the activities discontinued or undergoing disposal”.

For the legibility of the appendices to the consolidated financial statements, the headings of the summary reports that are no longer used in 2013 are not the subject of specific notes. The headings in question are the following:

Balance sheet :

ASSET (in millions of euros) 31/12/2013 31/12/2012

Cash, central banks 0,0 115,0

Financial assets at fair value through profit or loss 0,0 81,5

Derivative hedge instruments 0,0 503,9

Non-current assets available for sale 0,0 472,0

Finance lease and equivalent operations 0,0 4 821,8

Innovation financing aids 0,0 645,4

Revaluation discrepancies of the rate-hedged portfolios 0,0 486,0

Financial assets held to maturity 0,0 5 349,3

Current and deferred tax assets 0,0 56,0

Investment property 0,0 12,3

Tangible fixed assets 0,0 80,7

Intangible fixed assets 0,0 41,4

LIABILITIES (in millions of euros) 31/12/2013 31/12/2012

Central banks 0,0 3,0

Financial liabilities at fair value through profit or loss 0,0 5,1

Derivative hedge instruments 0,0 593,4

Debt securities 0,0 5 572,6

Revaluation discrepancies of the rate-hedged portfolios 0,0 412,1

Current and deferred tax liabilities 0,0 1,8

Provisions 0,0 1 759,8

Net innovation intervention resources 0,0 951,4

Subordinated debts 0,0 14,7


Profit and loss statement:

31/12/2013 31/12/2012


Commissions (income) 0,0 14,2

Commissions (expenses) 0,0 -0,4

Net gains or losses on financial instruments at fair value through profit or loss 0,0 1,7

Net gains or losses on financial assets available for sale 0,0 4,6

Income from other activities 0,0 120,6

Similarly, the information relative to risk exposure, management and measurement presented in 2012 as part of the financial information relative to financial instruments (IFRS 7 standard) are limited in 2013 to the transactions managed by the EPIC BPI-Groupe. 1.1.3. Capital endowments In fiscal 2013, the capital of the EPIC BPI-Groupe was endowed with €7,732.6 million:

€383.3 million on 12 July 2013, as part of a State endowment intended to finance the participation of the EPIC BPI-Groupe in the capital increase of €3,066 million of its subsidiary Bpifrance;

€20.9 million on 11 October 2013, as part of the agreement between the State and the EPIC BPI-Groupe relative to the loans for the industrialization of research and development projects coming from the competitiveness clusters (LICC);

€7,279.3 million on 18 October 2013, as part of the State’s contribution of the shares of the Bpifrance company, received in exchange for its equity interests in the FSI and in SOFIRED;

€49.1 million euros on 3 December 2013, as part of the agreement between the State and the EPIC BPI-Groupe relative to digital loans.

1.1.4. Transfer of all assets and liabilities of OSEO Industrie As part of the group restructuring, the Board of Directors meeting on 26 June 2013 authorised the dissolution, through the transfer of all assets and liabilities without liquidation of OSEO Industrie, a 100% subsidiary of Bpifrance Financement that occurred in the 3rd quarter of 2013.

1.2. Events after the closing No significant event occurred after the closing date of the financial statements.

Note 2 - Applicable accounting standards

Accounting standards applicable as of 31 December 2013 The 2013 consolidated financial statements are prepared in compliance with the IFRS reference base as adopted by the European Union and applicable on 31 December 2013. The new standards applicable as of 1

January 2013 are:

- The amendment to the IAS 1 standard relative to the presentation of financial statements, that breaks down the “other elements of the overall earnings” between elements that can and cannot be reclassified through profit or loss. The implementation of this amendment had no impact.

- The IFRS 13 standard relative to fair value valuation, that replaces the provisions relative to fair value included in all other IFRS standards. This standard also requires the presentation of additional information in the notes to the financial statements.

Moreover, the group decided to apply early, on 1

January 2013, the following standards that must be applied as of

1 January 2014:

- The IFRS 10 standard relative to the notion of control, that strengthens the recourse to judgment as part of its assessment. The application of the standard has an insignificant impact on the group’s financial statements.

- The IFRS 11 standard relative to partnerships, that distinguishes two types of joint arrangements (joint activity and joint venture) according to the nature of the rights and obligations of the partners, and discontinues the option for the application of the proportional integration method. The application of this standard had a significant impact on the level of the EPIC BPI-Groupe as a result of the use of the equity method for the Bpifrance shares (cf. 1.1.2).

- The IFRS 12 standard relative to the information to be presented in the appendix for all subsidiaries, partnerships, associated companies as well as for structured entities whether consolidated or not.

- The amendment to the IAS 28 standard 28 relative to equity interests in associated companies and joint ventures, that takes into account the modifications resulting from the publication of the IFRS 10 and IFRS 11 standards.

Accounting standards applicable as of 1 January 2014

The European Union has adopted new standards that will take mandatory effect as of 1

January 2014. With the

exclusion of the ones listed above, they will be not applied early by the group on 31 December 2013. The group is in the process of analysing the possible incidences of the application of these standards on the consolidated financial statements.

Note 3 - Consolidation principles and methods Pursuant to regulation EC n° 1606/2002, the group’s consolidated financial statements are prepared using the international IAS/IFRS accounting standards in effect within the European Union as on 31 December 2013.

3.1. Consolidation principles

General principle The group decided on the early application of EU regulation n° 1254/2012 of 11 December 2012 relative to the approval of the standards IFRS 10 “Consolidated financial statements”, IFRS 11 “Partnerships” and IFRS 12 “Disclosure of interests in other entities” and of the modification of the standards 27 “Separate financial statements” and IAS 28 “Investments in associates and joint ventures” for which the application is mandatory at the latest on the opening date of their first fiscal year after 1

January 2014.

The consolidated financial statements include all of the companies that it controls or over which it has significant influence.

Notion of control The notion of control is assessed irrespective of the nature of the links between the group and the entity that is the subject of an investment. Control applies when the group is exposed or is entitled to variable yields and that it has the ability to influence these yields as a result of the power that it holds. The group therefore controls a subsidiary if and only if all of the following elements are gathered:

- The group exercises power when it is in possession of the actual rights to direct the subsidiary’s relevant activities,

- The group is exposed or is entitled to variable yields, when the yield can vary according to the subsidiary’s performance.


- The group has the ability to exercise power such as to influence the amount of the variable yields that it obtains.

Joint control is the contractual sharing of the control exercised over a partnership which can be either a joint activity or a joint venture. Joint control only exists if the decisions regarding the relevant activities require the unanimous approval of the parties sharing control. Significant influence is the power to participate in decisions relative to the associate’s financial and operational policies, but without exerting control or joint control over the these policies. This situation is presumed when the group directly or indirectly holds 20% or more of the voting rights. It can also result, for example, from representation within the Board of directors or an equivalent management body, participation in the process for the preparation of policies, significant transactions between the group and the associate, exchange of management personnel or supply of sensitive technical information.

3.2. Consolidation methods The consolidation methods result from the nature of the group’s control over the entities that can be consolidated, irrespective of their activity. The accounts of companies that are totally controlled, including the companies with different account structures, are consolidated according to the full consolidation method. The accounts of companies over which the company exercises joint control or notable influence are consolidated on an equity basis.

3.3. Interests in companies accounted for using the equity method The equity method involves replacing the value of the securities with the share the group holds within the shareholders equity and earnings of the companies in question. The profit and loss statement reflects the group’s share of the earnings of the earnings of the companies accounted for using the equity method. The group applies the provisions of the IAS 39 standard in order to determine if it is necessary to record an impairment loss. If there is an indication of impairment according to the criteria of the IAS 39 standard, the entire equity interest that is the subject of the equitization then undergoes an impairment test according to the IAS 36 standard relative to the impairment of assets. The book value of the equitized equity interest is primarily compared with its value in use. The possible impairment is then recorded in the profit and loss statement under the heading “Share of the net earnings of companies accounted for using the equity method” and allocated to the equitized equity interest, which authorises the subsequent reversal of the impairment in case of an improvement of the value in use or market value.

3.4. Consolidation rules

Restatements and eliminations Restatements needed for the harmonisation of the assessment methods of the consolidated companies are carried out when they are significant. Intra-group dividends, provisions on consolidated securities, capital gains on internal disposal operations and exceptional depreciation are entirely neutralized in an amount equal to the share held with regard to companies accounted for using the equity method.

Goodwill The acquisition cost is equal to the total of the fair values, on the acquisition date, of the delivered assets, net of accrued or assumed liabilities and of the shareholders equity instruments issued in exchange for control of the acquired entity.

The costs directly related to the operation are booked as expenses, except the expenses for the issuing of equity interests that are deducted from the shareholders equity, as well as the direct costs of the transaction related to financial debts contracted as part of the operation that are deducted from the corresponding financial debts. The identifiable assets, liabilities, possible liabilities and off-balance sheet elements of the acquired entities are recognised at their fair value on the acquisition date. This initial assessment can be refined within 12 months of the acquisition date. The positive discrepancy between the entity’s acquisition cost and the acquired share of the net assets revalued in this way is listed as an asset in the consolidated balance sheet, under the heading “Interests in companies accounted for using the equity method” when the acquired company is accounted for using the equity method. When the discrepancy is negative, it is immediately recorded in the profit or loss. In the event of an increase of the percentage of the group’s interest in an already controlled entity, the additional acquisition of securities results in the recognition of additional goodwill, determined by comparing the acquisition price of the securities and the net share of the acquired assets.

3.5. Presentation of the financial statements and closing date

Presentation of the consolidated financial statements The employed presentation of the interim reports is compliant with the one proposed by recommendation n°2013-04 of 7 November 2013 from the Accounting Standards Authority (ANC) relative to the format of the consolidated financial statements of banking sector establishments according to the international accounting standards.

Closing date All companies included in the scope of consolidation close their annual financial statements on 31 December.

Note 4 - Scope of consolidation The following table identifies the consolidated companies, the percentage of their capital held directly and indirectly, and their consolidation method.

Designation Consolidation method

31/12/2013 holding %

31/12/2013 % of voting

rights

Bpifrance group Equitization 50,00% 50,00%

Note 5 - Accounting principles and valuation methods

5.1. Determination of the fair value The IFRS 13 standard establishes the framework for determining the fair value and provides information on how to assess the fair value of assets and liabilities, both financial and non-financial. This corresponds with the price that would be received for the sale of an asset or paid for the transfer of a liability during a normal transaction between market participants on the valuation date. The fair value is therefore based on the exit price. At the time of initial recognition, a financial instrument’s value is normally the negotiation price (i.e. the value of the consideration paid or received). During subsequent valuations, the fair value of the assets and liabilities must be estimated and determined while using, as a priority, observable market data, while ensuring that all of the parameters comprising this fair value align with the price that “market participants” would use during a transaction.


5.1.1 Hierarchy of the fair values

The three levels of fair value The standard defines three levels of fair value for financial and non-financial instruments: Level 1: valuation using market quotations on a liquid market. This involves instruments for which the fair value is determined from quotations on active markets. Level 2: valuation using observable market data. This fair value level includes instruments listed on an inactive market, and instruments valued using a valuation technique on the basis of parameters that are either directly observable (price) or indirectly observable (price derivative). Level 3: valuation using non-observable market data. This level includes instruments valued using unknown valuation models and/or that are based on parameters that are not observable on the market, provided that they would be likely to significantly affect the valuation.

Transfers of fair value levels Transfers between fair value levels can occur when instruments meet classification criteria in the new level; these criteria depend on market conditions and products. Changes due to observability, the passage of time and events affecting the life of the instrument are the main factors that can result in transfers. Transfers are considered to have occurred at the end of the period. 5.1.2 Assessment techniques

General framework The best estimate corresponds with the instrument’s market price when the latter is handled on an active market (prices listed and disseminated). The group uses the price offered for the fair value of a long position (asset) and the requested price for a short position (debt). In the absence of a market or of reliable data, the fair value is determined using an appropriate method that complies with the assessment methodologies used on the financial markets: benchmark at the market value of a comparable instrument, valuation models and, more generally, discounting of the estimated future flows. The fair value amounts of financial assets and liabilities represent the estimates made on the closing date. These amounts are subject to change in other periods depending on the changes to market conditions or other factors. The completed calculations are based on a certain number of hypotheses. In practice, and for the purposes of business continuity, not all of these financial instruments will be the subject of an immediate realisation for the estimated value.

5.2. Financial assets and liabilities Financial assets and liabilities are handled according to the provisions of the IAS 39 standard as adopted by the European Union on 19 November 2004 (EC n° 2086/2004) and completed by the regulation of 15 November 2005 (EC n° 1864/2005), relative to the use of the fair value option. The effective interest rate is the rate that exactly discounts the disbursements or collections of the future cash flows over the anticipated lifespan of the financial instrument. The group recognises all loans and borrowing in the balance sheet on the settlement date. All derivative instruments are recognised in the balance sheet on the trading date.

Loans and receivables not held for trading purposes or not intended for sale as of their acquisition or granting are listed in the balance sheet amongst the “Loans and Receivables owed by lending institutions” or “Loans and Receivables owed by the clientele”, depending on the nature of the counterparty. After their initial recognition, they are assessed at their amortised cost on the basis of the effective interest rate and can, if relevant, be subject to depreciation. Interest accrued on receivables is included in the relevant receivables account with changes recognised in the profit and loss statement. Receivables are impaired when, after the set-up of the loan, there are one or more objective signs of impairment, for which the impact on the future cash flows can be reliably measured.

5.3. Debts Debts issued by the group and which are not categorised as financial liabilities assessed as a counterparty in the profit and loss statement are initially recorded at their cost, which corresponds with the fair value of the amounts borrowed, net of transaction costs. These debts are assessed at their impaired cost on the closing date by using the effective interest rate method and are recorded in the balance sheet in the “Debts to lending institutions”, and “Debts to the clientele” or in the “Debts represented by a security”. The debts to lending institutions and the clientele are broken down according to their initial duration or the nature of these debts: debts repayable on demand (overnight loans, ordinary accounts) and term borrowings for lending institutions; term borrowings, security deposits and ordinary accounts for the clientele. Interest accrued on these debts is included in the related debts account with changes recognised in the profit and loss statement.

5.4. Derecognition of financial assets and liabilities The group derecognises a financial asset upon the expiry of the contractual rights to receive the cash flows linked to the financial asset, or when these contractual rights and almost all of the risks and benefits inherent to the asset’s ownership have been transferred. If relevant, the rights and obligations created or retained during the transfer are recognised separately as assets or liabilities. At the time of the complete derecognition of a financial asset, a disposal gain or loss is recorded in the profit and loss statement in an amount equal to the difference between this asset’s book value and the value of the consideration received, with possible correction for any unrealised profit or loss that might previously have been recognised directly in the shareholders equity. The group derecognises a financial liability only when this financial liability has been completely extinguished, i.e. when the obligation indicated in the contract has been extinguished, cancelled or arrives at maturity.

5.5. Provisions A provision is established when it is likely that a resource outflow representing economic benefits will be necessary in order to fulfil an obligation resulting from a past event and when the obligation’s amount can be reliably estimated. The amount of such obligations is discounted in order to determine the provision amount, when the impact of this discounting is material.

5.6. Current and deferred taxation, tax situation

Current taxation The payable tax on profits is determined on the basis of the rules and rates applicable in France, as the group companies are exclusively located in France. The taxable income as on 31 December 2013 is -€4.7 million.

Deferred tax Deferred taxes are recognised when temporary differences are noted between the book value and the tax value of an asset or liability.


The overall calculation method, which involves determining all of the temporary gaps irrespective of the date when the tax will become payable or recoverable, has been adopted for the calculation of the deferred tax. The tax rate and rules used in the calculation of the deferred taxation are the ones resulting from the applicable fiscal texts, which will be applicable when the tax becomes recoverable and payable. Deferred taxes are compensated with one another on the level of each tax entity of the consolidated group. Deferred tax debits are only taken into account if it is probable that the entity in question has a recovery prospect over a determined horizon. Deferred taxes are recognised as a tax income or expense in the profit and loss statement, except for the ones relating to unrealised gains or losses on assets available for sale, and to the value changes of derivatives designated as cash flow hedging, for which the corresponding deferred taxes are charged against the shareholders equity.

5.7. Interest income and expense In compliance with ANC recommendation n° 2013-R-04 of 7 November 2013, the items “Interest and related income” and “Interest and related expenses” record the interest from fixed income securities recognised in the category of ”Financial assets available for sale”, the interest on loans / borrowing and receivables / debts owed by lending institutions and the clientele (including on finance lease and equivalent operations) as well as guarantee commissions. This item also records the interest on “Financial assets held until maturity” and on the “Derivative hedge instruments”. The income and expenses relative to financial instruments assessed at their amortised cost and to fixed income assets included in the “Financial assets available for sale” are recognised in the profit and loss statement using the effective interest rate method.

5.8. Share of earnings of associates Bpifrance, consolidated using the equity method, is considered as having an operational nature that is an extension of the group’s activity. Consequently, the share in the net earnings of companies accounted for using the equity method is presented after the operating earnings, in compliance with ANC recommendation n°2013-04 of 7 November 2013.

5.9. Cash and cash equivalents The cash and cash equivalents heading includes the cash in hand and demand deposits, the very liquid short-term investments (under 3 months) that are easily convertible into a known cash amount and that are subject to a negligible risk of changing value. The cash equivalents are held in order to deal with short-term cash commitments. The cash equivalents consist of current accounts, overnight borrowings and loans, cash accounts, and central bank.

5.10. Usage of estimates in the preparation of the Financial Statements The preparation of the financial statements requires the formulation of hypotheses and estimates that include uncertainties with regard to their future realisation. Using information available on the closing date, these estimates require the managers to make use of their judgment. The future realisations depend on many factors: fluctuation of interest and exchange rates, economic situation, changes to regulations or legislation, …

Note 6 - Notes to the balance sheet For certain of the balance sheet’s accounting categories (in particular the ones that take in financial instruments), information on the contractual terms is provided under the references “Current” and “Non-current”.

With reference to the IAS 1 standard “Presentation of Financial Statements”, the breakdown between ”Current” and “Non-current” is made in view of the contractual residual maturities and of the management intention. As such, an asset or liability is classified as “Current” in the event of realisations or settlements that will notably take place within the 12 months that follow the closing date. Inversely, realisations and settlements that will take place more than 12 months after the closing date are classified as “Non-current”.

6.1. Loans and receivables due from credit institutions

(in millions of euros) 2013 2012

Overdrafts 116,9 275,9

Term loans (*) 1 621,5 118,5

Individual impairment of loans and receivables 0,0 0,0

Collective impairment of loans and receivables 0,0 0,0

Inter-company receivables 18,2 0,3

Total loans and receivables owed by lending institutions 1 756,6 394,7

(*) : of which loan to Bpifrance Financement, settled in 2012

Breakdown of the Loans and receivables owed by institutions, between current and non-current elements


Current 135,1 303,5

Non-current 1 621,5 91,2


6.2. Loans and receivables due from customers


Ordinary accounts receivable, advances on TAP 0,0 15,6

Short-term credit facilities 0,0 933,1

Medium and long-term loans 0,0 7 072,2

Subordinated loans 0,0 161,7

Other credits 0,0 3 157,7

Individual impairment of loans and receivables 0,0 -226,7

Collective impairment of loans and receivables 0,0 -368,4

Inter-company receivables 0,0 31,3

Accounts opened with the State - Agence France 1 029,9 5 615,3

Trésor

Total loans and receivables owed by the clientele 1 029,9 16 391,8

Breakdown of the Loans and receivables owed by the clientele, between current and non-current elements


Current 1 029,9 7 683,0

Non-current 0,0 8 708,8

Total loans and receivables owed by the clientele 1 029,9 16 391,8

6.3. Interests in companies accounted for using the equity method


2013

Equitization value Of which valuation / acquisition discrepancies

Bpifrance group 10 943,6 410,0

Total equity interests in companies accounted for using the equity method 10 943,6 410,0

6.4. Accrued income / expense, and other assets / liabilities

Accruals and other assets


Discounted value of pending commissions owed to

the guarantee funds (activity garantie) 0,0 147,5

Deferred expenses 0,0 7,0

Accrued income 0,0 6,6

Automatic direct debits in progress 0,0 0,8

Other 0,0 43,8

Total of the accruals and deferred income 0,0 205,7

Other assets


Settlement accounts for securities transactions 0,0 0,7

Guarantee margins paid on reverse repo operations

and interest rate swap contracts 0,0 224,2

Receivables with State and Innovation partners 0,0 748,2

Guarantee funds to be received 0,0 14,4

FMR allocation 0,0

Other sundry debtors 16,4 87,4

Stocks and sundry assets 0,5 10,9

Total of the other assets 16,9 1 085,8

Accruals and deferred expenses


Subsidies to be paid (innovation) 0,0 599,9

Other deferred income 71,7 20,0

Other tax and social charges to be paid 0,0 55,0

Other charges to be paid 0,1 7,0

Other 0,0 81,5

Total of the accruals and deferred expenses 71,8 763,4


Other liabilities


Outstanding payments on securities not fully paid up 1 149,8 6,9

Received security deposits 0,0 4,0

Advance from the State to the EPIC BPI-Groupe 902,6 794,9

Other guarantees received 0,0 175,9

Litigation to be paid on proven risks relative to guarantee commitments 0,0 1 208,5

Allocated public sector funds - FDES advances 0,0 10,2

Invoices to be paid on leasing operations 0,0 49,6

Preserved capital guarantee funds (guarantee activity) 0,0 495,1

Other tax and social debts 0,0 13,4

Sundry creditors 0,0 124,5

Total other liabilities 2 052,4 2 883,0

6.5. Debts to lending institutions


Demand and overnight debts 0,0 5,6

Ordinary deposits and accounts 0,0 5,6

Overnight borrowings and accounts 0,0 0,0

Term debts 321,5 10 590,5

Term borrowings and accounts 321,5 6 967,3

including Codevi / Livret Développement Durable resources 300,0 4 701,0

including EIB, KfW and BDCE resources 21,5 900,0

including refinancing with the European Central Bank 0,0 500,0

Securities sold on repo 0,0 3 623,2

Associated liabilities 2,2 76,8

Total debts to lending institutions 323,7 10 672,9

Breakdown of the Debts to lending institutions, between current and non-current elements


Current 2,2 4 241,9

Non-current 321,5 6 431,0

Total 323,7 10 672,9

6.6. Debts due to customers


Demand and overnight debts 0,0 57,2

Ordinary deposits and accounts 0,0 57,2

Overnight accounts and borrowing 0,0 0,0

Term debts 1 300,0 1 780,1

Term borrowings and accounts (*) 1 300,0 1 757,5

Securities sold on repo 0,0 22,6

Associated liabilities 16,0 15,9

Advance from State shareholder 0,0 300,0

Total debts due to customers 1 316,0 2 153,2

(*) : of which €1,300 million with the State in 2012 and 2013

Change of the debts due to customers


Current 16,0 302,0

Non-current 1 300,0 1 833,2

6.7. Public guarantee funds

Breakdown of the Debts to lending institutions, between current and non-current elements


Reserve funds 0,0 888,2

AFT (Agence France Trésor) 0,0 852,5

CDC 0,0 24,3

Hived-off assets 0,0 24,6

Other Funds 67,5 158,5

Non-current 0,0 264,6

Total of the public guarantee funds 67,5 2 212,7


6.8. Fair value of assets and liabilities

2013

(in millions of euros) Level 1 (*) Level 2 Level 3 Total

ASSETS

Loans and receivables due from credit institutions 116,9 1 810,7 1 927,6

Loans and receivables due from customers 1 029,9 1 029,9

LIABILITIES

Debts to lending institutions 342,4 342,4

Debts due to customers 1 484,2 1 484,2

(*) : these operations involve demand accounts, cash or cash equivalents.

2012

(in millions of euros) Level 1 (*) Level 2 Level 3 Total

ASSETS

Loans and receivables due from credit institutions 275,9 119,6 395,5

Loans and receivables due from customers 5 630,9 11 303,7 16 934,6

LIABILITIES

Debts to lending institutions 5,6 10 709,2 10 714,8

Debts due to customers 57,2 2 228,6 2 285,8

6.9. Euro equivalent of foreign currency transactions


Assets 21,5 1,6

Liabilities 21,5 24,4

Note 7 - Notes relative to the profit and loss statement

7.1. Interest income and expense (cf. note 1.1.2)

Interest and related income

2013 2012

restated 2012 (in millions of euros)

Transactions with lending institutions (*) 56,1 51,6 27,5

Customer loans

Overdrafts 0,0 0,0 0,1

Short-term credit facilities 0,0 0,0 22,6

Medium and long-term loans 0,0 0,0 223,4

Miscellaneous credits 0,0 0,0 261,8

Subordinated debts 0,0 0,0 5,9

Variation of discounted future guarantee commissions 0,0 0,0 22,9

Subtotal customer loans 0,0 0,0 536,7

Finance lease operations

Rents 0,0 0,0 887,4

Depreciation allowances 0,0 0,0 -632,9

Allowances for special depreciations (Art. 64 and Art. 57) 0,0 0,0 -78,4

Net movements on depreciation of termination compensation 0,0 0,0 -8,5

Other proceeds 0,0 0,0 97,3

Subtotal finance lease operations 0,0 0,0 264,9

Operations involving financial instruments

Non-current assets available for sale 0,0 0,0 67,8

Financial assets held to maturity 0,0 0,0 187,0

Capital gain from disposals of securities backing the guarantee funds 0,0 0,0 214,3

Hedging derivatives 0,0 0,0 203,9

Subtotal transactions on financial instruments 0,0 0,0 673,0

Other interests and similar income 0,0 0,0 0,4

Total interest and related income 56,1 51,6 1 502,5

(*) These operations only involved Bpifrance Financement (loan operations for €48.2 million and guarantee commissions staggered over the lifespan of the operations for €7.9 million).


Interest and similar expenses

2013 2012


Transactions with lending institutions -6,3 -8,5 -204,1

Customer loans -41,8 -40,0 -154,2

of which allocation of commission earnings to the guarantee funds 0,0 0,0 -97,0

Finance lease operations

Allowances to depreciations (excluding Art. 64 and Art. 57) 0,0 0,0 0,0

Other expenses 0,0 0,0 -96,4

Subtotal finance lease operations 0,0 0,0 -96,4

Operations involving financial instruments

Debt securities 0,0 0,0 -97,4

Subordinated debts 0,0 0,0 -0,2

Hedging derivatives 0,0 0,0 -248,5

Subtotal finance lease operations 0,0 0,0 -323,1

Other interests and similar income 0,0 0,0 -298,8

of which financial proceeds allocated to the guarantee funds 0 0,0 -274,6

Total interest and related income -48,1 -48,5 -1 076,6

7.2. Expenses from other activities (cf. note 1.1.2)

2013 2012


Expenses

Subsidies paid on behalf of partners 0,0 0,0 -28,6

Subsidies paid on own funds 0,0 0,0 0,1

Provisions and losses on innovation aid 0,0 0,0 -5,9

Investment property 0,0 0,0 -0,3

of which depreciation charges 0,0 0,0 -0,3

Capital losses on stock disposals 0,0 0,0 -6,4

LICC provisions, Digital Loans -12,0 0,0 0,0

Other expenses 0,0 0,0 -16,5

Total expenses from other activities -12,0 0,0 -57,6

7.3. Operating general expenses (cf. note 1.1.2)

2013 2012


Personnel expenses 0,0 0,0 -162,5

Duties and taxes -0,1 0,0 -23,6

Other operating expenses -0,6 -0,3 -83,4

Costs related to restructuring 0,0 0,0 -1,3

Total general operating expenses -0,7 -0,3 -270,8

7.4. Share of net income from companies accounted for using the equity method

2013


Share in the net earnings of equity interests accounted for using the

equity method

Bpifrance group 193,4

0,0

Total share of net income from companies accounted for using the equity method 193,4


7.5. Income net of taxes from discontinued activities or activities undergoing disposal (cf. note 1.1.2)

2013 2012

restated (in millions of euros)

SA OSEO Group 2012 earnings 61,6

MV disposal of SA OSEO shares -5,1

SA OSEO Group 1st quarter 2013 earnings 14,9

Visualization of the goodwill of SA OSEO shares -4,6

Income net of taxes from discontinued activities or activities undergoing disposal 5,2 61,6

Note 8 - Exposure, management and measurement of risks

8.1. General risk management organisation After the operations on 12 July 2013, the status as a financial company was transferred from the EPIC BPI-Groupe to Bpifrance, a holding company that holds the group’s operational subsidiaries and consolidates the risks. The EPIC BPI-Groupe is only exposed to its individual risks, as Bpifrance has been consolidated using the equity method (cf. 1.1.2. Accounting impact on the EPIC BPI-Groupe from the set-up of Bpifrance). On 31 December 2013, the risks inherent to the activities of the EPIC BPI-Groupe were limited to:

credit and counterparty risks: risks of losses due to a counterparty’s inability to meet its financial obligations,

market risks: risks of losses due to changing prices and market rates.

8.2. Quantitative analyses of the credit and counterparty risks on financial activities

Maximum credit risk exposure

2013 (in millions of euros)

Loans and receivables to lending institutions 1 756,6

Loans and receivables to customers 1 029,9

Total 2 786,5

Quantitative information on the credit risk The loans and receivables due from lending institutions, equal to €1,756.6 million on 31 December 2013, exclusively involve the group, with loans for €1,621.5 million (excluding related receivables) and current accounts for €116.9 million (excluding related receivables) with Bpifrance Financement. The loans and receivables due from customers, equal to €1,029.9 million on 31 December 2013, exclusively involve demand accounts opened with the French State (Agence France Trésor).

8.3. Market risks Financial risks are defined as the risks of losses of economic value resulting from an unfavourable evolution of the market parameters, which affect all of the positions in the balance sheet and the off-balance sheet. The market parameters affecting the EPIC BPI-Groupe are primarily interest rates. The balance sheet items of the EPIC BPI-Groupe exposed to a rate risk are limited to cash deposits and loans / borrowing operations for which the EPIC BPI-Groupe is involved as an intermediary between the initial lenders and Bpifrance Financement. As such, these operations are perfectly backed on the EPIC BPI-Groupe balance sheet in terms of rates and liquidity. Finally, to the extent that these outstandings are, in the end, included in the Bpifrance Financement balance sheet as financial risks, the structural risks related to these outstandings are included within the overall steering and follow-up framework of the Bpifrance Financement ALM risks. Analysis of the sensitivity of the cash flows An interest rate variation of 100 basis points on the closing date would result in an increase (decrease) of the earnings equal to the amounts indicated below.

Increase of 100 basis

points Decrease of 100

basis points (in millions of euros)

31 December 2013

Sensitivity of the 2013 interest margin 2,6 -0,4

Sensitivity of the net present value of the 2013 balance sheet

Cash flows payable by the EPIC BPI-Groupe relative to its financial debts, broken down by residual contractual maturity

2013

Book value Total incoming

(outgoing) flows

On-demand Under 3 months

Between 3 and 12 months

Between 1 year and 5

years

After 5 years


Repayment of term borrowings to the

State 1 316,0

16,0

0,0 108,0 1 192,0 Repayment of term borrowings to lending institutions 323,7 0,0 2,0

2,4 309,7 9,6

Note 9 - Disclosure of interests in other entities

9.1. Important assumptions and judgments As the EPIC BPI-Groupe only holds Bpifrance securities, no judgment was required relative to the determination of the scope of consolidation.

9.2. Interests in subsidiaries The EPIC BPI-Groupe holds no minority interests.


The group is subject to no significant legal, regulatory or contractual restrictions that would limit its ability to access the group’s assets or to settle the group’s liabilities.

9.3. Interests in partnerships and associated companies

Equity interests in associated companies The EPIC BPI-Groupe, as the holding company that holds the French State’s equity interest in Bpifrance, holds equity interests in an associated company that is considered to be individually significant. These equity interests are presented after the adjustments related to the application of the equity method.

Table of the interests in entities accounted for using the equity method 2013 – Bpifrance Group consolidated financial statements

(in millions of euros) Bpifrance group

Main establishment France Percentage of voting rights 50,00% Consolidation method Equity method

ASSET (in millions of euros)

LIABILITIES (in millions of euros)

Cash, central banks 173,5

Cash, central banks 0,0

Financial assets at fair value through profit or loss 2 522,7

Financial liabilities at fair value through profit or loss 5,0 Derivative hedge instruments 367,1

Derivative hedge instruments 432,2

Non-current assets available for sale 5 658,1

Debts to lending institutions 11 180,2 Loans and receivables due from credit institutions 2 189,4

Debts due to customers 2 521,9

Loans and receivables due from customers 19 850,3

Debt securities 9 442,2 Finance lease and equivalent operations 5 289,1

Revaluation discrepancies of the rate-hedged portfolios 229,1

Innovation financing aids 614,9

Current and deferred tax liabilities 332,2 Revaluation discrepancies of the rate-hedged portfolios 297,9

Accrued expenses and other liabilities 3 451,7

Financial assets held to maturity 6 634,1

Debts related to non-current assets intended to be sold 0,0 Current and deferred tax assets 67,5

Provisions 1 663,5

Accruals and miscellaneous assets 3 878,3

Net innovation intervention resources 1 005,0 Non-current assets held for sale 0,0

Public guarantee funds 2 296,5

Interests in companies accounted for using the equity method 6 218,5

Subordinated debts 14,6 Investment property 12,0

Shareholders equity 21 354,5

Tangible fixed assets 104,9

Group share of shareholders equity 21 067,3 Intangible fixed assets 49,8

- Capital and related reserves 20 981,4

Goodwill 0,5

- Consolidated reserves -2 143,8

- Gains and losses directly recognised in the shareholders equity 1 842,9

- Earnings 386,8

Minority interests 287,2

- Reserves 283,7

- Earnings 3,5

TOTAL ASSETS 53 928,6

TOTAL LIABILITIES 53 928,6

Consolidated financial statements


EARNINGS (in millions of euros) 31/12/2013

Interest and related income 661,5

Interest and similar expenses -406,6

Commissions (income) 32,2

Commissions (expenses) -3,9

Net gains or losses on financial instruments at fair value through profit or loss -42,6

Net gains or losses on financial assets available for sale 12,3

Income from other activities 43,2

Expense on other activities -20,6

NET BANKING INCOME 275,5

Operating general expenses -208,8

Amortisation & depreciation allowances on tangible & intangible fixed assets -13,3

GROSS OPERATING EARNINGS 53,4

Cost of risk -32,6

OPERATING INCOME 20,8

Share of net income from companies accounted for using the equity method 416,7

Net gains or losses on other assets 0,0

Changes to the value of the goodwill 0,0

PRE-TAX EARNINGS 437,5

Corporation tax -47,2

Income net of taxes from discontinued activities or activities undergoing disposal 0,0

NET EARNINGS 390,3

Minority interests 3,5

GROUP SHARE OF NET INCOME 393,8

* Earnings per share (in euros) 0,18

* Diluted earnings per share (in euros) 0,18

Reconciliation with the book value of these equity interests

Group share of shareholders equity 21 067,3

Shareholders equity relative to the interest percentage 10 533,6

Evaluation / acquisition discrepancies 410,0

Consolidation adjustments

Book value of the equity interests in the associated company 10 943,6

Interests in associated companies considered to be insignificant The group holds no equity interests in another associated company that is considered to be significant.

9.4. Interest held in non-consolidated structured entities The group holds no interests in a structured entity.


Note 10 - Sector-specific information The contributions within the EPIC BPI-Groupe are the following:


2013 EPIC BPI-Groupe

Bpifrance group Total

NBI -4,0 0,0 -4,0

Operating costs -0,7 0,0 -0,7

Operating income -4,7 0,0 -4,7 Share in the net earnings of companies accounted for using the equity method 0,0 193,4 -193,4

(in millions of euros) Balance sheet outstandings 2013

Loans and receivables due from lending institutions 1 756,6

Loans and receivables due from customers 1 029,9 Equity interests in companies accounted for using the equity method 10 943,6

Note 11 – Financing and guarantee commitments


Commitments given 15 729,2 16 785,9

Loan financing commitments 0,0 3 911,3

in favour of lending institutions 0,0 10,0

in favour of the clientele 0,0 3 901,3

Innovation aid financing commitments 0,0 795,1

Guarantee commitments (*) 15 729,2 12 079,5

in favour of lending institutions 15 729,2 17,3

in favour of the clientele 0,0 12 062,2

Commitments on securities (securities to deliver) 0,0 0,0

Commitments received 0,0 2 091,2

Financing commitments received from lending institutions 0,0 1 182,0

Guarantee commitments received from lending institutions 0,0 908,2

Commitments on securities (securities to receive) 0,0 1,0

(*) : as on 31 December 2013, these commitments include the guarantee given by EPIC BPI-Groupe to Bpifrance Financement as part of the issues of EMTN and deposit certificates



Note 12 - Other information

12.1. Related parties The related parties of the EPIC BPI-Groupe are the companies included within the scope of consolidation, namely Bpifrance. The operations with Bpifrance are listed in the column “Companies under joint control”. The operations with Bpifrance Financement are presented in notes 6, 7 and 11.

Balance sheet

(in millions of euros) Companies under

joint control Total

Assets Loans and advances 1 756,3 1 756,3 Equity instruments 0,0 0,0 Other receivables 0,0 0,0

Total assets 1 756,3 1 756,3

Liabilities Deposits 0,0 0,0 Term borrowings 0,0 0,0 Other liabilities 1 221,4 1 221,4

Total liabilities 1 221,4 1 221,4

Miscellaneous information Guarantees issued by the group 0,0 0,0 Guaranties received by the group 0,0 0,0 Impairment of doubtful receivables 0,0 0,0

Profit and loss statement

(in millions of euros) Companies under

joint control Total

Total expenses, including: 0,2 0,2 Interest expenses 0,0 0,0 Fees and commissions 0,0 0,0 Services received 0,0 0,0 Other liabilities 0,0 0,0

Total proceeds, including: 28,3 28,3 Interest income 28,3 28,3 Fees and commissions 0,0 0,0 Services received 0,0 0,0 Dividend income 0,0 0,0 Other 0,0 0,0

Other information Charges for the year pertaining to doubtful loans 0,0 0,0


12.2. Statutory auditors’ fees shown in the profit and loss statement (pre-tax)

Mazars KPMG

(in thousands of euros) 2013 2012 2013 2012

Fees relative to the statutory accounting, the certification and examination of the individual and consolidated accounts 23 19 23 19

Fees relative to the other due diligence reviews and services directly related to the mission of the Statutory auditors - - - -

Total 23 19 23 19


6. INDIVIDUAL FINANCIAL STATEMENTS

EPIC BPI-Groupe balance sheet

Notes Gross Amortisation 31/12/2013 31/12/2012

ASSETS (in thousands of euros)

Depreciations Net Net

Fixed assets 12 130 331,7 0,0 12 130 331,7 2 994 623,8

Financial fixed assets 12 130 331,7 0,0 12 130 331,7 2 994 623,8

- Equity interests 3 10 490 698,2 0,0 10 490 698,2 1 350 839,6

- Loans 4 1 639 633,5 0,0 1 639 633,5 1 643 784,2

Current assets 1 163 714,4 0,0 1 163 714,4 948 727,6

- Other receivables 5 16 899,8 0,0 16 899,8 17 838,3

- Cash 6 1 146 814,6 0,0 1 146 814,6 930 889,3

Total assets 13 294 046,1 0,0 13 294 046,1 3 943 351,4

Individual financial statements

EPIC BPI-Groupe balance sheet

Notes 31/12/2013 31/12/2012

LIABILITIES (in thousands of euros)

Shareholders equity 7 9 462 685,0 1 407 316,5

- Subscribed capital

9 083 417,7 1 350 839,6

- Retained earnings

56 476,9 44 614,8

- Profit or loss for the fiscal year

322 790,4 11 862,1

Financial liabilities

1 639 633,5 1 643 784,2

- Loans and receivables with lending institutions 8 323 695,4 327 849,9

- Miscellaneous financial loans and debts 9 1 315 938,1 1 315 934,3

Operating debts

970 281,1 850 079,5

- Trade creditors and other accounts payable 10 93,0 368,5

- Tax and company receivables 11 31,0 55,3

- Other debts 12 970 157,1 849 655,7

Other liabilities

1 149 750,0 0,0

- Bpifrance securities still to be paid up 13 1 149 750,0 0,0

Deferred income

71 696,5 42 171,2

- Deferred income 14 71 696,5 42 171,2

Total liabilities 13 294 046,1 3 943 351,4


EPIC BPI-Groupe off-balance sheet

Note 31/12/2013 31/12/2012

(in thousands of euros)

COMMITMENTS GIVEN

Financing commitments

. Commitments to lending institutions

. Commitments to customers

Guarantee commitments 15 15 729 200,0 11 189 200,0

. Guarantee commitments to lending institutions 5 615 200,0 4 875 200,0

. Guarantee commitments 10 114 000,0 6 314 000,0

. Commitments to the clientele

Commitments on securities

. Securities acquired on forward repurchase orders

. Other commitments given

COMMITMENTS RECEIVED


. Commitments received from the State

Guarantee commitments

. Commitments received from lending institutions

Commitments on securities

. Securities sold on forward repurchase orders

. Other commitments received


EPIC BPI-Groupe profit and loss statement

Notes 31/12/2013 31/12/2012


Operating earnings 0,0 0,0

Operating expenses 16 -668,4 -599,5

- External charges -583,4 -343,0

- Duties and taxes -85,0 61,8

- Depreciation charges on fixed assets 0,0 -318,3

OPERATING INCOME -668,4 -599,5

Financial proceeds 56 081,9 61 633,8

- Dividends 0,0 10 022,4

- Interest income 17 56 081,9 51 611,4

Financial expenses -48 140,0 -48 453,9

- Interest and similar expenses 18 -48 140,0 -48 453,9

FINANCIAL RESULT 7 941,9 13 179,9

Extraordinary Income 19 1 678 356,5 336,5

- Income from disposal of asset elements 1 678 356,5 336,5

Extraordinary expenses 20 -1 362 839,6 -336,5

- On management operations -12 000,0 0,0

- Book values of asset elements -1 350 839,6 -336,5

EXTRAORDINARY PROFIT OR LOSS 315 516,9 0,0

CURRENT RESULTS BEFORE TAXATION 322 790,4 12 580,4

- Corporation tax 21 0,0 -718,3

FISCAL YEAR EARNINGS 322 790,4 11 862,1


Accounting Appendix

NOTE 1 – SIGNIFICANT FACTS AND EVENTS OCCURRING AFTER CLOSING OF ACCOUNTS 89

NOTE 2 – PRESENTATION AND ASSESSMENT RULES 90

NOTE 3 – EQUITY HOLDINGS 90

NOTE 4 - LOANS 92

NOTE 5 – OTHER RECEIVABLES 92

NOTE 6 – LIQUIDITY (INCLUDING RELEVANT RECEIVABLES) 93

NOTE 7 – EQUITY CAPITAL 93

NOTE 8 – LOANS AND DEBTS ACCRUED 93

NOTE 9- FINANCIAL DEBTS AND LOANS 94

NOTE 10- DEBTS TO SUPPLIERS AND RELATED ACCOUNTS 94

NOTE 11 – FISCAL AND SOCIAL DEBTS 94

NOTE 12 – OTHER DEBTS 94

NOTE 13 - SECURITIES 95

NOTE 14 – INCOME COLLECTED IN ADVANCE 95

NOTE 15 – OFF-BALANCE SHEET 95

NOTE 16 – OPERATING COSTS 96

NOTE 17 – OTHER INTEREST INCOME 96

NOTE 18 – INTEREST PAYABLE AND SIMILAR CHARGES 96

NOTE 19 – EXTRAORDINARY INCOME 97

NOTE 20 – EXCEPTIONAL COSTS 97

NOTE 21 – TAX ON PROFITS 97

NOTE 22- RELATED PARTIES 98


Note 1 - Significant facts and events after the closing 1.1. Significant events during the fiscal year 1.1.1. Establishment of Bpifrance Law n°2012-1559 of 31 December 2012 amending order n°2005-722 of 29 June 2005 established the legal framework providing for the creation of the Banque Publique d’Investissement (BPI), as well as its governance provisions. Holding company held by the EPIC BPI-Groupe for 50% and by the Caisse des Dépôts (CDC) for 50%, it includes OSEO, CDC Entreprises (CDCE) and the Fonds Stratégique d’Investissement (FSI – Strategic Investment Fund). During the first quarter of 2013, the EPIC BPI-Groupe and the CDC acquired equal equity interests in the entity SNCF B2 (entity with no significant activity), that is intended to become BPI-Groupe (trade name Bpifrance) as a result of the contribution operations carried out on 12 July 2013. The Bpifrance group was set up at the end of the following steps:

contribution by the State to Bpifrance of its securities of FSI (renamed Bpifrance Participations) and of its securities intended for the group’s financing activity;

contribution by the EPIC BPI-Groupe to Bpifrance of its securities of OSEO (renamed Bpifrance Financement);

contribution by the CDC to Bpifrance of its securities of FSI, OSEO, CDCE (renamed Bpifrance Investissement) and of a set of securities intended for the group’s investment and financing activities;

Bpifrance capital increase reserved for the CDC, for €231.5 million;

Bpifrance capital increase shared equally between the CDC and the EPIC BPI-Groupe, for €3,066 million;

contribution by Bpifrance of the securities intended for the group’s investment activity, to Bpifrance Participations (former FSI);

Bpifrance Participations capital increase, for €2,730.8 million. In addition, the State contributed its securities of Bpifrance to the EPIC BPI-Groupe on 21 October 2013. After completion of all of these operations, the EPIC BPI-Groupe and the CDC hold equal shares of the voting rights and powers within Bpifrance. The reference shareholder of the credit institution Bpifrance Financement is henceforth Bpifrance, that has the status of a financial company as replacement for the EPIC BPI-Groupe. 1.1.2. Capital endowments In fiscal 2013, the capital of the EPIC BPI-Groupe was endowed with €7,732,578,100.

€383,250,000 on 12 July 2013, as part of a State endowment intended to finance the participation of the EPIC BPI-Groupe in the capital increase of €3,066,000,000 of its subsidiary Bpifrance;

€20,928,800 on 11 October 2013, as part of the agreement between the State and the EPIC BPI-Groupe relative to the loans for the industrialization of research and development projects coming from the competitiveness clusters (LICC);

€7,279,328,100 on 18 October 2013, as part of the State’s contribution of the shares of the Bpifrance company, received in exchange for its equity interests in the FSI and in SOFIRED;

€49,071,300 euros on 3 December 2013, as part of the agreement between the State and the EPIC BPI-Groupe relative to digital loans.

1.2. Events after the closing No significant event occurred after the closing date of the financial statements.


Note 2 - Presentation and assessment rules The EPIC BPI-Groupe annual financial statements are prepared and presented in compliance with the provisions of the General Chart of Accounts and of amended CRC regulation n° 99-03.

Balance sheet Loans and related debts are classified under the asset or liability items on which interest is due to or from. The shareholders equity heading includes the items subscribed capital, retained earnings and net income for the year. In the “Financial fixed assets” heading, the equity interests include securities that are held for the long term as this is considered to be useful for the company’s activities, notably because it allows for influence over the company issuing the securities or to assume control of it. These securities are valued at the lower of either their cost price or their value in present use at the year-end. The latter is notably determined according to the net asset value or of the business prospects.

Profit and loss statement The proceeds and expenses are classified by category. Interest, dividends and guarantee commissions are recognised through profit or loss using the accrual method. Assets and liabilities in foreign currencies are converted into euros at the rate prevailing on the accounts closing date. Differences arising from the mark to market of currency positions are reported in the financial result.

Off-balance sheet The guarantee commitments given are operations whereby EPIC BPI-Groupe (the guarantor) undertakes in favour of a third party (the beneficiary) to insure, on behalf of a customer (the originator), an obligation assumed by the latter if this person does not personally do so. When it becomes likely, as a result of a failure on the part of the originator, that the beneficiary will call on the EPIC BPI-Groupe, a provision equal to the probable loss is set up.

Note 3 - Equity interests

(in thousands of euros) 2013 2012

Gross amount 10 490 698,2 1 350 839,6

Bpifrance Financement (former OSEO) equity interest 0,0 1 350 839,6

Bpifrance equity interest 10 490 698,2 0,0

Bpifrance depreciation 0,0 0,0

Net amount 10 490 698,2 1 350 839,6

The flows result from the creation of the Bpifrance group (cf. note 1).


Corporate name

Registration in the trade

register of Créteil

% of capital held

Value of the securities held by the Cpy Issued

capital

Total issued capital before

earnings

Current earnings before taxes 2013

Net earnings

2 013

Pre-tax turnover

fiscal year 2013

Loans and advances

granted and not reimbursed

Amount of the sureties and

endorsements given

by the company

Dividends collected

during the fiscal year Directly Gross Net

Subsidiaries and equity interests

Bpifrance 507 523 678 50,00% 10 490 698 10 490 698 20 983 811 20 981 406 2 417 2 417 192 0 0 0


Note 4 - Loans


Loan in Pounds sterling (1)(2) 21 505,3 24 408,7

Loans (2) 1 600 000,0 1 600 000,0

Inter-company receivables 18 128,2 19 375,5

Total (1) 1 639 633,5 1 643 784,2

(1) The value change is tied to changing exchange rates and to the loan amortisation.

(2) Loans granted to Bpifrance Financement.

Breakdown of the loans (excluding related receivables) by residual maturity on 31/12/2013

(in thousands of euros) D ≤ 1 year 1 year < D ≤ 5

years D > 5 years

Outstandings 0,0 300 000,0 1 321 505,3

1 621 505,3

Note 5 - Other receivables


PPMTR allocation 16 398,0 17 000,0

Future operating subsidies 28,5 28,5

Carry Back report 473,3 473,3

Other sundry receivables 0,0 336,5

Total 16 899,8 17 838,3

Breakdown of receivables by residual maturity on 31/12/2013


years D > 5 years

Outstandings 28,5 16 871,3 0,0


Note 6 - Cash on hand (including related receivables)


BRED bank account 301,8 202,2

State current account - Agence France Trésor 144 882,3 130 309,9 State current account - Agence France Trésor Invest. Future 885 001,8 704 454,7

Bpifrance Financement current account 116 628,7 95 922,5

Total 1 146 814,6 930 889,3

Note 7 - Shareholders equity

(in thousands of euros) 2012

Capital increase

Appropriation of the

earnings

2013 earnings

2013

Capital 1 350 839,6 7 732 578,1 9 083 417,7

Retained earnings 44 614,8 11 862,1 56 476,9 Profit or loss for the fiscal year 11 862,1 -11 862,1 322 790,4 322 790,4

Total 1 407 316,5 7 732 578,1 0,0 322 790,4 9 462 685,0

Note 8 - Loans and equivalent debts


Loan in Pound sterling (European Investment Bank) 21 505,3 24 408,7

Codevi loan (BPCE) 300 000,0 300 000,0

Associated liabilities 2 190,1 3 441,2

Total 323 695,4 327 849,9

Breakdown of the borrowings and debts (excluding related receivables) by residual maturity on 31/12/2013

(in thousands of euros) D ≤ 1 year 1 year < D ≤ 5 years D > 5 years

Outstandings 0,0 300 000,0 21 505,3

321 505,3


Note 9- Financial loans and debts


Borrowing from the State 1 300 000,0 1 300 000,0

Associated liabilities 15 938,1 15 934,3

Total 1 315 938,1 1 315 934,3

Breakdown of the borrowings (excluding related receivables) by residual maturity on 31/12/2013


years D > 5 years

Outstandings 0,0 0,0 1 300 000,0

1 300 000,0

Note 10- Trade creditors and other accounts payable These debts are all payable in under 1 year.

Note 11 - Tax and company receivables These debts are all payable in under 1 year.

Note 12 - Other debts


Investments in the Future Public Resources 827 002,0 704 454,8

Other intervention public resources 75 626,4 91 626,4

Restaurant Modernization funds 67 528,7 53 574,5

Total 970 157,1 849 655,7

Breakdown of the other debts by residual maturity on 31/12/2013


years D > 5 years

Outstandings 970 157,1 0,0 0,0

970 157,1


Note 13 - Securities This includes the securities still to be paid up on Bpifrance (SA BPI-Groupe).

Note 14 - Unearned income


Bpifrance Financement guarantee commissions to be staggered over the duration of the guarantee 71 696,5 42 171,2

Total 71 696,5 42 171,2

Note 15 - Off-balance sheet


COMMITMENTS GIVEN


- Commitments to customers 0,0 0,0

Guarantee commitments 15 729 200,0 11 189 200,0

- Guarantee commitments to lending institutions 5 615 200,0 4 875 200,0

KFW 100 000,0 100 000,0

EIB 900 000,0 150 000,0

BPCE 245 200,0 255 200,0

Caisse des Dépôts 3 450 000,0 3 450 000,0

Postal Bank 720 000,0 720 000,0

Council of Europe 200 000,0 200 000,0

- Guarantee commitments given 10 114 000,0 6 314 000,0

EMTN programme 7 614 000,0 3 814 000,0

Deposit certificates 2 500 000,0 2 500 000,0

COMMITMENTS RECEIVED

- Commitments received from the STATE 0,0 0,0


Note 16 - Operating expenses


Services by Group Companies -167,3 -182,4

External charges -416,1 -160,6

Subtotal -583,4 -343,0

Duties and taxes -85,0 61,8

Depreciation charges on fixed assets 0,0 -318,3

Subtotal -85,0 -256,5

Total -668,4 -599,5

Note 17 - Interest and related income


Demand deposit account 22,1 98,4

Funds reinvested with Bpifrance Financement 48 139,6 48 453,6

- Loans (in €) 48 024,2 48 217,6

- Loans (in foreign currencies) 115,4 236,0

Commissions 7 920,2 3 059,4

- Bpifrance Financement guarantee commissions (*) 7 920,2 3 059,4

Total 56 081,9 51 611,4

(*) These commissions are staggered over the lifespan of the operations.

Note 18 - Interest and similar expenses


Loan (European Investment Bank) -115,5 -235,9

Loan (BPCE) -6 250,0 -8 250,0

Loan STATE -41 774,2 -39 967,6

Demand deposit account -0,3 -0,4

Total -48 140,0 -48 453,9


Note 19 - Extraordinary Income


Proceeds from assignments of intangible fixed assets 0,0 336,5 Proceeds from assignments of Bpifrance Financement securities(*) 1 678 356,5 0,0

Total 1 678 356,5 336,5

(*) cf. note 1

Note 20 - Extraordinary expenses


Book values of the assigned asset elements of the intangible fixed assets 0,0 -336,5 Book values of the assigned asset elements of the Bpifrance Financement securities (*) -1 350 839,6 0,0

LICC provisions, Digital Loans -12 000,0 0,0

Total -1 362 839,6 -336,5

(*) cf. note 1

Note 21 - Corporation tax

Tax is booked using the tax payable method. The taxable income is equal to -€4,726.5 million.

The contribution capital gain from the Bpifrance securities of €327,516,900 is exempt pursuant to article 14 of law

n°2012-1559 of 31 December 2012.


Note 22- Related parties

the Bpifrance Financement related parties


Balance sheet items 2013

Assets

Loans 1 639 633,5

Current account 116 628,7

Liabilities

Deferred income 71 696,6

Profit and loss statement items

External charges 275,2

Interest income 48 145,3

Commissions 7 920,1

Bpifrance related parties


Balance sheet items 2013

Assets

Equity interests 10 490 698,2

Liabilities

Securities still to be paid up 1 149 750,0

7. REPORTS FROM STATUTORY AUDITORS

7.1. Report on the consolidated financial statements KPMG Audit

Le Belvédère 1 Cours Valmy CS 50034 92923 Pans la Défense Cedex France

Mazars Tour Exaltis 61 rue Henri-Régnault 92400 Courbevoie France

EPIC BPI-Groupe

Statutory auditors’ report on the consolidated financial statements

Fiscal year ending on 31 the December 2006 EPIC BPI-Groupe

27-31, avenue du Général-Leclerc - 94710 Maisons-Alfort This report contains 42 pages

Reference: PSP – 142.001is RCC


KPMG Audit Le Belvédère 1 Cours Valmy CS 50034 92923 Pans la Défense Cedex France

Mazars Tour Exaltis 61 rue Henri-Régnault 92400 Courbevoie France

EPIC BPI-Groupe

Registered office: 27-31, avenue du Général-Leclerc - 94710 Maisons-Alfort Issued capital: € 9,093,417,679.70 Statutory auditors’ report on the consolidated financial statements Fiscal year ending on 31 December 2013 Ladies, Gentlemen, As part of our assignment for your General meeting, we present to you our report for the fiscal year ending on 31 December 2013, on:

our audit of the consolidated financial statements of the EPIC BPI-Groupe, as attached to this report;

the bases of our assessments;

the verifications and specific information required by law. The consolidated financial statements have been prepared by the Board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. 1. Opinion regarding the consolidated financial statements We have conducted our audit in accordance with the professional standards applicable in France; these standards require that we apply the procedures necessary to obtain reasonable assurance that the consolidated financial statements do not include any significant misstatements. An audit involves verifying, by sampling and other selection methods, the elements underlying the amounts and information contained in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. We certify that, in accordance with the IFRS reference base adopted by the European Union, the consolidated financial statements are truthful and in order, and present a fair picture of the asset base, financial situation and results of the structure consisting of the persons and entities included in the consolidation. Without calling into question the opinion expressed above, we draw your attention to notes 1.1.1 “Establishment of Bpifrance” and 1.1.2 “Accounting impact on the EPIC BPI-Groupe from the set-up of Bpifrance” of the appendix to the EPIC BPI-Groupe financial statements, most notably with regard to the posting method for the Bpifrance securities and the comparability of the financial statements.

2. Justification of the assessments In accordance with the provisions of article L.823-9 of the [French] Commercial code, concerning the justification of our assessments, we draw your attention to the following items. Accounting rules and principles As indicated in note 1.1.2. “Accounting impacts on the EPIC BPI-Groupe from the set-up of Bpifrance” and note 2 “Applicable accounting standards on 31 December 2013”, your group posts the Bpifrance shares using the equity method. As part of our assessment of the accounting rules and principles used by your group, we have notably verified the appropriate nature of the above-mentioned accounting methods and of the information provided in the appendix to the consolidated financial statements, as well as their correct application. The resulting assessments are part of our task of auditing the consolidated financial statements, in their broad interpretation, and they therefore contributed to the formation of our opinion as expressed in the first part of this report. 3. Specific verification In compliance with the professional standards applicable in France, we have also carried out the specific verification required by law with regard to the information provided in the report on the group management. We have no adverse comments to make about their truthfulness and agreement with the consolidated accounts. Paris la Défense, 17 April 2014 Courbevoie, 17 April 2014 KMPG Audit FSI Philippe Saint-Pierre Associate

Marie-Christine Jolys Associate

Mazars Virginie Chauvin Associate


7.2. Report on the individual financial statements

EPIC BPI-Groupe

Public corporation of an industrial or commercial nature with capital of €9,093,417,679.70

Registered office: 27-31, avenue du Général-Leclerc - 94710 Maisons-Alfort TCR: Créteil TCR D 483 790 069

Statutory auditors’ report on the annual financial statements

Fiscal year ending on 31 the December 2006

KPMG AUDIT FSI MAZARS

Statutory auditors’ report on the annual financial statements

Ladies, Gentlemen,

As part of our assignment for your Board, we present to you our report for the fiscal year ending on 31 December

2013, on:

our audit of the EPIC BPI-Groupe annual financial statements, as attached to the present report,

the bases of our assessments,

the verifications and specific information required by law.

The annual financial statements were prepared by the board of directors. Our responsibility is to express an

opinion on these financial statements based on our audit.

I. Opinion regarding the consolidated financial statements

We have conducted our audit in accordance with the professional standards applicable in France; these standards

require that we apply the procedures necessary to obtain reasonable assurance that the consolidated financial

statements do not include any significant misstatements. An audit involves verifying, by sampling and other

selection methods, the elements underlying the amounts and information contained in the consolidated financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the financial statements. We believe that our audit

provides a reasonable basis for our opinion.

We certify that the annual financial statements present fairly, in all material aspects, the financial position and

assets and liabilities of the company as of December 31, 2010 and the results of its operations for the year then

ended in accordance with French accounting standards and principles.

Without calling into question the opinion expressed above, we draw your attention to note 1.1 “Significant events

during the fiscal year” of the notes to the annual financial statements, that presents the steps in the set-up of

Bpifrance and the capital endowments of the EPIC BPI-Groupe.


II. Justification of the assessments In application of the provisions of article L.823-9 of the Commerce code relative to the justification of our assessments, we hereby inform you that the assessments carried out by us related to the appropriate nature of the applied accounting principles, and to the overall presentation of the financial statements. These assessments were made as part of our audit of the annual financial statements taken as a whole and therefore contributed to the formation of our audit opinion expressed in the first part of this report. III. Specific verification In compliance with the professional standards applicable in France, we have also carried out the specific verification required by law. We have no negative observations to report regarding the truthfulness or consistency with the annual financial statements of the information included in the Board of Directors management report and in the documents sent to the shareholders concerning the company’s situation and annual financial statements. Signed in Paris La Défense and Courbevoie, on 17 April 2014 The Statutory auditors KMPG Audit FSI Marie-Christine JOLYS Philippe SAINT-PIERRE Mazars Virginie CHAUVIN

BPI-Groupe Public corporation of an industrial and commercial nature Créteil TCR 483 790 069 Registered office 27-31, avenue du Général Leclerc 94710 Maisons-Alfort cedex Tel. : 01 41 79 80 00 - Fax: 01 41 79 80 01 www.bpifrance.fr

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