Annual Report. Financial Statements

Transcription

1 20 Annual Report 03 Financial Statements

2 FINANCIAL STATEMENTS 2003 Caisse des Dépôts Group 2 Consolidated balance sheet and income statement Central Sector 56 Balance sheet and income statement Savings funds centralized by Caisse des Dépôts 84 Balance sheet and income statement Foreword The 2003 financial statements include the audited consolidated financial statements of Caisse des Dépôts Group, the audited financial statements of Caisse des Dépôts Central Sector, presented in accordance with French banking regulations, and the audited financial statements of the savings funds centralized by Caisse des Dépôts. The financial statements of financial subsidiaries and other Group units and institutions managed by Caisse des Dépôts are not appended.

3 CONSOLIDATED FINANCIAL STATEMENTS Notion of Group The activities of Caisse des Dépôts et Consignations derive from its original mission as the legal depository for private funds that the French legislature wanted to safeguard by ensuring that they were managed in a way guaranteeing their protection. The management of these funds, which are used to finance public-interest investments and assist local development in France, also led Caisse des Dépôts to become a major player in financial markets, which it does today through specialized subsidiaries subject to market conditions. This entity forms a public and decentralized group, carrying out its business in France and internationally, specialized in financial activities and services governed by public fiduciary obligations or exercised freely in the competitive sector: Public-interest missions management of passbook savings accounts and financing for public housing; fiduciary management of major public retirement programs from its decentralized offices in Angers and Bordeaux; regulated banking and financial activities; support for local development, urban policy, job creation and small and medium-sized businesses. Competitive businesses Finance activities under the auspices of EULIA, the holding company providing strategic governance for the competitive businesses of the alliance between Caisse des Dépôts and the Caisses d Epargne Group, in particular: (1) investment banking and financing activities with the CDC IXIS Group: capital markets and financing, asset management (financial, real estate and private equity), banking and securities services, (2) insurance and guaranty activities, (3) real estate activities, mainly with the Crédit Foncier de France Group; life insurance with CNP Assurances; services and engineering for local and regional development through C3D s subsidiaries. In 2003, Caisse des Dépôts Group implemented several major changes and reforms. First, the strategy of Caisse des Dépôts was clarified, the public-interest missions were strengthened and the subsidiaries were developed through growth and partnerships. Caisse des Dépôts was chosen to administer the supplementary retirement plan for civil servants, and will soon acquire Société Nationale Immobilière (SNI), a vehicle for selling off the State s real estate assets. Caisse des Dépôts will also commit 4 billion in loans from the Savings Funds to finance France s major infrastructure projects. Regarding the subsidiaries, the shareholders agreement for CNP Assurances was renewed for the long term. The partnership with Caisses d Epargne will be restructured along solid and lasting lines, as Caisse des Dépôts becomes the strategic shareholder of France s third-largest bank. The creation of CDC Entreprises will open up a full range of private equity financing to French small and medium-sized businesses. Finally, Caisse des Dépôts has reaffirmed its commitment to serving as a long-term strategic investor in French companies. To that end, it has equipped itself with robust and transparent governance bodies, starting with an advisory committee for its major holdings in listed companies, which is chaired by René Barbier de La Serre. Underpinning this clear and transparent strategy, the organization of Caisse des Dépôts has been streamlined and simplified, with significant changes in the management team. For purposes of accounting and financial presentation, Caisse des Dépôts Group s activities are divided according to their two principal missions: the fiduciary management of the funds entrusted to Caisse des Dépôts according to the rules defining the nature of the services provided and the related financial conditions. These funds are managed individually and include, in particular, the Savings Funds centralized with Caisse des Dépôts and the management of public retirement funds; the direct activity performed by the Central Sector Caisse des Dépôts financial and administrative entity, managed separately from the operations under mandate and by affiliated groups, notably EULIA, CDC IXIS, C3D and CNP Assurances, in France and internationally. This activity alone is considered to constitute a group for the purpose of preparing consolidated financial statements drawn up in accordance with accounting standards applicable to credit institutions. The consolidating entity is the Central Sector and, depending on the level of control, subsidiaries are consolidated under the full or proportional method, or accounted for by the equity method. This distinction is evidenced by the exclusion of the Savings Funds and Retirement Funds from the scope of consolidation. Their financial statements are presented separately. 02 /// 2003 Annual Report Caisse des Dépôts Group

4 Introductory note The activities of Caisse des Dépôts et Consignations comprise two main missions: the direct business of the Central Sector the financial and administrative entity of Caisse des Dépôts which is managed separately from the operations under mandate and of the subsidiaries and long-term equity holdings attached to it, notably the CDC IXIS, C3D and CNP Assurances groups, and the Caisse des Dépôts departments that have been spun off into subsidiaries; the management of the funds entrusted to it. The accounting structure of Caisse des Dépôts reflects the nature of the relationships existing between the public institution and these funds. A series of legal, regulatory and contractual provisions defines the nature of the services provided by Caisse des Dépôts and their remuneration. The accounting systems used make it possible to identify the resources of each fund, their uses and the earnings generated. Therefore, a balance sheet and an income statement are drawn up for each fund. These funds, which consist mainly of savings funds centralized by Caisse des Dépôts, include deposits taken on the Livret A passbook accounts of the Caisses d Epargne, Livrets d Epargne Populaire passbook accounts for low-income savers, the Livret Bleu passbooks accounts of Crédit Mutuel, CODEVI accounts and the deposits collected by La Poste (Livret A, Livret B and CNE homepurchase savings plans). This mission also includes the management of retirement funds and other organizations. Audit of the financial statements Although not a legal requirement given its status, Caisse des Dépôts has chosen to have its financial statements audited in accordance with ordinary law in order to guarantee that the accounting and financial information provided is of the quality and transparency required by the nature and volume of its activities. The independent auditors have issued unqualified audit opinions on the 2003 financial statements of the Central Sector and the consolidated financial statements of Caisse des Dépôts Group. This is also the case, in particular, for the accounts of the savings funds, and of the CDC IXIS, C3D and CNP Assurances groups. These accounts have been published separately. This section presents financial information relating to the first of these missions: the audited consolidated balance sheet and income statement of Caisse des Dépôts Group; the audited balance sheet and income statement of the Central Sector reporting Caisse des Dépôts own activities. 03

5 CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheet (Euro millions) Note ASSETS Interbank and similar transactions 129, ,980 Cash, central banks and post office banks 4,317 3,844 Public-sector securities and similar 3 27,196 21,354 Advances and loans to financial institutions 1 97, ,782 Customer transactions 52,249 34,454 Overdrafts 2 1,882 2,867 Commercial loans Other loans to customers, lease financing and similar agreements 2 50,354 31,576 Bonds, equities, other fixed and variable income securities 94,443 83,573 Bonds and other fixed income securities 3 72,295 65,425 Equities and other variable income securities 3 22,148 18,148 Investments of insurance companies 4 68,938 63,332 Long-term equity holdings, shares in related undertakings, other long-term investments 4,465 4,053 Long-term equity holdings 5 3,188 2,950 Investments accounted for by the equity method 6 1,277 1,103 Tangible and intangible fixed assets 7 5,296 5,557 Goodwill on acquisitions Accruals, deferrals and other assets 9 24,362 28,346 TOTAL 379, ,191 LIABILITIES Interbank and similar transactions 120, ,740 Central banks and post office banks Advances and loans from financial institutions , ,728 Customer transactions 68,819 43,658 Customer deposits 11 28,572 25,033 Other customer advances and loans 11 40,247 18,625 Debt securities 52,663 51,199 Cash certificates 12 1 Interbank and negotiable debt securities 12 30,712 29,802 Bonds and similar debt securities 12 21,951 21,396 Technical provisions of insurance companies 13 66,559 60,840 Accruals, deferrals and other liabilities 14 52,779 50,458 Goodwill on acquisitions Provisions for risks and charges Subordinated debt 12 2,034 1,315 Fund for general banking risks (FGBR) Minority interests (excluding FGBR) 16 1, Group share of retained earnings (excluding FGBR) 16 13,540 12,503 Consolidated and other reserves 11,959 11,793 Income for the year 1, TOTAL 379, , /// 2003 Annual Report Caisse des Dépôts Group

6 Consolidated off-balance sheet commitments Financing, guarantee and securities commitments given Financing commitments To financial institutions 6,136 6,577 To customers 19,884 20,833 Guarantees To financial institutions 14,660 9,939 To customers 13,345 10,713 Securities transactions Securities to be delivered 1, Commitments given by insurance companies 1, Financing, guarantee and securities commitments received Financing commitments From financial institutions 10,526 10,308 Guarantees From financial institutions 3,267 3,017 From customers 10,058 2,056 Securities transactions Securities to be received 4,229 1,608 Commitments received by insurance companies 1,767 1,291 Other commitments Other commitments given 21,655 19,356 Other commitments received 6,391 5,088 05

7 CONSOLIDATED FINANCIAL STATEMENTS Consolidated income statement (Euro millions) Note Interest and similar revenues 10,042 10,399 Treasury and interbank transactions 20 3,351 4,779 Customer transactions 21 1,796 1,722 Bonds and other fixed income securities 22 2,681 2,462 Other interest and similar revenues 2,214 1,436 Interest and similar expenses (9,674) (11,324) Treasury and interbank transactions 20 (4,221) (5,656) Customer transactions 21 (949) (916) Bonds and other fixed income securities 22 (2,328) (2,548) Other interest and similar expenses (2,176) (2,204) Revenues from variable income securities Commissions (revenues) Commissions (expenses) 24 (252) (218) Gains or losses on trading security transactions 25 1,274 1,534 Gains or losses on available-for-sale security transactions and similar Other net operating banking revenues and expenses Gross margin on insurance activities Net income from other activities 29 1, NET BANKING INCOME 6,264 4,785 Operating expenses (3,475) (3,408) Payroll expenses 30 (2,397) (2,300) Other administrative expenses (1,515) (1,532) Rebillings Net amortization, depreciation and provision charges 31 (277) (232) GROSS INCOME FROM OPERATIONS 2,512 1,145 Cost of risk 32 (208) (79) NET INCOME FROM OPERATIONS 2,304 1,066 Net income from investments accounted for by the equity method Gains or losses on fixed assets RECURRING INCOME BEFORE INCOME TAX 2,462 1,133 Net non-recurring income (expenses) 1 6 Income taxes 34 (591) (377) Net amortization of goodwill on acquisitions 8 (65) (231) Net movement in FGBR (123) 266 Minority interests (103) (87) NET INCOME 1, /// 2003 Annual Report Caisse des Dépôts Group

8 Notes to the consolidated financial statements Highlights Caisse des Dépôts Group recorded consolidated net income of 1,581 million in 2003, up 123% from the 710 million recorded the previous year. This favorable performance was due to the overall financial market rebound in 2003 and the absence of non-recurring expenses that negatively affected 2002 earnings (non-recurring provision charges on the long-term equity portfolio and goodwill amortization for CDC IXIS Asset Management North America). For Caisse des Dépôts et Consignations, this result includes a 157 million write-back of provisions on the long-term equity portfolio, compared to a provision charge of 928 million in Adjusted for these non-recurring factors, consolidated net income rose by nearly 25% in In addition to the favorable impact of rising markets on the holdings of Caisse des Dépôts related to its role as a long-term investor, last year CDC IXIS Group increased its earnings contribution by posting gains across all business lines. In 2003, Caisse des Dépôts clarified its long-term management strategy and overhauled its organizational structure. To that end, Caisse des Dépôts and the Caisses d Epargne Group signaled their intent to restructure the terms of their partnership through a memorandum of agreement signed on October 1, Income statement Net banking income rose by 31% to 6,264 million, up from 4,785 million in This increase was largely driven by the cumulative impact of write-backs of provisions related to the portfolio securities business, thanks to the market rebound, compared with provision charges recorded in These writebacks added a total of 1,259 million to net banking income. Conversely, capital gains realized on these portfolios fell by 355 million year-on-year. Growth in net banking income was also fueled by contributions from Caisse des Dépôts et Consignations and CDC IXIS, which rose by 32% at constant scope and exchange rates. Gross income from operations climbed by 119% to 2,512 million, up from 1,145 million. This increase was significantly higher than that of net banking income as a result of the strict control over administrative expenses, which rose by only 3% in 2003, compared with 7% in Last year thus marked the first tangible results of the stepped-up cost control effort, notably at the Central Sector. Net recurring income before income tax rose by 117% to 2,462 million, as the increase in cost of risk provision charges for the year was offset by higher income from companies accounted for under the equity method and gains on fixed-asset disposals, which included the sale of the headquarters building of Crédit Foncier de France. The tax charge rose by 57% to 591 million, driven largely by the increase in pretax income, the lower portion of income taxable at a reduced rate and unused tax loss carry forwards, as well as the non-deductible nature of FGBR allocations. The sharp decrease in goodwill amortization, which totaled only 65 million in 2003 compared with 231 million the previous year, was due to the non-recurring goodwill amortization in 2002 on CDC IXIS AM NA LP and the impact of exchange rates in 2003, as the dollar depreciated against the euro. In 2003, the FGBR made a negative contribution to consolidated net income of 123 million, including 32 million for CDC IXIS and 91 million for Crédit Foncier, compared to a positive contribution of 266 million in 2002 (including 259 million for CDC). Consolidated net income totaled 1,581 million, up 123% relative to 2002 Caisse des Dépôts contributed 759 million to consolidated net income, more than triple its 227 million contribution in 2002, and 48% of the total. EULIA-CDC IXIS contributed 488 million, up from 142 million in 2002, when CDC IXIS s contribution was negatively affected by the non-recurring goodwill amortization on CDC IXIS AM North America. Adjusted for this non-recurring item, the contribution from EULIA-CDC IXIS rose by 36%. Crédit Foncier de France s contribution increased by 18% to 85 million. CFF s net income includes a significant capital gain related to the sale of its headquarters building and a 200 million allocation to the FGBR. The other EULIA subsidiaries (Ecureuil Vie, Ecureuil IARD, EULIA Caution, etc.) contributed 42 million, up from 19 million in The contribution from CNP Assurances was up by 4% to 244 million, on a par with the prior-year figure. Despite a difficult economic environment at the beginning of the year, CNP Assurances performed well in 2003 by achieving its growth targets in terms of revenues (+6%) and earnings (+2%). Moreover, the company s embedded value reached a record level of 45.5 per share as of December 31, 2003, an increase of 8% on the year. C3D s contribution fell by 16% to 90 million. Adjusted for consolidation scope effects in 2002 and 2003, however, this contribution increased by 5% to 91 million. 07

9 CONSOLIDATED FINANCIAL STATEMENTS Balance sheet Consolidated total assets rose by 8.7% to 380 billion in 2003, an increase of 31 billion. The changes in the balance sheet were not affected by any material changes in consolidation scope. On the asset side, interbank transactions remained unchanged at 129 billion. The relative increase in the share of publicsector securities at the expense of financial institutions resulted mainly from the contribution of CDC IXIS. Customer transaction volume increased by 51% to 52.2 billion, or 17.8 billion in nominal terms. With ACOSS volume up sharply, the Central Sector accounted for 11.8 billion of this increase, while CDC IXIS NA contributed 4.3 billion. The Group s securities portfolio rose by 12.9% to 94.4 billion, up from 83.6 billion in This increase involved both equities and other variable income securities, which increased by 4.0 billion, and bonds and other fixed-income securities, which were up 6.9 billion. Insurance company investments increased by 9%, or 5.6 billion. CNP Assurances accounted for all of this increase, as its assets under management increased by 8.5%. On the liabilities side, interbank transactions were down 5.2% to billion. The Central Sector and CDC IXIS accounted for 2.6 billion and 3.4 billion of this decline, respectively. The 25.2 billion increase in customer transactions was largely due to the Central Sector, whose transactions were up 14.5 billion, mainly attributable to the initial 11.6 billion deposit by the Retirement Trust Fund (FRR), which was made in late CDC IXIS s contribution increased by 10.7 billion. Customer deposits totaled 68.8 billion. Debt securities increased by 3%, or 1.5 billion, to 52.6 billion as of December 31, This increase was largely due to the 2.2 billion increase at CFF as a result of real estate bond issues through Compagnie de Financement Foncier. Insurance company technical reserves totaled 66.6 billion as of December 31, 2003, up from 60.8 billion the previous year. CNP Assurances accounted for the bulk of this 9.4% increase, equivalent to 5.7 billion, which is related to the 9% increase in insurance investments. Provisions for risks and charges increased by 147 million to 976 million, mainly due to CDC IXIS, which accounted for 123 million of the total. Of the 92 million total increase in provision charges by CDC IXIS, 29 million was for sector risks and 51 million was for default risk. The FGBR totaled 795 million as of December 31, The 119 million increase resulted primarily from net charges recorded by CDC IXIS ( 32 million) and CFF ( 91 million). After factoring in 1,581 million in net income for the period, 346 million paid out in the form of dividends and a 196 million decrease in retained earnings related to currency translation effects (mainly due to the US subsidiaries), the Group share of retained earnings totaled 13.5 billion. 08 /// 2003 Annual Report Caisse des Dépôts Group

10 Accounting principles used in preparing the consolidated financial statements of Caisse des Dépôts Group The consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to French banking and financial institutions. Principal policies for accounting and presentation of the consolidated financial statements 1 - Signature of a memorandum of agreement on restructuring the partnership between Caisse des Dépôts et Consignations and CNCE On October 1, 2003, Caisse des Dépôts et Consignations and Caisse d Epargne Group signed a memorandum of agreement aimed at restructuring their partnership on a new and lasting basis. Under this agreement: Caisse d Epargne Group would operate all the banking activities of the Alliance, including CDC IXIS and the activities currently held by Compagnie financière EULIA; Caisse des Dépôts would own a strategic 35% stake in the new CNCE, which would consolidate all banking activities, and would have a direct interest in the results of the Caisse d Epargne savings branch network through the subscription of non-voting preferred shares; Caisse des Dépôts would acquire direct control over CDC IXIS s portfolios of listed securities, private equity and real estate investments. It would also acquire CDC IXIS s interest in Sogeposte and a 65% majority interest in CDC IXIS Private Equity, the balance being held by CNCE. The signing of a definitive agreement should take place in Therefore, this agreement has not had any impact on the 2003 financial statements. 2 - Changes in accounting methods Credit risk CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the Comité de la Réglementation Bancaire et Financière CRBF (French Banking and Finance Regulations Committee) took effect on January 1, Some application methods for this CRC standard were set forth in the CNC s November 21, 2003 statement on accounting for loans restructured at non-market conditions and in opinion 2003-G of the CNC Urgent Issues Task Force dated December 18, 2003 concerning methods for reclassifying non-performing loans to irrecoverable loans. Credit risk can be defined as the potential loss arising from the failure by a counterparty to fulfill its obligations. The credit risk arises once it becomes likely that the bank will not receive part or all of the amounts due under the contract, notwithstanding the existence of guarantees and security deposits. This standard applies to all credit-risk-bearing commitments: loans to financial institutions and customers, signature commitments, fixed income securities (in the available-for-sale or held-to-maturity portfolios) and forward instruments traded over the counter that have a positive market value. Information related to credit risk is given in Note 19. Loans Loans are classified as non-performing once the credit risk arises, and in any event no later than three months after payments are past due (six months for real estate loans and nine months for loans to local governments). Similarly, once a loan for a given counterparty is classified as non-performing, all loans to that counterparty are classified as non-performing under the contagion principle. For groups of companies, the contagion principle is applied selectively. The non-performing loans category includes irrecoverable loans. These include loans in default and some loans that have been classified as non-performing for more than one year. Non-performing loans are classified as irrecoverable when they require the establishment of a provision and when it is likely that the loan will ultimately be written off. This analysis must be made while taking existing guarantees on these loans into account. Non-performing loans and irrecoverable loans may be reclassified as performing loans when payments have resumed in a steady fashion for the amounts corresponding to the original contractual payment schedule and once the counterparty no longer presents a default risk. They may also be classified as restructured loans if debt has been rescheduled and following a waiting period. For loans with credit risk exposure, provisions are established to cover all projected losses on loans classified as non-performing or irrecoverable. A full provision is established on all outstanding, accrued and unpaid interest. Once the loan is deemed to be definitively irrecoverable, a loss is recorded. The new accounting measures discussed above have no impact on balance sheet and income statement items; nevertheless, supplementary disclosures to the notes to the financial statements are provided. Restructured loans at non-market conditions are broken out separately, where applicable, in a specific sub-category for performing loans. At the time of the restructuring, the loan is recorded at nominal value less a discount corresponding to the amount of forfeited interest. This interest differential will be taken into account in determining the lending margin on the loans concerned. All restructured loans are immediately reclassified as irrecoverable once the borrower fails to make scheduled payments. As of December 31, 2003, there were no material restructured loans at non-market conditions, and no interest differential was therefore calculated to be taken into account for lending margin purposes. 09

11 CONSOLIDATED FINANCIAL STATEMENTS Securities and futures The accounting principles and methods of CRC Standard of December 12, 2002 dealing with the accounting treatment of credit risk for companies governed by the CRBF, described above for loans, also apply to fixed income securities and futures traded on over-the-counter markets. These new accounting methods have no impact on the financial statements, but they require additional disclosures in the notes to the financial statements. Inflation-indexed OATs In the absence of specific regulations for credit institutions, the indexing effects on the face value of inflation-indexed OATs may be recorded using one of the following methods: at the time the bond is sold or reaches maturity; spread over the bond s term to maturity; as income or expense for the period. Beginning with the year ending December 31, 2003, Caisse des Dépôts Group decided to use the example of the accounting method prescribed by Article R of the Insurance Code, as amended by decree No of December 24, 2002, and to enter gains or losses related to the indexing of the face value of the bonds to the consumer price index as income or expenses for the year. This change in accounting method increased opening retained earnings as of January 1, 2003 by 4 million after taxes and gross income for the year ended December 31, 2003 by 7.1 million. Depreciation, amortization and impairment of assets CRC Standard of December 12, 2002 related to the depreciation, amortization and impairment of assets is effective for financial years beginning January 1, No entity of Caisse des Dépôts Group opted for early application of this standard, nor did they choose the option allowed by the standard which consists of applying the component approach to major maintenance or repairs during the transition period. However, in accordance with opinion No F of the CNC Urgent Issues Task Force, approved December 12, 2003 by the CRC, the entities of Caisse des Dépôts Group recorded provisions for major repairs to real estate to cover so-called Category 2 major maintenance expenses. Application of this standard resulted in an 11 million provision for major repairs. This amount, charged against opening retained earnings at January 1, 2003, is net of tax effects and corresponds to Category 2 expenses that are part of multi-year maintenance plans. Retirement commitments The CNC Urgent Issues Task Force opinion of January 21, 2004 provides guidelines on the accounting treatment of the consequences of the French Pensions Reform Act (act No of August 21, 2003). Under the new rules, employees can elect to retire before the age of 65, but cannot be required to do so by their employer. The statutory retirement bonus payable when they retire is subject to payroll taxes. However, in light of calculation assumptions applied previously, these modifications do not have a material impact on the provision amounts in the Caisse des Dépôts Group financial statements. Consolidation principles and policies 1 - Consolidation methods and scope of consolidation The consolidated financial statements include the accounts of the Central Sector of Caisse des Dépôts et Consignations, the consolidated accounts of the sub-groups and the accounts of subsidiaries, whenever their consolidation is material to the consolidated accounts of the entities included in the scope of the consolidation. Those companies whose contribution to the results of the subgroup to which they belong is considered material, and newly formed or acquired companies for which strong growth is expected, are also consolidated. Full consolidation Undertakings over which the Group exercises exclusive control are fully consolidated. Exclusive control is defined as the ability of an undertaking to direct the financial and operational policies of another undertaking with a view to gaining economic benefits from its activities. It results from the ownership of more than one half of the voting rights of an undertaking, or from the appointment for two successive years of more than one half of the members of the governing bodies, or from the power to exert a dominant influence by virtue of company by laws or agreements. Proportional consolidation Companies over which the Group exercises joint control are proportionally consolidated. Joint control is defined as sharing of the control of an undertaking jointly run by a limited number of partners or shareholders, such that the financial and operating policies result from their agreement. 10 /// 2003 Annual Report Caisse des Dépôts Group

12 Equity method consolidation Undertakings over which significant influence is exerted are accounted for under the equity method. Significant influence results from the ability to take part in determining the financial and operational policies of an undertaking without exercising control. Special case of ad hoc entities When the Group or a Group company controls an undertaking in substance, notably by virtue of contractual agreements or provisions in company bylaws, the undertaking is consolidated even if there is no ownership of shares. The existence of control in substance is assessed using the following criteria, as defined by CRC Standard 99-07: decision-making and management powers in respect of the daily operations of an ad hoc entity or in respect of its assets; and the ability to obtain the majority or all of the economic benefits and be exposed to a majority of the risks. Entities that carry out their activities under a fiduciary relationship, where management is carried out on behalf of third parties and in the interest of the various parties involved, are not consolidated. The following types of companies are not consolidated: semipublic companies (SEMs and SAIEMs) and public housing corporations (HLMs), for which access to their assets and profits is restricted. As regards insurance activities, controlled pooled investment vehicles and transparent companies with property rental activities representing policyholder liabilities are not consolidated. The accounts of consolidated entities are generally prepared to December 31. Companies preparing their accounts more than three months before or after this date are consolidated using interim accounts at December Changes in the scope of consolidation As of December 31, 2003, the scope of consolidation comprised the Central Sector of Caisse des Dépôts, 23 ad hoc entities (of which six venture capital funds and similar entities), a debt securitization fund and 790 other direct and indirect subsidiaries, representing an overall total of 815 entities, compared with 857 one year earlier. The most significant consolidation changes at Caisse des Dépôts last year were as follows: CNCE sub-group Acquisition during the second half of 2003 by CNCE of a 60% stake in the French subsidiary of Sanpaolo IMI, consisting of 13 companies. Consolidation of Océor, a group of 13 companies consisting of retail banks whose activities are mainly in the French overseas departments and territories. CDC IXIS sub-group CDC IXIS s acquisition of a 38.7% stake in Nexgen Financial Holdings Group, which specializes in high-value-added financial engineering transactions, was completed in late December This group was not consolidated as of December 31, 2002, given its non-material impact on the financial statements of CDC IXIS Group at the time. As of January 1, 2003, this group is accounted for under the equity method. In accordance with the laws of certain U.S. states regarding ownership of insurance companies operating in their jurisdiction, the shares of CDC IXIS Financial Guaranty North America were transferred on September 20, 2003 to a voting trust, with the approval of the New York State Insurance Department. Under the voting trust agreement, two of the five trustees must be employed by CDC IXIS and two by CDC IXIS Financial Guaranty Services. In addition, three of the trustees must be residents of the United States. Under the voting trust agreement signed on September 17, 2003 by the five trustees as well as CDC IXIS Financial Guaranty North America and CDC IXIS Financial Guaranty Services, the shares of CDC IXIS Financial Guaranty North America will be owned by the trustees. However, CDC IXIS Financial Guaranty Services continues to control all related revenues and expenses. As a result, CDC IXIS Financial Guaranty North America remains fully consolidated in the financial statements of CDC IXIS Group and proportionally consolidated in the financial statements of Caisse des Dépôts Group. C3D sub-group Sale of Médica France, consisting of 69 companies offering assisted living residences and a subsidiary of Icade Group. CNP Assurances sub-group Sale of Carivita in the first half of Goodwill and fair value adjustments When an undertaking is consolidated for the first time, the difference between the cost of acquisition of the shares and the total restated value of the assets, liabilities and off-balance sheet items constitutes goodwill on acquisition. The difference between the value retained for an item in the consolidated balance sheet and its carrying value in the individual balance sheet of the acquired undertaking constitutes a fair value adjustment. These differences are amortized, written down or written back to income using the rules normally applicable to the corresponding items. Goodwill on acquisition, which may be positive or negative, is amortized through the income statement over a period that reflects the assumptions made and the objectives set at the time of the acquisition, but does not exceed twenty years allowing for exceptions. If material unfavorable changes occur affecting the assumptions on which the amortization schedule is based, the rate of amortization of goodwill on acquisition should be increased. 11

13 CONSOLIDATED FINANCIAL STATEMENTS 4 - Deferred taxes Deferred taxes are recognized when a temporary difference is identified between the restated carrying amount and the tax base of assets and liabilities. They are calculated using the liability method, whereby deferred taxes from prior years are adjusted to account for changes in tax rates. The corresponding impact is recognized under deferred tax in the consolidated income statement. The deferred tax rates applied in 2003 for France were 35.43% for the full rate and 20.20% for the reduced rate. These rates were unchanged from Deferred taxes are calculated separately for each tax entity. In accordance with the rule of prudence, deferred tax assets are recognized only if there is a strong likelihood that they may be set against future tax liabilities. Certain directly and indirectly held Group entities make up consolidated tax group. 5 - Foreign currency translation Balance sheet items and off-balance sheet commitments of foreign companies are translated at the year-end rates, with the exception of equity capital, which is maintained at the historical rate. Income statements are translated on the basis of the average exchange rates during the year. The resulting differences are entered in consolidated reserves under Translation reserve. 6 - Intra-Group transactions Intra-Group accounts as well as income and expenses resulting from transactions within the Group are eliminated on consolidation whenever they relate to fully or proportionally consolidated subsidiaries. Securities issued by Group companies are also eliminated from the balance sheet if they are not part of the trading portfolio. 7 - Rental and leasing transactions with purchase option and lease-financed goods Rental and leasing transactions are entered in the company accounts according to their legal nature. Under accounting regulations, transactions that are in fact comparable to credit transactions must be restated in the consolidated financial statements in such a way as to recognize their economic purpose. Rental and leasing transactions with a purchase option are therefore entered on the consolidated balance sheet with the outstanding amount determined using the so-called financial method. The unrealized reserve, which consists of the difference between the reported amortization and the financial amortization of the invested capital, is entered in consolidated reserves net of deferred taxes. Fixed assets acquired through a lease or similar agreement are restated for the purpose of consolidation and entered on the balance sheet as if they had been acquired through borrowing. Presentation and accounting policies Banking and financial activities 1 - Income statement items Interest and commissions classified as such are recorded on an accruals basis. Commissions not classified as interest are recorded on a cash basis. 2 - Foreign-currency-denominated transactions Foreign-currency-denominated assets, liabilities and off-balance sheet commitments have been translated at exchange rates on December 31, Currency gains and losses from ordinary currency transactions are recorded in the income statement. Spot foreign exchange transactions are valued at the spot rate. Forward currency transactions, other than hedging, are valued at the forward rate of the remaining period. Forward currency transactions for hedging purposes are valued by symmetry with the item hedged. Premiums and discounts related to hedged foreign currency transactions are taken as income and expenses over the period remaining until the maturity of these transactions. 3 - Advances and loans to financial institutions and customers These items include loans, overdrafts and securities purchased under collateralized and uncollateralized fixed resale agreements. Loans Loans are recorded as assets in the balance sheet at redemption value. Accrued interest is recognized as income over the life of the loan. Loans are now accounted for in accordance with the principles of CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the CRBF, which took effect January 1, 2003 and whose application was further complemented by various opinions of the Urgent Issues Task Force and a statement by the CNC. These accounting principles and methods are presented above in the section on changes in accounting methods. Securities purchased under collateralized and uncollateralized fixed resale agreements These securities are recorded as assets in the balance sheet on the line representing the receivable arising from the transaction. The corresponding income is recognized on an accruals basis. Securities received as collateral and subsequently sold are recorded as liabilities and valued at market value. 12 /// 2003 Annual Report Caisse des Dépôts Group

14 4 - Securities and securities transactions Securities are classified under accounting categories corresponding to the institution s activities. Trading securities Trading securities include in particular Treasury bills and negotiable debt securities. They are expected to be held for periods not exceeding six months. They are highly liquid and are marked to market. Valuation differences are recognized in the income statement. When the Group is in a market-making position and the security is actively traded, these securities may be held in the trading portfolio beyond the regulatory period of six months. This is also the case when these securities are under specialized management to hedge instruments valued on a marked-tomarket basis. Available-for-sale securities Available-for-sale securities represent securities that are not to be held until maturity or for trading purposes. They also include, except in the case of market-making activities, trading securities reclassified after being held for a period of more than six months. In this case, the reclassification is made at market value on the date of the transfer. Available-for-sale securities are treated according to the FIFO method and are valued as follows: bonds and equities: unrealized losses calculated based on their year-end closing price are taken to expenses through a provision for impairment; Treasury bills, negotiable debt securities, and interbank instruments: provisions are made on the basis of the individual situation of the issuer and market indicators. Any premiums and discounts are written off over the residual life of the asset on a yield-to-maturity basis for negotiable debt securities and on a straight-line basis for other securities. Held-to-maturity securities This portfolio comprises fixed income securities that are intended to be held until maturity, and financed with dedicated long-term resources or covered through hedging instruments. Unrealized capital losses resulting from differences between book and market values are not covered by provisions. However, if applicable, default risks are taken into account in determining the value of these securities at year-end. The difference between the acquisition price and the redemption value of the securities (premium or discount) is amortized using the yield-to-maturity method for negotiable debt securities and the straight-line method for other securities. Portfolio securities (TAP) Portfolio securities are investments made on a regular basis with the aim of realizing a capital gain in the medium term but without the intention of investing on a long-term basis in the development of the business or taking an active part in the operational management of the issuing undertaking. These securities are recorded at cost. A provision is taken in respect of any permanent impairment in the value of the security due to a fundamental deterioration in the undertaking s position. Fair value is determined taking into account the general economic outlook for the issuer and the remaining period for which the securities will be held. It is calculated using a multi-criteria approach, with a predominant role given to the market price over a sufficiently long term. Non-consolidated equity securities Non-consolidated equity securities are recorded at acquisition cost. They are valued on the basis of their fair value, with reference to various criteria such as net assets, potential return, and capitalization of earnings. Provisions are constituted to reflect any permanent impairment in the fair value of these securities. Lending and borrowing of securities Securities are valued using the rules applicable to the portfolio of origin. Borrowed securities are recorded as an asset under trading securities at their market value on the day they were borrowed, and as a liability to recognize the debt towards the lender. They are valued on the basis of their year-end market value. Loans and borrowings guaranteed by cash and notes are treated in the same way as collateralized resale agreements. Income from these transactions is recognized on an accruals basis in the income statement. Issues indexed on fund performance These consist in structured issues, the most often with a zero coupon in fine, that are indexed on fund performance. The index is hedged by the purchase of units in the fund whose performance accrues entirely to the subscribers at maturity. The overall financial engineering margin on these transactions is estimated by reference to the market value of the units in the fund and the present value of future cash flows relating to these issues as well as to future management expenses. As required by applicable regulations, extremely prudent assumptions are used regarding early redemption when the valuation is based on models. 13

15 CONSOLIDATED FINANCIAL STATEMENTS 5 - Forward financial instruments In application of the strategy defined for the development of its trading activities and the management of market risks, Caisse des Dépôts Group operates on all organized and overthe-counter markets for interest rate, currency and equity futures and options. In France as well as abroad, these transactions are entered into as part of specific or general hedging, or in connection with specialized management of trading portfolios. For all of these instruments, whatever the management policy pursued, the face value of the futures and options contracts, the value of the underlying assets, or the exercise price is recorded in the off-balance sheet. The method of accounting for expenses and revenues on these instruments depends on the management policy pursued. Interest rate and currency swaps Hedging transactions: expenses and revenues resulting from hedging instruments (taken singly or as a homogeneous group) are recognized symmetrically with the revenues and expenses resulting from the transaction hedged. Specialized portfolio management transactions: contracts are valued at year-end at their market value. In accordance with regulations, the market value takes into account an adjustment for default risks and the discounted value of future management costs. The total net valuation difference is recognized in the income statement. Other interest rate and currency transactions These transactions relate primarily to futures and options. Hedging transactions: expenses or revenues are recognized in the income statement on a symmetrical basis with the revenues or expenses on the transaction hedged. Other transactions: these transactions are marked to market. Unrealized gains or losses at year-end are recognized in the income statement. In order to give a fair view of the value of these instruments, those that are not highly liquid are also valued by reference to their theoretical market value. Complex transactions Complex transactions include derivatives, which combine repackaged instruments of various types, characteristics and pricing methods. Each component of the transaction is recorded in the on- or offbalance sheet according to the nature of the underlying. The result is considered globally and recorded through one entry reflecting the economic nature of the transactions, as if they were a single instrument. In the case of totally new products, when not governed by explicit regulation, the accounting approach for recognition of any gains and losses is based on similar existing products. The method of accounting for gains and losses depends on the management policy pursued: hedging transactions: for reasons of prudence, notably when market liquidity is low, results are recorded on an accruals basis. A provision is made when market value is negative; trading portfolio or transactions for which the result can be considered as an arrangement fee: the result is recognized when the transaction is initiated. A discount is applied to take into account future management expenses and possible default risks. Credit derivatives Credit derivatives are instruments whose purpose is to transfer the credit risk in respect of an asset from one counterparty to another, generally in exchange for a premium paid at the outset or by installments. In the case of events predefined in the related contract, known as credit events, the seller of the cover is called upon to bear the cost under the terms defined in the contract. There are three categories of credit derivatives: credit default swaps, total rate of return swaps and credit linked notes that can be likened to options, interest rate swaps and securities swaps, respectively. In the absence of a specific accounting text, the accounting approach for credit derivatives is based on their analogy to existing products with which they can be likened and taking into account the management policy being pursued: hedging transactions: expenses and revenues are recognized symmetrically with the revenue and expenses on the transaction hedged; isolated open position transactions undertaken as part of a longterm holding: the result is booked on an accruals basis. A provision is made against unrealized losses; specialized portfolio management transactions: when market liquidity for the derivative is ensured, contracts are valued at market price with a discount applied to take into account possible default risks and the present value of future management expenses. Otherwise, contracts are valued using the applicable regulations for the underlying transactions, which involves valuing them at cost and, where necessary, establishing a provision for impairment. Market values When the market price of the instruments or the valuation parameters are not officially quoted, alternative valuation methods are used, making reference to one or more of the following components: price confirmation by brokers or outside counterparties, comparison with actual transactions and research by issuer or instrument category. When instruments are valued using models, these integrate the parameters that affect the valuation of the instruments, in particular the liquidity level of the related markets. Applying a prudent approach, the calculations are adjusted to take account of the weaknesses of some of these parameters, in particular their relevance over a long period. 14 /// 2003 Annual Report Caisse des Dépôts Group

16 6 - Tangible and intangible fixed assets Fixed assets are valued at cost. In the case of buildings, initial fixtures, fittings and installation expenditure may be added to the cost of acquisition. Depreciation is calculated using the straight-line method and according to the type and quality of the building, over its estimated useful life. Thus, buildings are depreciated over twenty to fifty years. Partial renovation work on old buildings is depreciated over periods of between fifteen and twenty-five years. Installations, improvements and fittings are generally written off over ten years. Market shares acquired are not amortized. They are, however, periodically subjected to an impairment test based on the valuation of the benefits arising from the competitive position held. As for insurance activities, the surplus value of the contracts portfolio, which corresponds to the estimated present value of future distributable profits attributable to the portfolio at the time of the acquisition, is depreciated for like groups of contracts using a schedule that is updated regularly and reflects the likelihood of future profits over a reasonable period. As a general rule, software is written off over three years (maximum of five years). Forests are subject to provisions for impairment as required. In the event of an irreversible loss, an exceptional depreciation charge is taken for the amount of the loss. 7 - Investment property risks Caisse des Dépôts Group owns a large portfolio of rental properties held as long-term investments. Market values are determined regularly by independent appraisers. A provision is booked for any permanent impairment in value of these properties, representing the difference between carrying value and market value. 8 - Advances and loans from financial institutions and customer deposits These liabilities include deposits, loans and securities sold under collateralized and uncollateralized fixed repurchase agreements. Loans Loans are recorded in the balance sheet at redemption value and accrued interest is charged to income over the life of the loan. Securities sold under collateralized fixed repurchase agreements The debt is recorded under liabilities. The securities are maintained in their original portfolio and valued according to the rules applicable to that portfolio. The corresponding interest is recognized through the income statement as it is accrued. 9 - Debt securities Debt securities are reported according to the type of security: interbank and negotiable debt securities (commercial paper, certificates of deposit and medium-term notes), bonds and similar debt securities. Accrued interest is recorded on the same balance sheet line as the debt security and is charged to income. Commissions on the issue of debt securities and any premiums on their issue or redemption are charged to income over the life of the securities Provisions for risks and charges This heading includes: provisions for country risk, which are determined based on an appraisal of the risk carried by the Group in the respective countries or on borrowers in those countries; the appraisal criteria are generally based on an assessment of the country s economic, financial and socio-political situation; provisions for sector risks and general provisions to cover losses whose realization and valuation are uncertain; provisions for pension-related commitments corresponding mainly to retirement benefits and expenses related to the establishment of framework agreements to organize early and gradual cessation of activities within various Group entities; provisions for risks and charges not related to banking transactions, established in accordance with the terms of CRC Standard regarding the accounting for liabilities. These provisions are intended to cover risks and charges that are clearly defined but whose amount or timing remains uncertain. The establishment of these provisions is subject to the existence of an obligation to a third party at year-end, and the absence of at least an equivalent consideration from this third party. This standard does not cover, in particular, banking transactions, financial instruments and insurance contracts in force; provisions for default risks established among the Real Estate Division s subsidiaries cover the scope of sound commitments entered on the balance sheet or as off-balance sheet commitments, for which statistical information is available that makes it possible to assess default probabilities. These provisions are determined by applying multiples segmented by rating category and residual term, and weighted by recovery assumptions in the event of a default. In particular, they cover potential risks on office space, financial institutions, the local and regional public sector and structured financing; provisions for major repairs established in accordance with CRC Standard related to the depreciation, amortization and impairment of assets and whose application methods are described in the section on changes in accounting methods. 15

17 CONSOLIDATED FINANCIAL STATEMENTS 11 - Pension and related committments In France, pension liabilities are generally covered by contributions taken as expenses and paid to retirement or insurance funds, which then handle pension payments, or by the government in the case of civil servants. Provisions are made in respect of the rights of employees to a payment on retirement that are not covered by insurance contracts, for each category of employee based on collective bargaining agreements. These provisions are calculated using an actuarial method taking into account the age and seniority of the personnel, the mortality rate and probable remaining service with the Group until retirement age and estimated future salary levels. This provision is adjusted each year based on changes in the actuarial liabilities. When these commitments are covered by an insurance policy, the annual premiums paid are included in expenses for the period. In countries other than France, there are various compulsory retirement plans to which employers and employees pay contributions. Depending on each case, the corresponding commitments are paid to company pension funds or recognized in the individual accounts of the companies concerned. No restatements are made in this respect in the consolidated financial statements. Commitments related to bonuses awarded for work medals or Caisse des Dépôts medals are calculated using the same method as is used to determine commitments for retirement indemnities Subordinated debt This category includes debts whose repayment in the event of liquidation of the debtor would occur only after other creditors have been repaid. Accrued interest payable is carried in a debtor account and charged against income Fund for general banking risks This fund is constituted to cover operational risks and losses arising from banking activities and the management of financial assets that are not covered by general or specific provisions. Transfers are made to and from this fund on a regular basis to cover these risks Other information Some of the previous year s figures have been restated from the figures reported in Principal accounting and presentation policies Insurance business Accounting policies and valuation methods specific to insurance activities have been maintained in the consolidated financial statements of Caisse des Dépôts Group. Caisse des Dépôts Group applies CRC Standard regarding rules for consolidating companies governed by the Insurance Code. Constituent items of the consolidated financial statements of insurance companies are presented on the lines of the balance sheet, income statement and off-balance sheet that are of the same nature, with the exception of the following items: Investments of insurance companies Investments of insurance companies include real estate, investments representing unit-linked policies and various other investments. Real estate investments are shown in the balance sheet at acquisition cost, net of acquisition expenses, but increased to reflect the cost of improvements and certain taxes. Properties are depreciated over their estimated useful life. The estimated value of properties is based on reports produced by independent appraisers. A provision is recognized in the event of permanent diminution in value. Investments allocated to unit-linked policies are reassessed at the year-end by reference to variations in related unrealized capital gains or losses. Technical liabilities relating to these policies are similarly reassessed. Equities and other variable income securities are recorded at cost excluding expenses. A provision for impairment is established to cover permanent impairment of the securities, determined relative to the estimated recoverable amount. Marketable securities and other fixed income securities are recorded at cost excluding accrued income. The difference between the redemption value of these securities and their cost, excluding accrued income, is allocated on an actuarial basis over the remaining term to maturity. A provision is established in the event of a default risk on the part of the issuer. Moreover, when the net book value of the real estate investments and variable rate securities exceeds the realizable value of these assets, a provision for the call risk of the technical commitments, which is equal to the difference between these two amounts, must be established. Technical provisions of insurance companies Technical provisions correspond to commitments to policyholders and beneficiaries. 16 /// 2003 Annual Report Caisse des Dépôts Group

18 Life insurance and capitalization For policies including whole life insurance, the provision taken comprises the share of written premiums not earned in the period concerned. The mathematical provisions relating to premiums on policies denominated in monetary terms correspond to the difference in the present value of the liabilities of the policyholder and of the insurer. Life insurance provisions are set aside using a discount rate not exceeding the expected return, prudently estimated, on the assets representing these provisions. Liabilities are discounted applying a rate that is at the most equal to the rate of the policy concerned, and using published mortality rates or actual mortality tables if these are more prudent. An overall provision is made for the amount of the total future management expenses of policies not covered by expenses levied on premiums or on the financial income generated thereon. When remuneration in excess of the minimum guaranteed rate, based on the results of technical and financial management, is due to the policyholders and has not been distributed to them during the period, this remuneration is included in the provision for profit-sharing payments. The provision for claims payable includes outstanding claims and capital due at the year-end. Mathematical provisions in respect of unit-linked policies are assessed on the basis of the assets underlying these policies. Disability, accident and health insurance A provision is taken for incremental risks to cover timing differences between the time when guarantees are acquired by policyholders and when they are financed by insurance premiums. Provisions for claims are based on the estimated value of foreseeable expenses net of any recourse recovery. Non-life insurance Non-life insurance technical provisions comprise provisions for unearned premiums (share of premiums issued that correspond to subsequent years) and provisions for claims payable. Gross margin on insurance activities The gross margin on insurance activities comprises earned income from premiums and contributions, the cost of benefits (including changes in technical provisions) and net investment income. Recording of movements in the liquidity risks reserve of insurance companies In 2002, CNP Assurances added 504 million to the liquidity risks reserve ( 217 million attributable to Caisse des Dépôts Group), which were maintained in the consolidated financial statements. These provisions were written back in full in 2003 in the context of the financial market recovery. This write-back was recorded as income in accordance with the CNC s Urgent Issues Task Force opinion of January 21, 2004, which followed the decree of December 22, Principal accounting and presentation policies Service sector businesses Accounting policies and valuation methods specific to service sector businesses have been maintained in the consolidated financial statements of Caisse des Dépôts Group. Constituent items of the financial statements of service companies are presented on the lines of the consolidated balance sheet, income statement and off-balance sheet that are of the same nature. One specific line only has been added, entitled Net income from other activities in the intermediate management balances. Net income from other activities comprises mainly sales and other operating income, less purchases consumed. 17

19 CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Interbank and similar transactions: advances and loans to financial institutions Ordinary accounts 10,595 8,740 Current accounts of the savings funds Overnight accounts and advances 2,871 4,430 Securities purchased under overnight uncollateralized fixed resale agreements 13 Securities purchased under collateralized fixed resale agreements 1,572 5,431 Accrued interest Sight amounts due from financial institutions 15,297 18,821 Term loans and advances 56,532 55,581 Securities purchased under uncollateralized fixed resale agreements 8 9 Securities purchased under collateralized fixed resale agreements 25,054 28,508 Subordinated loans Non-performing loans Provisions (13) (14) Accrued interest Term loans to financial institutions 82,212 84,961 ADVANCES AND LOANS TO FINANCIAL INSTITUTIONS 97, ,782 The majority of advances and loans to financial institutions relates to entities engaged in banking and financial activities. Note 2 - Customer transactions (assets) Overdrafts 1,876 2,866 Non-performing loans 13 9 Provisions (7) (8) Overdrafts 1,882 2,867 Commercial loans Loans to financial sector customers 1, Other cash advances (1) 17,074 6,390 Loans for infrastructure projects 4,078 4,132 Loans for housing projects 11,825 11,497 Other loans to customers 4,627 4,385 Securities purchased under uncollateralized fixed resale agreements 1 Securities purchased under collateralized fixed resale agreements 9,486 2,376 Subordinated loans Lease financing and similar agreements 1,140 1,127 Non-performing loans Provisions (299) (298) Accrued interest Other loans to customers, lease financing and similar agreements 50,354 31,576 CUSTOMER TRANSACTIONS (2) 52,249 34,454 Total at sight 1,882 2,867 Total term loans 50,367 31,587 (1) Of which, ACOSS for 14,130 million as of December 31, 2003, compared with 2,285 million in (2) The majority of loans to customers relate to entities engaged in banking and financial activities. 18 /// 2003 Annual Report Caisse des Dépôts Group

20 Note 3 - Transactions on trading, available-for-sale, held-to-maturity and portfolio activities A) BREAKDOWN BY NATURE AND TYPE OF PORTFOLIO (Euros millions) Available- Held-to- Available- Held-to- Trading for-sale maturity Portfolio Trading for-sale maturity Portfolio securities securities securities securities TOTAL securities securities securities securities TOTAL French government securities 9, ,821 15,299 7, ,486 14,898 Treasury bills 10, ,052 4, ,168 Securities on loan , ,288 Public-sector securities and similar 20, ,201 27,196 13,732 1,131 6,491 21,354 Bonds 19,105 4,875 14,912 38,892 15,069 8,608 14,898 38,575 Subordinated securities Securitized debt funds 1,089 2, ,035 1,777 2, ,340 Negotiable debt securities 1,114 23,497 1,833 26,444 8,131 9,269 1,706 19,106 Securities on loan 2, ,812 2, ,222 Bonds and other fixed income securities 23,989 31,322 16,984 72,295 27,937 20,597 16,891 65,425 Equities 6,969 1,976 9,132 18,077 3,851 1,039 8,950 13,840 Mutual funds 1,197 2,851 4,048 1,085 3,116 4,201 Securities on loan Equities and other variable income securities 8,187 4,829 9,132 22,148 5,041 4,157 8,950 18,148 TOTAL BY TYPE OF PORTFOLIO 52,645 36,677 23,185 9, ,639 46,710 25,885 23,382 8, ,927 Securities portfolios are mainly held by entities engaged in banking and financial activities. Portfolio securities include venture capital investments. 19

21 CONSOLIDATED FINANCIAL STATEMENTS Note 3 (cont.) B) SUPPLEMENTARY INFORMATION Available- Held-to- Available- Held-to- Trading for-sale maturity Portfolio Trading for-sale maturity Portfolio securities securities securities securities TOTAL securities securities securities securities TOTAL Public-sector securities and similar Gross value (1) 20, ,976 26,947 13,731 1,047 6,217 20,995 Premiums/discounts Accrued interest Provisions Net book value 20, ,201 27,196 13,732 1,131 6,491 21,354 Market value of trading and available-for-sale securities 20, ,731 1,260 Bonds and other fixed income securities Gross value (1) 23,989 31,166 16,703 71,858 27,937 20,428 16,524 64,889 Premiums/discounts 85 (10) Accrued interest Provisions (44) (61) (105) (64) (4) (68) Net book value 23,989 31,322 16,984 72,295 27,937 20,597 16,891 65,425 Of which, listed securities 22,369 28,549 15,549 66,467 17,836 17,470 15,998 51,304 Market value of trading and available-for-sale securities (2) 23,989 31,921 27,937 20,697 Equities and other variable income securities Gross value 8,187 4,978 11,057 24,222 5,041 4,475 11,017 20,533 Accrued interest Provisions (149) (1,961) (2,110) (318) (2,095) (2,413) Net book value 8,187 4,829 9,132 22,148 5,041 4,157 8,950 18,148 Of which, listed securities (3) 7,670 2,413 8,439 18,522 3,375 1,195 8,162 12,732 Market value (trading and available-for-sale securities) or value in use (portfolio securities) (2) (3) 8,187 5,195 11,410 24,792 5,041 4,066 12,693 21,800 (1) Gross values shown under available-for-sale securities and held-to-maturity securities correspond to redemption value. (2) These amounts do not take into account unrealized gains and losses on financial instruments allocated, where applicable, as hedges for available-for-sale securities. (3) The value in use of portfolio securities is determined on the basis of moving averages for listed securities, adjusted where necessary when a specific value in use appears to better reflect the fair market value of the securities. 20 /// 2003 Annual Report Caisse des Dépôts Group

22 Note 4 - Investments of insurance companies Investments to cover unit-linked policies 5,962 5,083 Other investments Land and buildings 1,361 1,311 Investments in related undertakings and long-term equity holdings Other investments 61,593 56,875 INVESTMENTS OF INSURANCE COMPANIES 68,938 63,332 This relates mainly to investments by the CNP Assurances Group, which was proportionally consolidated for 42.98% as of December 31, 2003 in the consolidated financial statements of Caisse des Dépôts Group. As of December 31, 2003, the insurance subsidiaries of EULIA (namely Ecureuil IARD, Cegi, Saccef, Foncier Assurance and Socamab) and CDC IXIS Financial Guaranty were also consolidated proportionally. As of December 31, 2003, the line other investments comprised mainly equities and equity funds ( 7.3 billion), and bonds and bond funds ( 47.3 billion), these being the proportionally consolidated amounts excluding accrued interest relating to the CNP Assurances Group. Other investments include notably the value of companies of the CNP Assurances Group accounted for under the equity method (see Note 6). Note 5 - Long-term equity holdings A) MOVEMENTS Acquisitions/ Disposals/ Other (Euro millions) charges reversals movements Long-term equity holdings Gross value (2) 2, (98) (109) 3,174 Provisions (310) (49) 16 (34) (377) Net book value 2, (82) (143) 2,797 Advances Gross value (166) (17) 585 Provisions (181) (30) 17 (194) Net book value (149) (17) 391 TOTAL (1) 2, (231) (160) 3,188 (1) This item mainly corresponds to entities engaged in banking and financial activities. (2) The increase in long-term equity holdings was mainly due to the following transactions: acquisition of shares in CNR ( 207 million) and Dexia ( 80 million) by the Central Sector, sale of Gecina shares by Crédit Foncier de France ( 48 million) and reclassification of Nexgen shares, which were fully consolidated in 2003 ( 74 million). 21

23 CONSOLIDATED FINANCIAL STATEMENTS Note 5 (cont.) B) MAIN LONG-TERM EQUITY HOLDINGS AS OF Book value of Total Percentage (Euro millions) securities Advances Provisions held Companies in which the net book value of the Group s investment is over 50 million Dexia % Areva % Sanpaolo IMI (1) % Compagnie Nationale du Rhône % Banca Carige (2) % Crédit Logement (2) % Sicovam Holding % Sub-total 2,028 2,028 Other non-consolidated holdings 916 (342) 574 Advances related to non-consolidated holdings 567 (183) 384 SEM and SAIEM (46) 202 TOTAL CONSOLIDATED AND NON-CONSOLIDATED LONG-TERM EQUITY HOLDINGS AND ADVANCES 3, (571) 3,188 Of which, listed companies 1,305 1,305 These securities are held mainly by banking and financial subsidiaries. (1) Jointly held by CDC, CNP Assurances and EULIA. (2) Held by EULIA. Note 6 - Investments accounted for by the equity method Equity- Equity- Of which, accounted Of which, accounted pro forma Investment amount net income amount net income BDPME CNCE Group (1) 87 (26) 48 (37) Ecureuil Vie Nexgen (2) 61 2 AIH-PBW Group Other (3) INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD 1, , Of which, investments accounted for by the equity method by entities engaged in banking and financial activities 1, , Of which, investments accounted for by the equity method by entities engaged in non-banking activities (excluding CNP Assurances) Companies accounted for by the equity method by CNP Assurances (4) Net income of companies accounted for by the equity method, including CNP Assurances Group (1) Including Océor Group and Banque Sanpaolo France. (2) Including the impact of the deterioration in the euro/dollar exchange rate in the amount of 15 million. (3) Essentially from Crédit Foncier de France Group and C3D. (4) Included in investments of insurance companies (see Note 4). 22 /// 2003 Annual Report Caisse des Dépôts Group

24 Note 7 - Tangible and intangible fixed assets A) BREAKDOWN OF ASSETS Amortization, Amortization, depreciation depreciation Gross and provisions Net Gross and provisions Net Operating fixed assets 3,191 (1,509) 1,682 3,255 (1,480) 1,775 Investment properties Construction in progress (1) 115 Land and buildings 3,082 (1,050) 2,032 3,188 (1,048) 2,140 Forests and undeveloped land Real estate holding companies 584 (23) (52) 428 TANGIBLE ASSETS 6,990 (2,582) 4,408 7,059 (2,581) 4,478 Purchased goodwill (1) 117 (45) (35) 125 Concessions, licences and patents 443 (320) (253) 150 Other intangible assets (2) 759 (66) (58) 804 INTANGIBLE ASSETS 1,319 (431) 888 1,425 (346) 1,079 TANGIBLE AND INTANGIBLE ASSETS 8,309 (3,013) 5,296 8,484 (2,927) 5,557 Of which, assets of entities engaged in banking and financial activities 4,215 (1,131) 3,084 4,167 (1,059) 3,108 Of which, assets of entities engaged in non-banking activities (3) 4,094 (1,882) 2,212 4,317 (1,868) 2,449 (1) The decrease in purchased goodwill resulted primarily from the disposal of Médica France Group by C3D. (2) Of which, market share identified at the time of the acquisition of CDC IXIS Asset Management North America LP for $719 million ( 570 million as of December 31, 2003 compared with 685 million in 2002). This decrease in valuation was due entirely to currency translation effects. (3) Contributed mainly by C3D Group. B) MOVEMENTS Disposals/ Other (Euro millions) Acquisitions reversals movements Gross tangible operating fixed assets 3, (145) (170) 3,191 Depreciation and provisions (1,480) (179) (1,509) Tangible operating assets 1, (39) (126) 1,682 Investment properties, gross 3, (222) (36) 3,799 Depreciation and provisions (1,101) (115) (1,073) Investment properties 2, (103) (12) 2,726 Intangible assets, gross (1) 1, (15) (163) 1,319 Amortization and provisions (346) (101) 13 3 (431) Intangible assets 1,079 (29) (2) (160) 888 TANGIBLE AND INTANGIBLE ASSETS 5, (144) (298) 5,296 (1) Other movements were mainly due to the negative 115 million effect of the euro/dollar exchange rate on valuation of the market share identified at the time of the acquisition of CDC IXIS AM North America LP. 23

25 CONSOLIDATED FINANCIAL STATEMENTS Note 8 - Goodwill on acquisitions Goodwill on acquisitions Goodwill on acquisitions, gross as of January 1 1,275 1,318 Goodwill arising on investments and other movements (1) (2) (174) (43) Goodwill on acquisitions, gross 1,101 1,275 Amortization as of January 1 (379) (166) Net amortization for the period (2) (3) (66) (247) Other movements (4) Amortization (370) (379) GOODWILL ON ACQUISITIONS, NET Negative goodwill Net negative goodwill as of January Reversals in the period (1) (16) Other movements 1 5 NEGATIVE GOODWILL, NET IMPACT ON NET INCOME FOR THE PERIOD (65) (231) (1) The main movements in 2003 involved changes in C3D s consolidation scope. The acquisition of TRP (formerly CAÏMA) added 25 million, disposals deducted 107 million (including Médica France and Egis Port for 58 million and 21 million, respectively) and the impact of changes in the euro/dollar exchange rate had a 98 million negative impact on the goodwill of CDC IXIS Asset Management North America LP. (2) Pursuant to paragraph No of CRC Standard relating to the consolidation rules of companies governed by the CRBF, in 2001 CDC IXIS Group performed due diligence and additional audits that led to a more precise market share estimate (see Note 7) and to record a deferred tax asset of $363 million, which is included in the acquisition price of CDC IXIS Asset Management North America LP. This deferred tax asset is being written back over a period of fifteen years using an actuarial method. As of December 31, 2003, it totaled 249 million (Group share: 179 million). The goodwill on this acquisition totaled $841 million before amortization ( 667 million based on the December 31, 2003 exchange rate, or a Group share of 481 million, compared with 801 million and 577 million, respectively, the previous year). The downturn in the U.S. financial markets in 2002, which represented an indication of impairment in value, prompted the Group to conduct an impairment test that examined both identifiable intangible assets (market share) and residual goodwill. The results of this impairment test led the Group to record $203 million ( 215 million based on the average exchange rate for the period, or a Group share of 155 million) in non-recurring amortization. The net book value of the goodwill, which as of December 31, 2002 totaled $547 million (or a Group share of 394 million), is now being amortized over its residual life of 214 months as of January 1, As of December 31, 2003, the recoverable amount of the intangible assets was deemed not to have deteriorated, given the favorable performance of the leading indicators, including the changes in assets under management and the operating income of the US businesses. As a result, non-recurring amortization was not recorded in After ordinary amortization during the period of $31 million ( 27 million at the average exchange rate for the year, or a Group share of 19 million), residual goodwill totaled $516 million ( 409 million based on the year-end exchange rate, or a Group share of 295 million) as of December 31, 2003, compared with $547 million ( 521 million based on the 2002 year-end exchange rate, or a Group share of 376 million) as of December 31, (3) Goodwill amortization was down relative to 2002 given the changes in consolidation scope at C3D and the non-recurring goodwill amortization in 2002 for CDC IXIS Asset Management North America LP. (4) Other movements included in particular the euro currency translation effects of the dollar-denominated goodwill on CDC IXIS AM NA LP. 24 /// 2003 Annual Report Caisse des Dépôts Group

26 Note 9 - Accruals, deferrals and other assets (Euro millions) Note Deferred charges Prepaid expenses Accrued income Currency and forward financial instrument adjustments 6,997 8,195 Collection accounts Other accruals 2,681 3,612 Deferred tax assets Accruals and deferrals 11,809 14,919 Premiums on purchases of options 1, Miscellaneous receivables 6,102 6,309 Settlement accounts on securities transactions (1) 1,381 3,688 Inventories and similar Accrued interest Impairment provisions (89) (116) Other assets 9,685 10,963 Share of reinsurers in technical provisions 1,734 1,572 Other insurance assets 1, Other insurance assets and share of reinsurers in technical provisions 2,868 2,464 ACCRUALS, DEFERRALS AND OTHER ASSETS 24,362 28,346 Of which, miscellaneous assets of entities engaged in banking and financial activities 7,898 9,132 Of which, miscellaneous assets of entities engaged in non-banking activities 1,787 1,831 (1) The decrease in this item resulted mainly from the unwinding of the Gestitres activity from the Central Sector s systems as of January 1, 2003, representing a decrease of 1,072 million. Note 10 - Interbank and similar transactions: advances and loans from financial institutions Current accounts 11,055 8,471 Overnight advances 10,415 1,999 Securities sold under overnight uncollateralized fixed repurchase agreements 1 Securities sold under collateralized fixed repurchase agreements 824 4,269 Other amounts due Accrued interest Sight amounts due to financial institutions 22,325 14,785 Term loans and advances 71,841 75,590 Securities sold under collateralized fixed repurchase agreements 25,028 35,325 Accrued interest 932 1,028 Term loans from financial institutions 97, ,943 ADVANCES AND LOANS FROM FINANCIAL INSTITUTIONS 120, ,728 Nearly all the amounts due to financial institutions relate to entities engaged in banking and financial activities. 25

27 CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Customer transactions (liabilities) Current accounts 28,560 25,025 Accrued interest 12 8 Customer deposits 28,572 25,033 Loans from financial sector customers 2,830 1,221 Escrow accounts ( consignations ) 2,593 2,490 Term deposits (1) 21,929 9,757 Securities sold under uncollateralized fixed repurchase agreements 4 12 Securities sold under collateralized fixed repurchase agreements 11,807 4,490 Other Accrued interest Other customer advances and loans 40,247 18,625 CUSTOMER TRANSACTIONS 68,819 43,658 (1) Including retirement trust fund (Fonds de réserve des retraites FRR), whose assets totaled 11,583 million as of December 31, Note 12 A) DEBT SECURITIES Cash certificates 1 Commercial paper 2,524 4,892 Certificates of deposit 12,193 12,559 Medium-term notes and other negotiable debt securities 15,779 12,157 Accrued interest Interbank and negotiable debt securities 30,712 29,802 Bonds and similar debt securities 21,325 20,753 Accrued interest Bonds and similar debt securities (1) 21,951 21,396 DEBT SECURITIES 52,663 51,199 (1) Bonds relate almost entirely to Crédit Foncier de France Group in the amount of 15,781 million, CDC IXIS in the amount of 5,500 million and CDC IXIS Capital Markets for 511 million. 26 /// 2003 Annual Report Caisse des Dépôts Group

28 Note 12 (cont.) B) SUBORDINATED DEBT Term subordinated debt Issue Due Interest date date rate Crédit Foncier de France Group July 1994 July % October 1994 October % December 1994 December % February 1993 February 2003 Libor 6 months (1) 32 Total Crédit Foncier de France Group CDC IXIS Group August 2000 August 2010 Euribor 3 months (2) September 2002 September 2022 Euribor 6 months November 2002 November 2027 Euribor 3 months (2) January 2003 January 2033 Euribor 3 months (2) 42 March 2003 April 2023 Euribor 3 months (2) 17 April 2003 April 2015 Euribor 3 months (2) 61 April 2003 January 2033 Euribor 3 months (2) 6 June 2003 March 2018 Euribor 6 months 8 July 2003 July 2018 Euribor 3 months (2) 397 Total CDC IXIS Group CNP Assurances Group May 1999 May % April 2001 As of 5.75% until 2011 April 11, 2011 and Euribor % through 2021 after July 11, 2011 May July December February April April 2003 As of 5.25% until 2013 May 16, 2013 and Euribor + 2% 129 and through 2023 after July 11, 2013 June 2003 As of % until 2013 June 24, 2013 and Euribor + 2% 86 and through 2023 after June 24, 2013 Total CNP Assurances Group TOTAL TERM SUBORDINATED DEBT SECURITIES 1, Perpetual subordinated debt securities Crédit Foncier de France Group 1992 (3) Other companies 7 4 TOTAL PERPETUAL SUBORDINATED DEBT SECURITIES Term subordinated debt CDC IXIS Group December 2001 December 2011 Euribor 3 months Other companies TOTAL TERM SUBORDINATED DEBT Accrued interest } } Crédit Foncier de France Group 3 4 CDC IXIS Group Other companies 0 0 TOTAL ACCRUED INTEREST TOTAL SUBORDINATED DEBT 2,034 1,315 (1) Libor USD 6 months less a 0.125% margin. (2) Subordinated debt securities hedged by a swap. (3) The issue proceeds represent a net total of approximately 174 million for the CDC Group share and are amortized using an actuarial method over twenty years. During the first twenty years, periodic payments in the form of interest will be made at a rate linked to PIBOR applied to the par value of the securities. 27

29 CONSOLIDATED FINANCIAL STATEMENTS Note 13 - Technical provisions of insurance companies Technical provisions relating to unit-linked policies 5,961 5,083 Other technical provisions Technical provisions, life business 58,384 53,879 Technical provisions, non-life business 2,209 1,877 Equalization provisions 5 1 TECHNICAL PROVISIONS OF INSURANCE COMPANIES 66,559 60,840 The above comprise mainly the technical provisions of CNP Assurances, which was consolidated proportionally at 42.98% in the financial statements of Caisse des Dépôts Group as of December 31, The insurance subsidiaries of EULIA (Ecureuil IARD, Cegi, Saccef, Foncier Assurance, Socamab) and CDC IXIS Financial Guaranty were also consolidated proportionally. Note 14 - Accruals, deferrals and other liabilities (Euro millions) Note Deferred income 1,237 1,009 Accrued charges Currency and forward financial instrument adjustments 6,654 6,315 Other deferrals 2,746 8,003 Deferred tax liabilities Accruals and deferrals 11,738 16,587 Premiums on sale of options 2,337 2,008 Securities on loan 27,720 20,254 Miscellaneous payables 10,178 8,136 Settlement accounts on securities transactions (1) 445 2,920 Accrued interest 3 Liabilities arising from direct insurance Other insurance liabilities 6 7 Miscellaneous liabilities 41,041 33,871 ACCRUALS, DEFERRALS AND OTHER LIABILITIES 52,779 50,458 Of which, miscellaneous liabilities of entities engaged in banking and financial activities 38,785 31,266 Of which, miscellaneous liabilities of entities engaged in non-banking activities 2,256 2,605 (1) The decrease in this item is due primarily to the Central Sector, whose contribution was reduced by 964 million following the unwinding of the Gestitres activities as of January 1, /// 2003 Annual Report Caisse des Dépôts Group

30 Note 15 - Provisions for risks and charges (Euro millions) Charges Reversals Other movements Provisions for retirement and other employment-related expenses (1) (45) Provisions for real estate risks (11) Provisions for default risks (2) (82) (9) 262 Other provisions for risks and charges (146) PROVISIONS FOR RISKS AND CHARGES (284) Of which, provisions arising from entities engaged in banking and financial activities (203) Of which, provisions arising from entities engaged in non-banking activities (81) (1) These provisions include around 20 million related to the cost of implementing a new agreement on reduced workweek hours and job mobility by Informatique CDC. (2) As of December 31, 2003, provisions for default risks include provisions for dynamic risks (mainly from Crédit Foncier de France in the amount of 22 million) and provisions for industry risks (CDC IXIS in the amount of 37 million). Note 16 - Changes in the fund for general banking risks (FGBR), minority interests and consolidated retained earnings Minority Minority Retained Fund for interests interests Consolidated earnings, Total general in reserves Minority in retained reserves Group share consolidated banking risks (excluding interests earnings (excluding Translation Net (excluding retained (Euro millions) (FGBR) (1) FGBR) in income (excluding FGBR) FGBR) reserve income FGBR) earnings Consolidated retained earnings as of December 31, ,009 (216) ,503 14,141 Appropriation of 2002 earnings 87 (87) 710 (710) Distribution in 2003 of 2002 earnings (2) (54) (54) (346) (346) (400) Other changes (3) (2) (196) (198) earnings ,581 1,581 1,684 CONSOLIDATED RETAINED EARNINGS AS OF DECEMBER 31, , ,157 12,371 (412) 1,581 13,540 15,492 (1) Fund for general banking risks of fully and proportionally consolidated entities. As of December 31, 2003, minority interests in the fund for general banking risks were not material. (2) Dividends paid in 2003 were calculated based on the 346 million contribution from mandatory deposits to consolidated net income in The amount actually paid to the government totaled 264 million. The balance of 82 million corresponded to the indemnification related to the Sagitrans loan, which was guaranteed by the State. (3) Other changes included: for the fund for general banking risks, net allocations recognized in the income statement of 123 million, which corresponded to the allocations made by Crédit Foncier de France ( 91 million) and CDC IXIS ( 32 million), as well as several non-material reclassifications at the level of the subsidiaries; for the Group share of retained earnings, the change was an overall decrease of 198 million, of which 196 million in currency translation effects largely related to the U.S. subsidiaries. The other movements included in particular the impact of changes in accounting methods in 2003 related to the depreciation, amortization and depreciation of assets pursuant to the implementation of CRC Standard (a decrease of 11 million) and related to inflation-indexed OATs (an increase of 4 million); movements in minority interests reflect changes in consolidation scope at C3D (a decrease of 20 million), first-time consolidations by CNCE Group (Océor Group and Banque Sanpaolo France, for 17 million and 61 million, respectively) and capital increases ( 92 million, of which 49 million for CDC PME Croissance, 24 million for CNP Assurances Group and 12 million for C3D Group). 29

31 CONSOLIDATED FINANCIAL STATEMENTS Note 17 A) CONSOLIDATED BALANCE SHEET ITEMS BY TERM OF MATURITY 3 months 3 months 1 year More than Total (Euro millions) or less to 1 year to 5 years 5 years Eliminations ASSETS Advances and loans to financial institutions 90,996 14,605 20,844 18,809 (47,745) 97,509 Advances and loans to customers 15,313 17,141 11,071 16,736 (8,012) 52,249 Securities portfolios excluding trading securities Public-sector securities and similar , ,727 Bonds and other fixed income securities 19,755 3,383 8,148 17,925 (905) 48,306 LIABILITIES Advances and loans from financial institutions 100,823 26,268 19,682 22,101 (48,748) 120,126 Of which, securities sold under collateralized fixed repurchase agreements (including accrued interest) 11,691 17, (4,377) 25,933 Customer advances and loans 62,354 6,637 1,943 3,904 (6,019) 68,819 Of which, securities sold under collateralized fixed repurchase agreements (including accrued interest) 10, ,816 Debt securities Bonds 1,667 2,204 9,824 8,727 (471) 21,951 Other debt securities 15,059 2,832 6,465 6,423 (67) 30,712 B) CONSOLIDATED BALANCE SHEET ITEMS BY CURRENCY U.S. Pound Total (Euro millions) Euro dollar sterling Other Eliminations ASSETS Advances and loans to financial institutions 117,867 22,113 1,360 3,914 (47,745) 97,509 Advances and loans to customers 44,946 14, (8,012) 52,249 Securities portfolio excluding trading securities Public-sector securities and similar 6, ,727 Bonds and other fixed income securities 44,130 3, (905) 48,306 LIABILITIES Advances and loans from financial institutions 128,941 32,705 3,335 3,893 (48,748) 120,126 Of which, securities sold under collateralized fixed repurchase agreements (including accrued interest) 28,928 1,382 (4,377) 25,933 Customer advances and loans 58,771 15, (6,019) 68,819 Of which, securities sold under collateralized fixed repurchase agreements (including accrued interest) 6,787 5,029 11,816 Debt securities Bonds 20,801 1, (471) 21,951 Other debt securities 19,923 6,648 1,468 2,740 (67) 30, /// 2003 Annual Report Caisse des Dépôts Group

32 Note 18 A) OFF-BALANCE SHEET COMMITMENTS RELATED TO SPOT OR FORWARD CURRENCY TRANSACTIONS AND LENDING AND BORROWING OF FOREIGN CURRENCY Spot transactions Euros purchased to be received 1,429 1,628 Foreign currencies purchased to be received 8,433 5,847 Euros sold to be delivered 2,930 1,582 Foreign currencies sold to be delivered 6,845 5,998 Lending and borrowing Foreign currencies loaned to be delivered 115 1,222 Foreign currencies borrowed to be received 1,745 1,359 Forward currency transactions Euros to be received against foreign currencies to be delivered Euros to be received 47,031 45,699 Foreign currencies to be delivered 43,893 43,512 Foreign currencies to be received against euros to be delivered Foreign currencies to be received 49,486 45,849 Euros to be delivered 52,288 47,530 Foreign currencies to be received against foreign currencies to be delivered 54,080 42,403 Foreign currencies to be delivered against foreign currencies to be received 54,371 42,918 Unaccrued premiums/discounts To be received To be paid B) FORWARD FINANCIAL INSTRUMENTS Cash/ Cash/ Trading (1) hedge (2) Trading hedge Purchase/ Sale/ Purchase/ Sale/ Purchase/ Sale/ Purchase/ Sale/ borrowing loan borrowing loan borrowing loan borrowing loan FUTURES TRANSACTIONS Organized markets Interest rate contracts 34,012 47, ,263 58,978 1,422 1,429 Foreign currency contracts Other contracts 35, ,276 19,905 64,910 2 Over-the-counter markets Interest rate swaps 1,067,618 72,351 1,025,616 69,178 FRA 27,045 36, ,011 12, Foreign currency contracts 4 2, ,049 Other contracts OPTIONS Organized markets Interest rate options 87, ,155 17,418 31, Foreign currency options Other options 62,206 31,544 24,740 16,406 Over-the-counter markets Interest rate options 1, ,343 1,672 3,145 1, Caps, floors 49,037 79,170 5, ,977 73,955 3, Swaptions 21,424 29, ,782 25, Foreign currency options 3,746 3,358 1,658 1,683 Other options 12,047 14, ,299 13, (1) The trading transactions include the specialized investment portfolios and individual open positions. (2) The hedging transactions include micro- and macro-hedging portfolios. 31

33 CONSOLIDATED FINANCIAL STATEMENTS Note 18 (cont.) Information on default risk related to forward financial instruments The following analysis applies to EULIA Group, which is the main user in the Group of forward financial instruments. This information is prorated to the consolidation rates for CDC IXIS and Crédit Foncier in the financial statements of Caisse des Dépôts Group. The default risk related to forward financial instruments is measured by the probable loss on the consolidation scope under review if the counterparty was not able to meet its commitments. The default risk exposure on forward interest rate and currency instruments (futures and options) may be determined by calculating an equivalent credit risk pursuant to the Banking Commission s regulation No , which consists of adding the following items: the replacement cost of these instruments, calculated at market value, including the impact of netting agreements that meet the conditions of CRBF guideline No , Article 4; the potential credit risk resulting from the application of addons, as defined by the above-mentioned regulation, calculated on the nominal amount of the contracts depending on their type and residual term. This default risk is moderated by: the signing of master netting agreements (ISDA-AFB), which, in the event of a default by the counterparty, make it possible to offset the positive and negative replacement values; the signing of collateral contracts, which lead to the establishment of a guarantee in cash or securities. OECD governments OECD and central financial Other Total (Euro millions) banks institutions counterparties 2003 Equivalent unweighted credit risk before netting and collateralization agreements 1,829 26,511 6,066 34,406 Impact of netting-by-liquidation agreements (794) (14,855) (705) (16,354) Collateralization effects (13) (1,998) (34) (2,045) Equivalent unweighted credit risk after netting and collateralization agreements 1,022 9,658 5,327 16,007 Equivalent weighted credit risk after netting and collateralization agreements 1,932 2,664 4,595 This table only includes transactions covered by Banking Commission regulation No , namely transactions realized in over-thecounter markets and markets classified as organized markets. C) FORWARD FINANCIAL INSTRUMENTS BY TERM TO MATURITY 3 months 3 months 1 year More than Total (Euro millions) or less to 1 year to 5 years 5 years Eliminations FUTURES TRANSACTIONS Interest rate contracts 39,883 29,691 11,618 81,192 Foreign currency contracts ,062 Interest rate swaps 281, , , ,941 (216,490) 1,139,969 FRA 6,398 53,711 5, (1,889) 63,560 Other contracts 72,813 87,568 20,307 3,322 (738) 183,272 OPTIONS Interest rate options 86, ,069 9, (100) 226,607 Caps, floors 17,851 21,114 68,389 44,324 (18,081) 133,597 Swaptions 4,767 11,073 25,667 13,311 (3,957) 50,861 Foreign exchange options 7,144 (40) 7,104 Other options 42,339 45,395 29,600 4,041 (230) 121, /// 2003 Annual Report Caisse des Dépôts Group

34 Note 18 (cont.) D) OTHER OFF-BALANCE SHEET COMMITMENTS a) CNCE commitments As part of the Alliance s transactions, Caisse des Dépôts Group entered into commitments (given or reciprocal) with CNCE that could result in cash outflows or inflows. Because the effects of these commitments can not be assessed until after the guarantee periods have ended (between 2004 and 2011), only the maximum contractual amounts have been recorded as off-balance sheet commitments. These commitments given and received totaled 389 million and 238 million, respectively. On October 1, 2003, Caisse des Dépôts Group and Caisses d Epargne Group signed a memorandum of agreement intended to restructure their business relationship. In that context, the signature of a definitive agreement planned for 2004 should include an early unwinding of the commitments made in Based on estimates as of December 31, 2003, the unwinding of these commitments would result in CDC paying out around 150 million. b) Sanpaolo IMI (SP IMI) commitment Caisse des Dépôts Group and Sanpaolo IMI have signed an agreement that expresses their intention to create a lasting strategic partnership. Along with this agreement, the two groups acquired cross-holdings. In that context, Caisse des Dépôts granted Sanpaolo IMI two options to purchase CDC IXIS shares, the first in the event of a change in CDC IXIS s controlling ownership, the second, which includes a liquidity commitment, in the event that the shares are not listed on an organized European market. In addition, Caisse des Dépôts has an option to buy CDC IXIS shares owned by Sanpaolo IMI, which can be exercised in the event of a change in the controlling interest in Sanpaolo IMI. These commitments expire in The sale price of the shares in the event the options are exercised shall be determined by expert financial appraisals. Note 19 - Credit risks A) GLOBAL CREDIT RISK EXPOSURE Gross Gross Gross Gross performing performing non-performing irrecoverable Total (Euro millions) loans restructured loans loans loans Loans to financial institutions 97, ,522 Loans to customers 51, ,575 Available-for-sale and held-to-maturity portfolios 54, ,138 Financing and guarantee commitments given 56, ,435 TOTAL 260, ,670 The Group has no material restructured loans at other than market conditions. B) PROVISIONS FOR DEFAULT RISK Other Total (Euro millions) Allocations Reversals movements Loans to financial institutions (13) (13) Loans to customers (324) (109) 127 (20) (326) Available-for-sale and held-to-maturity portfolios (fixed income securities) (68) (63) 6 55 (70) Provisions recorded against assets (1) (405) (172) (409) Signature risk (37) (4) 18 0 (23) Provisions for country risk (9) (8) Provisions for industry risk 0 (30) 0 (7) (37) Other provisions for default risk (159) (116) (196) Provisions recorded as liabilities (205) (150) 82 9 (264) TOTAL PROVISIONS FOR DEFAULT RISK (610) (322) (673) (1) Of which, provisions for: Gross performing loans (67) (12) 2 55 (22) Gross performing restructured loans Gross non-performing loans and irrecoverable loans (2) (338) (160) 131 (20) (387) (405) (172) (409) (2) Of which, provisions on gross irrecoverable loans as of December 31, 2003: 217 million. 33

35 CONSOLIDATED FINANCIAL STATEMENTS Note 19 (cont.) C) CREDIT RISKS LOANS TO FINANCIAL INSTITUTIONS Gross Gross Gross performing non- Gross performing restructured performing irrecoverable Loan Total (Euro millions) loans loans loans loans provisions Breakdown by geographic region France 95, (13) 95,545 Rest of Europe United States 1, ,135 Asia Rest of the world TOTAL BY GEOGRAPHIC REGION 97, (13) 97,509 D) CREDIT RISK LOANS TO CUSTOMERS Gross Gross Gross performing non- Gross performing restructured performing irrecoverable Loan Total (Euro millions) loans loans loans loans provisions Breakdown by geographic region France 44, (316) 45,202 Rest of Europe United States 7, (10) 7,046 TOTAL BY GEOGRAPHIC REGION 51, (326) 52,249 Breakdown by sector Sovereign and central governments 15, ,334 Local governments 4, (9) 4,747 Insurance and reinsurance 1, ,576 Other financial institutions 12, (11) 12,016 Funds (ABS/CDO, Securitization, etc.) Corporate 5, (185) 5,945 Small businesses and professionals 1, (29) 2,025 Private individuals 9, (92) 9,651 TOTAL BY SECTOR 51, (326) 52, /// 2003 Annual Report Caisse des Dépôts Group

36 Note 19 (cont.) E) CREDIT RISKS FIXED INCOME SECURITIES Gross non- Gross Performing performing irrecoverable Loan Total (Euro millions) loans (1) loans loans provisions (2) Breakdown by currency Euro 49, (9) 49,947 U.S. dollar 4, (1) 4,002 Pound sterling (60) 535 Other currencies TOTAL BY CURRENCY (1) 54, (70) 55,068 Breakdown by rating AAA 34, (7) 34,429 AA 10, ,059 A 3, (1) 3,628 BBB 1, ,499 BB (1) 62 B Unrated 5, (61) 5,223 TOTAL BY RATING (1) 54, (70) 55,068 (1) Excluding provisions for interest-rate risk. (2) These mainly involve provisions against the senior securities issued by HTR (Box Clever Group) in respect of the company s restructuring risk. These securities are held by the held-to-maturity portfolio. The provision was calculated on the basis of the probable loss in light of the issuer s operating forecast. F) CREDIT RISK SIGNATURE RISK All signature risks were made by entities in the euro zone. Note 20 - Interest and similar revenues and expenses on Treasury and interbank transactions Interest on current account advances Interest on other loans and securities purchased under uncollateralized fixed resale agreements 2,471 2,868 Interest on securities purchased under collateralized fixed resale agreements Premium/discount income and other interest and similar income INTEREST AND SIMILAR REVENUES FROM TREASURY AND INTERBANK TRANSACTIONS 3,351 4,779 Interest on current accounts (193) (258) Interest on loans and securities sold under uncollateralized fixed repurchase agreements (3,185) (3,547) Interest on securities sold under collateralized fixed repurchase agreements (640) (1,151) Premium/discount expenses and other interest and similar expenses (203) (700) INTEREST AND SIMILAR EXPENSES ON TREASURY AND INTERBANK TRANSACTIONS (4,221) (5,656) 35

37 CONSOLIDATED FINANCIAL STATEMENTS Note 21 - Interest and similar revenues and expenses on customer transactions (Euro millions) Interest on overdrafts Interest on commercial and other loans to customers 1,095 1,184 Interest on other loans and securities purchased under uncollateralized fixed resale agreements Interest on securities purchased under collateralized fixed resale agreements Interest and similar income from leasing transactions Other interest and similar income Doubtful interest receivables Provisions for doubtful interest receivables Losses on uncollectable interest, reversals of provisions for interest and collections (24) (28) INTEREST AND SIMILAR REVENUES FROM CUSTOMER TRANSACTIONS 1,796 1,722 Interest on current accounts (261) (321) Interest on escrow accounts (35) (40) Interest on term deposits, borrowings and securities sold under uncollateralized fixed repurchase agreements (310) (264) Interest on securities sold under collateralized fixed repurchase agreements (201) (90) Interest and similar charges on lease transactions (3) Other interest and similar charges (142) (198) INTEREST AND SIMILAR EXPENSES ON CUSTOMER TRANSACTIONS (949) (916) Note 22 - Interest and similar revenues and expenses on bonds and other fixed income securities Interest and similar revenues from available-for-sale securities Interest and similar revenues from held-to-maturity securities 1,210 1,252 Other interest and similar revenues INTEREST AND SIMILAR REVENUES FROM BONDS AND OTHER FIXED INCOME SECURITIES 2,681 2,462 Interest expenses on negotiable medium-term notes and certificates of deposit (1,310) (1,408) Interest and expenses on bonds (414) (472) Other interest expenses (604) (668) INTEREST AND SIMILAR EXPENSES ON BONDS AND OTHER FIXED INCOME SECURITIES (2,328) (2,548) NET INTEREST AND SIMILAR REVENUES (EXPENSES) ON BONDS AND OTHER FIXED INCOME SECURITIES 353 (86) 36 /// 2003 Annual Report Caisse des Dépôts Group

38 Note 23 - Revenues from variable income securities Revenues from available-for-sale securities Revenues from portfolio securities Revenues from long-term equity holdings REVENUES FROM VARIABLE INCOME SECURITIES Note 24 - Commission revenues and expenses Revenues Expenses Revenues Expenses Money-market and interbank transactions 1 (3) 1 (5) Customer transactions 28 (2) 32 Security transactions 32 (41) 31 (39) Forward financial instrument transactions 10 (45) 9 (27) Financial services 840 (157) 847 (135) Currency transactions 2 (1) 3 (1) Other commissions 11 (3) 32 (11) COMMISSIONS 924 (252) 955 (218) Note 25 - Gains and losses on trading security transactions Net gains (losses) on trading securities 1, Net gains (losses) on foreign currency instruments Net gains (losses) on forward financial instruments (315) 431 GAINS AND LOSSES ON TRADING SECURITY TRANSACTIONS 1,274 1,534 37

39 CONSOLIDATED FINANCIAL STATEMENTS Note 26 - Gains and losses on available-for-sale and portfolio security transactions Net gains (losses) on the sale of available-for-sale securities Other income and expenses on available-for-sale securities (4) (6) Provisions taken/reversed on available-for-sale securities 187 (82) GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITY TRANSACTIONS Net gains (losses) on the sale of portfolio securities Provisions taken/reversed on portfolio securities 88 (1,172) GAINS (LOSSES) ON PORTFOLIO SECURITY TRANSACTIONS 550 (355) GAINS (LOSSES) ON AVAILABLE-FOR-SALE AND PORTFOLIO SECURITY TRANSACTIONS Note 27 - Other net operating banking revenues and expenses Revenues Expenses Revenues Expenses Gains or losses on disposal of investment properties 131 (7) 82 (17) Depreciation and provision charges/reversals on investment properties 17 (122) 56 (108) Revenues and expenses on investment properties 328 (81) 369 (83) Total revenues and expenses on investment properties 476 (210) 507 (208) Revenues and expenses on real estate development operations 16 (11) (11) Provision charges/reversals on real estate development operations 1 (1) 3 (1) Total revenues and expenses on real estate development operations 17 (12) 3 (12) Public-interest programs (42) (16) Provision charges/reversals on public-interest programs 1 Total revenues and expenses on public-interest programs (42) 1 (16) Expenses rebilled, revenues recredited and expenses transferred 24 (5) 31 - Other miscellaneous operating income and expenses 623 (252) 345 (243) Provision charges/reversals on other operating income and expenses 6 (346) 12 (16) Total other operating income and expenses 629 (598) 357 (259) OTHER OPERATING BANKING INCOME AND EXPENSES 1,146 (867) 899 (495) OTHER NET OPERATING BANKING REVENUES AND EXPENSES Other net operating banking revenues and expenses decreased as a result of several negative trends: a decrease in revenues from investment properties as a result of the disposals made last year and in previous years by various Group entities, including ICADE in particular; a decrease in IT services realized with non-consolidated entities; an increase in engineering loan expenses of more than 25 million as part of the performance of public-interest programs; offsetting these negative trends was the increase in net proceeds from the disposal of receivables by CDC IXIS ( 72 million in 2003, compared with 24 million in 2002) and of investment properties by Crédit Foncier de France (capital gain of 37 million attributable to CDC). 38 /// 2003 Annual Report Caisse des Dépôts Group

40 Note 28 - Gross margin on insurance activities Earned premiums and contributions, paid or accrued ,736 Cost of benefits including changes in technical provisions (10,505) (9,926) Net investment income 3,021 2,940 GROSS MARGIN ON INSURANCE ACTIVITIES Of which, gross margin on life business Of which, gross margin on non-life business This is the gross margin generated mainly by CNP Assurances, which was consolidated proportionally for 42.98% as of December 31, 2003, as well as the insurance subsidiaries of EULIA that were consolidated proportionally (Ecureuil IARD, Crédit Foncier Assurance, Saccef, CEGI, Socamab, CDC IXIS Financial Guaranty). RECONCILIATION OF GROSS MARGIN AND NET RECURRING INCOME (Euro millions) Life Non-life Total Life Non-life Total Gross margin of life business Dividends from equity holdings contributing to net technical income (1) (1) Restatement of intra-group eliminations in gross margin (36) 0 (36) (38) 0 (38) Attributable payroll expenses before intra-group eliminations (95) (21) (116) (87) (24) (111) Other attributable administrative expenses before intra-group eliminations (103) (85) (188) (88) (66) (154) Net operating amortization and depreciation (25) (1) (26) (11) (2) (13) Net income from investments transferred and other adjustments (104) (16) (120) (102) (14) (116) Net technical income of life business included in consolidation Employee profit sharing (3) 0 (3) (5) 0 (5) Net income from investments transferred Net recurring income included in consolidation TOTAL NET RECURRING INCOME (100%) Note 29 Net income from other activities Sales and other operating revenues 2,362 2,253 Purchases consumed and other operating expenses (663) (646) NET INCOME FROM OTHER ACTIVITIES 1,699 1,607 The above relate to the C3D Group only, other than the investment property activities that are included in other banking operating revenues and expenses. 39

41 CONSOLIDATED FINANCIAL STATEMENTS Note 30 - Payroll expenses Salaries (1,644) (1,613) Retirement expenses and related provision charges and reversals (1) (100) (9) Other employee-related charges (492) (506) Incentive programs and profit-sharing (49) (48) Payroll taxes (111) (108) Provision charges and reversals (1) (16) PAYROLL EXPENSES (2,397) (2,300) (1) The changes in this item resulted from the impact of an accounting reclassification in 2003 ( 42 million) and a revision in the calculation method for provisions for retirement benefits in 2002 ( 41 million). Note 31 - Net amortization, depreciation and provisions on fixed assets Depreciation and amortization of operating fixed assets (275) (235) Reversals of depreciation and amortization of operating fixed assets 3 2 Net amortization and depreciation (272) (233) Provisions against operating fixed assets (11) (9) Reversal of provisions against operating fixed assets 6 10 Net provisions against operating fixed assets (5) 1 NET AMORTIZATION, DEPRECIATION AND PROVISIONS ON FIXED ASSETS (277) (232) 40 /// 2003 Annual Report Caisse des Dépôts Group

42 Note 32 - Cost of risk (net appropriation to provisions) Provision charges in respect of Impairment of receivables (109) (107) Signature risk (4) (8) Default and other risks (203) (55) PROVISION CHARGES (316) (170) Reversals of provisions for Impairment of receivables Signature risk Default and other risks REVERSALS OF PROVISIONS Losses and collections Losses on irrecoverable receivables and collections (83) (51) LOSSES AND COLLECTIONS (83) (51) COST OF RISK (208) (79) Note 33 - Gains and losses on fixed assets Gains (losses) on disposals of tangible and intangible fixed assets (1) Gains (losses) on transactions concerning long-term equity holdings and held-to-maturity securities Gains (losses) on disposals of long-term equity holdings and on advances (2) 97 6 Provision charges and reversals (3) (62) 10 Net gains (losses) on transactions concerning long-term equity holdings and advances Net gains (losses) on transactions concerning held-to-maturity securities (1) Provision charges and reversals 2 (4) Net gains (losses) on transactions concerning held-to-maturity securities 2 (5) GAINS (LOSSES) ON FIXED ASSETS (1) As of December 31, 2003, gains on fixed assets consisted mainly of capital gains on disposals by Crédit Foncier de France through the sale of its registered office (Group share of 65 million). (2) This item includes in particular the capital gain on C3D s disposal of its Médica France subsidiary ( 70 million). (3) As part of C3D Group s strategic planning with regard to VVF assets, a 33 million risk provision was established. 41

43 CONSOLIDATED FINANCIAL STATEMENTS Note 34 - Income tax A) BREAKDOWN OF DEFERRED AND CURRENT INCOME TAX AND EXPENSES Current income tax (758) (424) Deferred tax TAX CHARGE (591) (377) B) BREAKDOWN OF DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets Deferred tax liabilities (312) (418) Net deferred taxes carried on the balance sheet Tax credits (1) Tax loss carryforwards (2) Timing differences (3) (83) (309) (1) Pursuant to paragraph No of CRC Standard relating to the consolidation rules of companies governed by the CRBF, in 2001 CDC IXIS Group performed due diligence and additional audits that led to identifying a deferred tax asset of $363 million, which is included in the acquisition price of CDC IXIS Asset Management North America LP. This deferred tax asset is being written back over a period of fifteen years using an actuarial method. As of December 31, 2003, it totaled 249 million in the financial statements of CDC IXIS AM and 179 million in those of Caisse des Dépôts Group. (2) Of which, 67 million attributable to CDC IXIS Asset Management North America LP. In late 2002, the Group chose to limit the volume of deferred tax assets related to the tax losses of CDC IXIS Asset Management North America to the portion that could be recovered within a five-year period. This prudent measure resulted in CDC IXIS AM recording a $93 million reduction in deferred tax assets as of December 31, 2002, while for its part Caisse des Dépôts Group recorded a $67 million reduction. This prudent measure was maintained in 2003 by CDC IXIS Group, whose unrecognized deferred tax assets totaled 83 million, or 60 million for Caisse des Dépôts Group. (3) The main changes in timing differences were recorded by CDC IXIS, whose deferred tax bases includes equalization payments on trades of financial instruments totaling 174 million, or 138 million attributable to Caisse des Dépôts Group, whose deductibility is spread over several years. 42 /// 2003 Annual Report Caisse des Dépôts Group

44 Note 35 - Income statement by business segment CNP Caisse des EULIA Total (Euro millions) Assurances C3D Dépôts Alliance Interest and similar revenues 30 1,889 8,123 10,042 Treasury and interbank transactions 108 3,242 3,351 Customer transactions ,544 1,796 Bonds and other fixed income securities 12 1,253 1,416 2,681 Other interest and similar revenues 294 1,921 2,215 Interest and similar expenses (1) (68) (1,217) (8,388) (9,674) Treasury and interbank transactions (1) (52) (363) (3,805) (4,221) Customer transactions (16) (510) (423) (949) Bonds and other fixed income securities (44) (2,284) (2,328) Other interest and similar expenses (300) (1,876) (2,176) Revenues from variable income securities Commissions (revenues) Commissions (expenses) (11) (30) (211) (252) Gains (losses) on trading securities (40) (6) 52 1,268 1,274 Gains (losses) on available-for-sale securities and similar transactions Other net banking operating revenues and expenses (27) Gross margin on insurance activities Net revenues from other activities 1,699 1,699 NET BANKING INCOME 707 1,843 1,462 2,252 6,264 Operating expenses (263) (1,560) (329) (1,323) (3,475) Payroll expenses (124) (916) (524) (833) (2,397) Other administrative expenses (139) (680) (187) (509) (1,515) Rebillings Net depreciation, amortization and provision charges (27) (110) (76) (64) (277) GROSS INCOME FROM OPERATIONS , ,512 Cost of risk (6) (36) (166) (208) NET INCOME FROM OPERATIONS , ,304 Net income from investments accounted for by the equity method (3) Gains (losses) on fixed assets 71 (22) RECURRING INCOME BEFORE INCOME TAX , ,462 Net non-recurring income (expenses) 1 1 Income tax (103) (82) (249) (157) (591) Net amortization of goodwill on acquisitions (17) (27) (1) (20) (65) Net movement in FRBG (123) (123) Minority interests (51) (39) (3) (10) (103) NET INCOME ,581 43

45 CONSOLIDATED FINANCIAL STATEMENTS Note 36 - Income statement by geographical area Consolidated United total (Euro millions) Europe States Asia NET BANKING INCOME 5, ,264 Operating expenses (2,980) (492) (3) (3,475) Payroll expenses (2,021) (374) (2) (2,397) Other administrative expenses (1,393) (121) (1) (1,515) Rebillings Net depreciation, amortization and provision charges (265) (12) (277) GROSS INCOME FROM OPERATIONS 2, ,512 Cost of risk (202) (6) (208) NET INCOME FROM OPERATIONS 2, ,304 Net income from investments accounted for by the equity method Gains or losses on fixed assets NET RECURRING INCOME BEFORE INCOME TAX 2, ,462 Net non-recurring income (expenses) 1 1 Income tax (524) (67) (591) Net amortization of goodwill on acquisitions (45) (20) (65) Net increase in FGBR (123) (123) Minority interests (100) (3) (103) NET INCOME, GROUP SHARE 1, , /// 2003 Annual Report Caisse des Dépôts Group

46 Note 37 - Consolidation scope as of December 31, 2003 % % % % COMPANIES METH control held METH control held 2003 (1) (1) CDC (CENTRAL SECTOR) FULL FULL CDC KINEON FULL FULL CDC PME FULL FULL DABFI (*) (*) (*) FULL INFORMATIQUE CDC FULL FULL CDC HOLDING FINANCE (formerly SODEVE) FULL FULL DFCI (*) (*) (*) FULL CDC PME CROISSANCE FULL FULL BDPME GROUP EQUI EQUI BDPME EQUI EQUI AUXI CONSEIL EQUI EQUI AUXICOMI EQUI EQUI AUXIFINANCES EQUI EQUI AUXIMURS EQUI EQUI AVENIR ENTREPRISES EQUI EQUI AVENIR INVESTISSEMENTS (*) (*) (*) EQUI AVENIR PME SUCCESSION (*) (*) (*) EQUI AVENIR TOURISME EQUI EQUI BATIROC BRETAGNE EQUI EQUI BIOTECH GARANTIE EQUI EQUI BRETAGNE DEVELOPPEMENT EQUI EQUI CEPME EQUI EQUI CIE AUXILIAIRE DU CEPME (CAC) EQUI EQUI ENERBAIL EQUI EQUI PROCREDIT PROBAIL EQUI EQUI SOFARIS EQUI EQUI SOFARIS REGIONS EQUI EQUI CNP ASSURANCES Group PROP PROP CNP ASSURANCES PROP PROP CARIVITA EQUI 8.60 ASSURBAIL PROP PROP ASSURPOSTE PROP PROP CAIXA SEGUROS (formerly CNP DO BRASIL) PROP PROP CNP IAM PROP PROP CNP IMMOBILIER PROP PROP CNP INTERNATIONAL PROP PROP CNP SEGUROS DE VIDA PROP PROP FULLAL PROP PROP % % % % COMPANIES METH control held METH control held 2003 (1) (1) FULLAL VIDA PROP PROP INVESTISSEMENT TRESOR VIE ITV PROP PROP PREVIPOSTE PROP PROP PREVISOL EQUI EQUI PREVISOL RETIRO EQUI EQUI PREVISOL VIDA EQUI EQUI PROVINCIA SEGUROS DE VIDA EQUI EQUI SICAC PROP PROP ECUREUIL VIE PROP PROP FONCIERE ANATOLE FRANCE GROUP FULL FULL SOCIETE FONCIERE ANATOLE FRANCE FULL FULL QUAI ANATOLE FRANCE SCI FULL FULL SARL ATHOS FULL FULL SCI ATHOS FULL FULL SCI ATRIUM FULL FULL SCI AUSTERLITZ FULL FULL SCI RIVE GAUCHE FULL FULL URBA CLUB FULL FULL CAISSE NATIONALE DES CAISSES D EPARGNE GROUP EQUI EQUI CAISSE NATIONALE DES CAISSES D EPARGNE EQUI EQUI CNETI EQUI EQUI HOLASSURE EQUI EQUI SOPASSUR EQUI EQUI OCEOR GROUP FINANCIERE OCEOR EQUI BANQUE DE LA REUNION EQUI BANQUE DE NOUVELLE CALEDONIE EQUI BANQUE DE TAHITI EQUI BANQUE DES ANTILLES FRANCAISES EQUI BANQUE DES ILES SAINT-PIERRE-ET-MIQUELON EQUI BANQUE INTERNATIONALE DES MASCAREIGNES EQUI CAISSE D EPARGNE DE NOUVELLE CALEDONIE EQUI CREDIPAC POLYNESIE EQUI CREDIT COMMERCIAL DE NOUMEA EQUI

47 CONSOLIDATED FINANCIAL STATEMENTS % % % % COMPANIES METH control held METH control held 2003 (1) (1) CREDIT SAINT-PIERRAIS EQUI SLIBAIL REUNION EQUI SOCIETE HAVRAISE CALEDONIENNE EQUI SANPAOLO GROUP BANQUE SANPAOLO EQUI BAMI EQUI 4.20 CONSERVATEUR FINANCE EQUI 4.20 EUROSIC EQUI 6.88 SANPAOLO ASSET MANAGEMENT EQUI SANPAOLO BAIL EQUI SANPAOLO FONDS GESTION EQUI SANPAOLO MUR EQUI SOCAVIE EQUI SOCIETE FONCIERE D INVESTISSEMENT EQUI SOCIETE FONCIERE JOSEPH VALLOT EQUI SOCIETE IMMOBILIERE D INVESTISSEMENT EQUI UNI INVEST EQUI C3D GROUP FULL FULL C3D FULL FULL C3D GROUP: ICADE (formerly SCIC) FULL FULL REAL ESTATE AND HOLDING ICADE SA (formerly SCIC SA) FULL FULL CIE IMMOBILIERE DE LA REGION PARISIENNE (CIRP) FULL FULL FONCIERE COMMERCES IDF FULL FULL SA POUR LA CONSTRUCTION DE LOGEMENTS ECONOMIQUES (SACLE) FULL FULL SCI LOCATIVES IDF (78 companies) FULL FULL SCI LOCATIVES REGIONS (27 companies) FULL FULL EMGP GROUP FULL FULL EMGP SA FULL FULL SCI PDM 1 FULL FULL SCI PDM 2 FULL FULL SCI PDM 3 FULL FULL SCI BASSIN NORD PROP FULL SCI BATI GAUTIER FULL FULL CFI (CHEMIN DE FER INDUSTRIEL) SAS FULL FULL MANUTRA SECURITE SARL FULL FULL % % % % COMPANIES METH control held METH control held 2003 (1) (1) MANUTRA SAS FULL FULL SERAEL SA FULL FULL SNC LE PARC DU MILLENAIRE FULL FULL SCI 68 VICTOR HUGO FULL FULL SCI LE PARC DU MILLENAIRE FULL FULL MEDICAL RESIDENCES BEL-AIR CLAMART SARL FULL CAYO LARGO SAS FULL CLINIQUE DU VAL-DE-SEINE SAS FULL HOLDING VAL-DE-SEINE FULL LA PROVENCALE SAS FULL LE SPLENDID SAS FULL MF DEVELOPPEMENT SA FULL SA MEDICA France (formerly SEMACS) FULL SANTEL SAS FULL SARL CENTRE CONV NEUVILLE (CCN) FULL SARL CENTRE MEDICAL DES ALPILLES (CMA) FULL SARL CENTRE MEDICAL DU VENTOUX (CMV) FULL SARL LA ROCHE SAMUEL FULL SARL LA ROCHETTE FULL SCI LE SPLENDID FULL SNC LES PINS FULL SOCIETE DE DEVELOPPEMENT ET DE PARTICIPATION FINANCIERES (SDFI) SA FULL SOLISANA SAS FULL EIS GROUP EIS SA FULL QUALISANTE SUISSE SA FULL RESIDENCE AUTOMNE DE CHALONS SA FULL RESIDENCE AUTOMNE DE DINARD SA FULL RESIDENCE AUTOMNE DE LAXOU SARL FULL RESIDENCE AUTOMNE DE NEUVILLE SA FULL GRAPA SARL FULL INVAMURS SA FULL JARDINS DE SERMAIZE SAS FULL JARDINS D HESTIA SA FULL LA MOLE D ANGOULINS SA FULL LE MOULIN DE L ISLE SAS FULL /// 2003 Annual Report Caisse des Dépôts Group

48 % % % % COMPANIES METH control held METH control held 2003 (1) (1) POLYMED SANTE SA FULL QUALISANTE SA FULL RESIDENCE AUTOMNE DE SARZEAU SA FULL RESIDENCE AUTOMNE DU MANS SARL FULL RESIDENCE AUTOMNE LA FERME SARL FULL RESIDENCE AUTOMNE LA GARE SARL FULL RESIDENCE AUTOMNE LILLE STE THERESE SARL FULL RESIDENCE AUTOMNE LYON GERLAND SARL FULL RESIDENCE AUTOMNE ND SANILHAC SA FULL RESIDENCE AUTOMNE SABLES-D OLONNE SARL FULL RESIDENCE AUTOMNE SAINT-MALO SARL FULL RESIDENCE AUTOMNE ST GEORGES SARL FULL RESIDENCE AUTOMNE VILLARS DOMBES SARL FULL SA DE CHAINTREAUVILLE FULL SA INVAMIS FULL SA SOCEFI FULL SCI BICHAT FULL SCI DE L EUROPE FULL SCI LAXOU FULL SCI LES CHENES FULL SCI PIERRE DEBOURNOU FULL SCI ST JEAN FULL SDSA SA FULL SERAPA SARL FULL SERPA SARL FULL SANTE INVESTISSEMENT FRANCE (SIF) SA FULL SNC DE DINARD FULL SNC DE L EUROPE FULL SOGEMAPAD SARL FULL ST-JEAN CEDRES (BRIVE) SA FULL CEDREPA INVESTISMTS SA FULL SCI BRUAY-SUR-ESCAUT SCI ST-GEORGES-DE-DIDONNE SCI SABLES-D OLONNE SCI LYON GERLAND SCI SAINT-MALO % % % % COMPANIES METH control held METH control held 2003 (1) (1) SCI VILLARS DES DOMBES SCI LE MANS SCI ARS-EN-RE REAL ESTATE DEVELOPMENT ESPACE & HABITAT SA FULL FULL GROUPE CAPRI ATLANTIQUE (53 companies) FULL FULL GROUPE CAPRI LYON MEDITERRANEE (48 companies) FULL FULL GROUPE CAPRI ILE-DE-FRANCE ET REGION NORD (48 companies) FULL FULL GROUPE ELLUL (29 companies) FULL FULL SCI LA MUSEAU FULL GROUPE PROMOMIDI (7 companies) FULL SCI TUILERIES PROP CAPRI RESIDENCES FULL REAL ESTATE SERVICES PROJECT MANAGEMENT ANTONY PARC SNC FULL CENTRE EST PROMOTION SNC FULL FULL FRANCE OUEST PROMOTION SNC FULL FULL ARCOBA SAS FULL FULL GRANDE ARCHE ARCHITECTURE AMENAGEMENT (G3A) (SNC) FULL FULL NERUDA FONTANOTS SCI FULL FULL NORD PROMOTION SNC FULL FULL ODYSSEUM 2 SCI FULL FULL PB31 PROMOTION SNC PROP PROP RESA ESPANA SA FULL FULL SANESCO SA EQUI EQUI ICADE G3A SAS FULL FULL SCIC ESPANA SA FULL FULL SETRHI - SETAE SA FULL FULL ICADE CITES SNC FULL FULL TERTIAL SNC (10 companies) FULL FULL URBIS ATLANTIQUE FULL SCI ESPACE MARCEAU FULL SCI NICE 400 PROMENADE DES ANGLAIS PROP SCI 22/24 RUE DE LAGNY FULL FACILITIES MANAGEMENT EUROGEM SAS (*) (*) (*) FULL EURIS BELGIQUE SPRL FULL FULL

49 CONSOLIDATED FINANCIAL STATEMENTS % % % % COMPANIES METH control held METH control held 2003 (1) (1) EUROGEM SA FULL FULL EUROGEM SNC FULL GESTEC RS CONSULTANTS SAS FULL FULL KLEBER FM SAS FULL FULL MANUTRA SARL EQUI PROPERTIA FM SAS PROP PROP STHAL SNC PROP PROP TREGS SARL PROP PROP IMOP SA FULL FACIMALP SA FULL IMSI EUROGEM IBERICA SA FULL NORMANDIAL SERVICES FULL PROPERTY MANAGEMENT GFF INSTITUTIONNELS SAS (formerly AGIFRANCE SA) FULL FULL EUROCAMPUS SARL FULL FULL EUROSTUDIOMES SNC FULL FULL GFF AQUITAINE SASU (*) (*) (*) FULL GFF ATLANTIQUE SA (*) (*) (*) FULL GFF FINCAS ANZIZU SARL (Spain) FULL FULL GFF HABITAT SAS FULL FULL GFF PARTICIPATIONS SAS (formerly GFF INSTITUTIONNELS) FULL FULL GFF LES FLANDRES SASU (*) (*) (*) FULL GFF MEDITERRANEE SASU (*) (*) (*) FULL GFF PATRIMOINE SASU (*) (*) (*) FULL GFF PROVENCE SASU (*) (*) (*) FULL GFF RHONES-ALPES SA (*) (*) (*) FULL GFF TOULOUSE SASU (*) (*) (*) FULL GFF VALORIAL SAS FULL FULL GROUPEMENT FONCIER DE FRANCE (GFF) SAS FULL FULL MARTEL ET BOURDAIS SAS (*) (*) (*) FULL MONTPARNASSE SERVICES SARL FULL FULL SPGI SAS (*) (*) (*) FULL SERVICES TO SEMs BETURE CONSEIL SA EQUI SOCIETE CENTRALE POUR L EQUIPEMLENT DU TERRITOIRE (SCET) SA FULL FULL C3D GROUP: HOLDING & OTHER ALTEAU SA FULL FULL C3D INVESTMENT SAS FULL FULL FINANCIERE TRANSDEV SA FULL FULL % % % % COMPANIES METH control held METH control held 2003 (1) (1) BETHURE GROUP/CAP ATRIUM SASU FULL FULL SADSI SA FULL FULL C3D GROUP: TRANSDEV FULL FULL HOLDING TRANSDEV SA FULL FULL COFITREC SNC FULL FULL TRANSAMO SA FULL FULL TRANSDATA SNC FULL FULL TRANSPART SNC FULL FULL RATP DEVELOPPEMENT SA EQUI TPT-SGPS SA FULL TRANSDEV ORLEANS SNC FULL REGIONAL INTERCITY TRANSPORTATION CARS ARIEGE PYRENEES SAS FULL FULL CARS BIZIERE SA FULL FULL CARS COMTADINS SAS FULL FULL CIE DES CHEMINS DE FER CAMBRESIS (CFC) SA FULL CIE TRANSPORTS DE LA COMMUNAUTE SNC (CTC) FULL FULL COMPAGNIE AUTOCARS DE PROVENCE SAS (CAP) FULL FULL COURRIERS DE L AUBE SCS FULL FULL ALPES BUS FOURNIER SARL FULL FULL MARTIN FRERES SNC FULL FULL MONT BLANC BUS SARL FULL FULL PROGESUD SA FULL FULL VISUAL SUD SNC FULL FULL RAPIDES DE BOURGOGNE SNC FULL FULL RAPIDES DE COTE-D OR (RCO) SNC FULL FULL RAPIDES DE SAONE- ET-LOIRE SA FULL FULL RAPIDES DU SUD EST SNC FULL FULL RAPIDES DU VAL-DE-LOIRE SNC FULL FULL SOCIETE AUTOMOBILE DE PROVENCE SA PROP STCAR SARL PROP STE NOUVELLE DES AUTOBUS AJACCIENS SA (SNAA) FULL FULL STE TRANSPORT AGGLOMERATION CHALONNAISE SARL (STAC) FULL FULL STE TRANSPORTS AUTOMOBILE DU MIDI SNC (STADIMI) FULL FULL /// 2003 Annual Report Caisse des Dépôts Group

50 % % % % COMPANIES METH control held METH control held 2003 (1) (1) TRANSAVOIE SA FULL FULL TRANSDEV ALPES SAS FULL FULL TRANSDEV EST SAS FULL FULL TRANSDEV LORRAINE ETB FULL FULL TRANSDEV SUD SAS FULL FULL TRANS L SARL FULL FULL TRANSPORTS CAGNES-SUR-MER SA PROP VOYAGES CROLARD SAS FULL FULL PARIS REGION INTERCITY TRANSPORTATION AEROPASS SAS FULL FULL AIRCAR SAS FULL FULL AUTOBUS DE MARNE- LA-VALLEE SAS (AMV) FULL FULL CARS BRIDET SA FULL FULL CARS D ORSAY SAS FULL FULL CARS LE CAPLAIN SAS FULL FULL CIE EXPLOITATION AUTOMOBILE ET DE TRANSPORT SAS (CEAT) FULL FULL EUROPE AUTOCARS SAS FULL FULL INTERVAL SAS FULL FULL SOCIETE DE TRANSPORT DU BASSIN CHELLOIS SAS (STBC) FULL FULL SOFITRANS SA FULL FULL TRANSDEV PARIS EST SAS FULL FULL TRANSDEV PARIS SUD SA FULL FULL TRANSPORTS URBAIN DE CHELLES SA (TUC) FULL FULL VAL D EUROPE AIRPORT SAS (VEA) FULL FULL VISUAL IDF SNC FULL FULL VISUAL TOURISME SAS FULL URBAN TRANSPORTATION FRANCE SEMTAO SAEM EQUI SOCIETE DOUAISIENNE DE TRANSPORT SAS (SDT) FULL FULL SODIPARC SAEM EQUI STAB SA FULL FULL TRANSPORT EN COMMUN DE LA REGION D AVIGNON SAS (TCRA) FULL FULL TRANSPORTS COMMUNS REGION METZ SAEM (TCRM) EQUI EQUI SETAO SNC FULL % % % % COMPANIES METH control held METH control held 2003 (1) (1) INTERNATIONAL LONDON UNITED 1994 LTD FULL FULL LONDON UNITED BUSWAYS LTD FULL FULL METROLINK PTY (Australia) PROP PROP SOVEREIGN BUSES LONDON LIMITED FULL FULL STANWELL LTD FULL FULL TRANSDEV AUSTRALIA LTD FULL FULL TRANSDEV NEW SOUTH WALES LTD (Australia) FULL FULL TRANSDEV PLC FULL FULL TRANSDEV Portugal (branch) FULL FULL TRANSDEV LIMITADA (Portugal) FULL FULL TRANSDEV TRAM UK LTD FULL FULL TRANSDEV VICTORIA LTD (Australia) FULL FULL DOMINGOS DA CUNHA LIMITIDA (Portugal) FULL TRANSPORTES RODOVARIOS DE PORTUGAL SA (formerly CAIMA SA) FULL RODOVIARIA DA BEIRA SA (RBL) FULL RODOVIARIA D ENTRE DOURO E MINHO SA (REDM) FULL SOCIEDADE DE TRANSPORTES DO CARAMULO LIMITADA FULL CHARLINE LIMITIDA (Portugal) FULL CAVADO-SGPS LIMITADA (Portugal) FULL C3D GROUP: INFRASTRUCTURE ENGINEERING EGIS GROUP FULL FULL HOLDING EGIS DEUTSCHLAND GMBH FULL FULL EGIS INGENIERIE SA FULL FULL EGIS PROJECT VICTORIA PTY EQUI EQUI EGIS SA FULL FULL ENGINEERING DIVISION BCEOM SA FULL FULL BDPA SCET AGRI SA FULL FULL BETEREM INFRASTRUCTURE SA FULL FULL BETURE INFRASTRUCTURE SA FULL FULL INGENIERIE DES SYSTEMES D INFORMATIONS ET DE SECURITE (ISIS) SA FULL FULL ITAL CONSULT SPA (Italy) EQUI EQUI JEAN MULLER INTERNATIONAL SA FULL FULL

51 CONSOLIDATED FINANCIAL STATEMENTS % % % % COMPANIES METH control held METH control held 2003 (1) (1) SCETAUROUTE SA FULL FULL SEMALY SA FULL FULL SERALP INFRASTRUCTURE SA FULL FULL SOCIETE METRO MARSEILLE SA (SMM) EQUI EQUI GROUPE DORSCH CONSULT GMBH FULL FULL DORSCH CONSULT ERFURT FULL FULL NC AIRPLAN FULL NC BERLIN DORSCH CONSULT FULL FULL NC BIRK HILLMAN FULL NC CDC CHEMNITZ FULL FULL NC DC INDIA FULL DRESDEN DORSCH CONSULT FULL FULL NC GITEC CONSULT FULL FULL NC HYDROPROJECT FULL FULL NC I DORSCH CONSULT FULL NC PLASSA FULL FULL NC WEIDLEPLAN FULL FULL NC ACI SA FULL EYSER SA (Spain) FULL EST INFRA SA FULL EGIS SEMALY INC (United States) FULL OUEST INFRA SA FULL SCET CAMEROUN SA (Cameroon) FULL SUD OUEST INFRA FULL PROJECT MANAGEMENT DIVISION EGIS DORSCH DEVELOPPEMENT (EDD) GMBH (Germany) FULL FULL EGIS PROJECTS GMBH (Austria) FULL FULL EGIS PROJECTS SA FULL FULL EPSYS (Philippines) FULL TOLLAUST PTY PROP PROP ENGINEERING DIVISION ADEGIS PTY (Austria) PROP PROP ATTIKES DIADROMES LTD (Greece) PROP PROP BHEGIS (Austria) PROP PROP EGIS PORTS SA EQUI FULL EUROPE ATLANTIQUE TERMINAL (EAT) SA PROP GENERALE DE MANUTENTION PORTUAIRE (GMP) SA PROP JELETRANS PROP MANUTENTION TERMINAL NORD (MTN) SA PROP MANUTENTION TERMINAL NORD DEVELOPPEMENT (MTND) SA PROP % % % % COMPANIES METH control held METH control held 2003 (1) (1) MGM SA FULL OPERSCUT (Portugal) FULL FULL STALEXPORTS TRANSROUTE (Poland) PROP PROP TRANSLINK INVESTMENT PTY LTD (Australia) PROP PROP TRANSROUTE INTERNATIONAL SA FULL FULL TRANSROUTE PHILIPPINES (Philippines) FULL FULL UK HIGHWAYS SERVICES LTD (U.K.) PROP FULL AUTOSTRADA EXPLO EKSPLOATACJA (Poland) PROP EGIS PROJECT ASIA PASIFIC (Australia) FULL FULL C3D GROUP: COMPAGNIE DES ALPES FULL FULL COMPAGNIE DES ALPES SA FULL FULL CENTRALE INVESTISSEMENTS ET LOISIRS SA (CIEL) FULL FULL CMBF (COURMAYEUR MT BLANC) SPA (Italy) FULL FULL COMPAGNIE DU MONT BLANC SA (formerly CMB) SA PROP 8.53 PROP 8.58 DOMAINE SKIABLE DE FLAINE (DSF) SA FULL FULL DOMAINE SKIABLE DE GIF (DSG) SA FULL FULL FAVRE SPORTS SA FULL FUNIVIE DELLE ALPI SRL (FDA) (Italy) FULL FULL MERIBEL ALPINA SA FULL FULL MONT BLANC COMPAGNIE SA (formerly CMMG) (MBC) PROP PROP SAAS FEE BERGBAHNEN AG (Switzerland) EQUI EQUI SEHRT SA (*) (*) PROP 8.57 SELALP SA FULL FULL SHM SA (*) (*) PROP 8.58 SKI SHOP SA FULL SOCIETE DES MONTAGNES DE L ARC SA (SMA) FULL FULL CMB RESTAURATION SARL PROP 8.53 PROP 8.58 STE AMENAGEMENT ARVES GIFFRE SA (SAG) FULL FULL STE AMENAGEMENT LA PLAGNE SA (SAP) FULL FULL STE CONSTRUCTION IMMOBILIERE VALLEE DES BELLEVILLE (SCIVABEL) SCI FULL FULL STE EXPLOITATION VALLEE DES BELLEVILLE SA (SEVABEL) FULL FULL STE TELEPHERIQUES DE LA GRANDE MOTTE SA (STGM) FULL FULL /// 2003 Annual Report Caisse des Dépôts Group

52 % % % % COMPANIES METH control held METH control held 2003 (1) (1) STE TELEPHERIQUES DE L AIGUILLE GRIVE SA (STAG) FULL FULL SWISSALP SA (Switzerland) FULL FULL TELEVERBIER SA (Switzerland) EQUI EQUI VVF VACANCES GROUP VVF VACANCES SA FULL FULL VVF RESERVATION SA FULL FULL JUMBO TOURS FRANCE SA EQUI EQUI TOURING HOTEL SARL FULL FULL GREVIN Cie SA GROUP GREVIN & Cie FULL FULL BAGATELLE SA FULL FULL FRANCE MINIATURE SA FULL FULL GREVIN & CIE TOURAINE (formerly AQUARIUM DU VAL DE LOIRE) FULL FULL AQUARIUM GEANT DE SAINT-MALO SA FULL FULL LES PRODUCTIONS DU PARC SA FULL FULL MINI CHATEAUX DU VAL DE LOIRE SA (*) (*) FULL MUSEE GREVIN SA FULL FULL SOCIETE DE MISE EN VALEUR P SA FULL FULL BOIS DE BAGATELLE SCI (formerly FRANÇOIS PARENT) FULL SCI LE PARC DE LOISIRS DE BAGATELLE FULL FOREIGN SUBSIDIARIES DOLFINARIUM (Netherlands) (*) (*) FULL GREVIN DEUTSCHLAND GMBH (formerly FOR FUN) (Germany) FULL FULL GREVIN AVONTURENPARK HELLENDOORN BV (Netherlands) FULL FULL HARDERWIJK HELLENDOORN HOLDING BV (Netherlands) FULL FULL DOLFINARIUM HARDEWIJK BV (formerly ZEEDIERNPARK) (Netherlands) FULL FULL BICI ENTERTAINMENT SA (Switzerland) FULL COMPAGNIE FINANCIERE EULIA GROUP PROP PROP COMPAGNIE FINANCIERE EULIA PROP PROP CDC IXIS ITALIA HOLDING PROP PROP GROUPE CICOBAIL PROP PROP CICOBAIL PROP PROP CINERGIE PROP PROP MUR ECUREUIL PROP PROP % % % % COMPANIES METH control held METH control held 2003 (1) (1) BAIL ECUREUIL PROP PROP ECUREUIL GESTION PROP PROP ECUREUIL IARD PROP PROP ECUREUIL PARTICIPATIONS PROP PROP ECUREUIL VIE EQUI EQUI GESTITRES PROP PROP HOLGEST PROP PROP CREDIT FONCIER DE FRANCE GROUP PROP PROP CREDIT FONCIER DE FRANCE PROP PROP AUXILIAIRE DU CREDIT FONCIER DE FRANCE PROP PROP COFIMAB PROP PROP COMPAGNIE DE FINANCEMENT FONCIER PROP PROP COMPAGNIE FONCIERE DE CREDIT PROP PROP CREDIT DE L ARCHE PROP PROP CREDIT FONCIER ASSURANCE COURTAGE PROP PROP CREDIT FONCIER BANQUE PROP PROP DOM2 PROP FCC TEDDY PROP PROP FINANCIERE DESVIEUX PROP PROP FONCIER ASSURANCE PROP PROP FONCIER BAIL PROP PROP FONCIER PARTICIPATIONS EQUI EQUI SICP EQUI EQUI SOCLIM PROP PROP SOCFIM GROUP PROP PROP SOCFIM PROP PROP SEI LOGEMENT PROP PROP SEI TERTIAIRE PROP PROP SOCFIM PARTICIPATIONS PROP PROP SOCFIM TRANSACTIONS PROP PROP SOCIETE EUROPEENNE D INVESTISSEMENT (SEI) PROP PROP EULIA CAUTION GROUP (formerly SOGECCEF) PROP PROP EULIA CAUTION PROP PROP CEGI PROP PROP FINANCIERE CEGI PROP PROP SACCEF PROP PROP SOCAMAB PROP PROP

53 CONSOLIDATED FINANCIAL STATEMENTS % % % % COMPANIES METH control held METH control held 2003 (1) (1) CDC IXIS GROUP PROP PROP CDC IXIS PROP PROP CDC ENTREPRISES 1 PROP PROP CDC ENTREPRISES 2 PROP PROP CDC INNOVATION 96 PROP PROP CDC IXIS ADMINISTRATION DE FONDS (formerly GSF) PROP PROP CDC URQUIJO PROP PROP ELECTROPAR FRANCE PROP PROP EURO MONTAIGNE NV PROP PROP FONDINVEST PROP PROP IXIS AEW EUROPE PROP PROP MARTIGNAC FINANCE PROP PROP PART COM PROP PROP SOGEPOSTE EQUI EQUI MAGNANT SA (*) (*) (*) PROP VEGA FINANCE GROUP PROP PROP VEGA FINANCE PROP PROP AGENCE FRANCAISE DU PATRIMOINE EQUI EQUI C & M FINANCE EQUI EQUI FIDUCIARA VEGA PROP P & B FINANCE EQUI EQUI STRATUTS CONSULTANTS PROP PROP VEGA GESTION DE FORTUNE PROP PROP VEGA MULTIMANAGER PROP PROP VEGA PARTENAIRES PROP PROP VEGAGEST ITALIA PROP CDC IXIS PRIVATE EQUITY GROUP PROP PROP CDC EQUITY CAPITAL PROP PROP CDC INNOVATION PARTNERS PROP PROP CDC IXIS PRIVATE EQUITY PROP PROP FONDINVEST CAPITAL PROP PROP PART COM MANAGEMENT (2) (2) (2) PROP SERVICES INDUSTRIES GESTION PROP PROP CDC IXIS CAPITAL MARKET GROUP PROP PROP CDC IXIS CAPITAL MARKETS PROP PROP CDC IXIS SECURITIES PROP PROP CDC MARCHES INFORMATIQUE PROP CLEA2 PROP PROP CDC IXIS NORTH AMERICA GROUP PROP PROP CDC IXIS NORTH AMERICA PROP PROP CIMCO PROP PROP % % % % COMPANIES METH control held METH control held 2003 (1) (1) CDC IXIS CAPITAL MARKETS NORTH AMERICA GROUP PROP PROP CDC IXIS CAPITAL MARKETS NORTH AMERICA PROP PROP TH STREET HOLDINGS II PROP BEDFORD OLIVER FUNDING PROP PROP BLOOM ASSET HOLDING FUND PLC PROP PROP CCAV I PROP PROP CDC COMMERCIAL PAPER PROP PROP CDC DERIVATIVES INC PROP PROP CDC FINANCIAL PRODUCTS PROP PROP CDC FUNDING CORPORATION PROP PROP CDC HOLDING TRUST PROP PROP CDC MIRROR TRUST ST 1-3/11/00 PROP PROP CDC MIRROR TRUST ST 1-9/11/00 PROP PROP CDC MIRROR TRUST ST 1-FAC PROP PROP CDC MORTGAGE CAPITAL PROP PROP CDC MUNICIPAL PRODUCTS PROP PROP CDC PROPERTY TRUST PROP PROP CDC SECURITIES INC PROP PROP CDC SECURITIZATION CORP PROP PROP CDC WONDERLAND PROPERTY TRUST PROP PROP NINE WEST HOLDINGS PROP CDC RANDALL PARK MALL PROPERTY TRUST PROP CDC CRESTED BUTTE HOTEL PROPERTY TRUST PROP ANATOL INVEST GROUP PROP PROP ANATOL INVEST SA (*) (*) (*) PROP ANATOL INVEST HOLDING BV PROP PROP PBW GROUP EQUI EQUI PBW REAL ESTATE FUND EQUI EQUI ATRIUM TOWER EQUI EQUI BRISTOL EQUI EQUI IBC EQUI EQUI MATY AS KIRALY EQUI EQUI MYSLBEK EQUI EQUI WEBC EQUI EQUI CDC IXIS FINANCIAL GUARANTY GROUP PROP PROP CDC IXIS FINANCIAL GUARANTY HOLDING PROP PROP CDC IXIS FINANCIAL GUARANTY PROP PROP CDC IXIS FINANCIAL GUARANTY EUROPE PROP PROP /// 2003 Annual Report Caisse des Dépôts Group

54 % % % % COMPANIES METH control held METH control held 2003 (1) (1) CDC IXIS FINANCIAL GUARANTY NA PROP PROP CDC IXIS FINANCIAL GUARANTY SERVICES INC. PROP PROP FONCIERE DES PIMONTS GROUP PROP PROP SOCIETE FONCIERE DES PIMONTS PROP PROP SA MESSINE PARTICIPATIONS PROP PROP SARL DESCARTES PROP SAS DESCARTES PROP PROP SCI CAMILLE DESMOULINS PROP PROP SCI DU 1 ROND-POINT DES CHAMPS-ELYSEES PROP PROP SCI DU 1 TERRASSE BELLINI PROP PROP SCI DU 114 AV. DES CHAMPS- ELYSEES PROP PROP SCI DU 2 RUE DU 4-SEPTEMBRE PROP PROP SCI DU 2-4 BLD HAUSSMANN (2) (2) (2) PROP SCI DU AV. DE WAGRAM PROP PROP SCI DU AV. DE WAGRAM PROP PROP SCI DU 3-5 AV. DE FRIEDLAND PROP PROP SCI DU 31 RUE DE MOGADOR PROP PROP SCI DU 69 BLD HAUSSMANN PROP PROP SCI DU PONT-NEUF PROP PROP SCI MONTSOURIS 2001 PROP PROP SCI MORIZET PROP PROP SCI SEINE A4B PROP LOGISTIS GROUP EQUI EQUI LOGISTIS EQUI EQUI SCI ARTOIPOLE ARRAS EQUI EQUI SCI CLESUD EQUI EQUI SCI EUROCENTRE TOULOUSE EQUI EQUI SCI PARISUD EQUI EQUI SCI PARISUD VI EQUI EQUI SCI PLAINE DE L AIN EQUI EQUI SCI PORTE DE France EQUI EQUI SCI SAINT-LAURENT-DE-MURE EQUI EQUI SCI SAINT-OUEN-L AUMONE (formerly SCI VILLEBON) EQUI EQUI NEXGEN GROUP EQUI NEXGEN FINANCIAL HOLDINGS LTD EQUI NEXGEN RE LTD EQUI UNIVERSE HOLDINGS LTD EQUI NEXGEN MAURITIUS LTD EQUI % % % % COMPANIES METH control held METH control held 2003 (1) (1) NEXGEN CAPITAL LTD EQUI NEXGEN FINANCIAL SOLUTIONS LTD EQUI NEXGEN FINANCIAL SOLUTIONS (ASIA) PTE LTD EQUI BALTIMORE LTD EQUI MANGO CDO LTD EQUI CDC IXIS ASSET MANAGEMENT GROUP PROP PROP CDC IXIS ASSET MANAGEMENT PROP PROP CDC AM ASIA PROP PROP CDC AM JAPAN PROP PROP CDC IXIS AM ITALIA PROP PROP CDC IXIS AME PROP PROP CDC IXIS FONDSERVICES GMBH PROP PROP CDC IXIS PRIVATE CAPITAL MANAGEMENT PROP PROP CDC IXIS AM NORTH AMERICA CORPORATION GROUP PROP PROP CDC IXIS AM NORTH AMERICA CORPORATION PROP PROP CDC IXIS AM NA LP PROP PROP CDC IXIS AM US LLC PROP PROP AEW ADVISORS INC. PROP PROP AEW CAPITAL MANAGEMENT, LP PROP PROP AEW CAPITAL MANAGEMENT, INC. PROP PROP AEW CURZON LTD PROP AEW EQUITY SHARING LLC PROP PROP AEW II CORPORATION PROP PROP AEW INVESTMENT GROUP, INC. PROP PROP AEW ITALIA EQUI AEW MANAGEMENT AND ADVISORS, LP PROP PROP AEW PARTNERS III, INC. PROP PROP AEW PARTNERS IV, INC. PROP PROP AEW REAL ESTATE ADVISORS, INC. PROP PROP AEW SECURITIES LIMITED PARTNERSHIP PROP PROP AEW TSF, INC. PROP PROP ASASHI NVEST INVESTMENT ADVISORY CO, LTD EQUI EQUI BACK BAY ADVISORS, INC. PROP PROP CAPITAL GROWTH MANAGEMENT, LP EQUI EQUI CASPIAN CAPITAL MANAGEMENT PROP PROP

55 CONSOLIDATED FINANCIAL STATEMENTS % % % % COMPANIES METH control held METH control held 2003 (1) (1) CDC IAM ADVISORS LP PROP PROP CDC IAM ASSOCIATES, INC. PROP PROP CDC IAM DISTRIBUTION CORPORATION PROP PROP CDC IAM DISTRIBUTORS, LP PROP PROP CDC IAM HOLDINGS, LLC PROP PROP CDC IAM SERVICES, INC. PROP PROP CDC IXIS INVESTMENT SERVICES JAPAN, INC. PROP PROP CREA WESTERN INVESTORS I, INC. PROP PROP CURZON FULLAL PARTNERS, LP EQUI FEDERAL STREET MANAGEMENT, INC. PROP PROP FIFTH COPLEY CORP. PROP MUTUALFUNDS.COM, LLC EQUI EQUI CDC IAM AUSTRALIA LTD PROP PROP CDC IAM HOLDINGS LLC (AUSTRALIA) HOLDINGS LLC PROP PROP GRAND CATHAY SECURITIES INVESTMENT TRUST EQUI HARRIS ASSOCIATES SECURITIES, LP PROP PROP HARRIS ASSOCIATES, INC. PROP PROP HARRIS ASSOCIATES, LP PROP PROP HARRIS PARTNERS, LLC PROP PROP JURIKA & VOYLES, INC. PROP PROP JURIKA & VOYLES, LP PROP KOBRICK FUNDS LLC PROP PROP LOOMIS SAYLES & COMPANY, INC. PROP PROP LOOMIS SAYLES & COMPANY, LP PROP PROP HANSBERGER GROUP INC. EQUI LOOMIS SAYLES CONSUMER DISCRETIONARY HEDGE FUND PROP NC NC % % % % COMPANIES METH control held METH control held 2003 (1) (1) LOOMIS SAYLES DISTRIBUTORS, INC. PROP PROP LOOMIS SAYLES DISTRIBUTORS, LP PROP PROP LOOMIS SAYLES EQUITY SHARING, LLC PROP PROP LOOMIS SAYLES INTERNATIONAL FUND SERVICES LTD PROP NC NC LOOMIS SAYLES SOLUTIONS, INC. PROP MC MANAGEMENT, INC. PROP PROP MC MANAGEMENT, LP PROP PROP NEICOMP LLC PROP PROP NVEST INTERNATIONAL PARTNERSHIP, LP EQUI <15 <15 EQUI <15 <15 REICH & TANG DISTRIBUTORS, INC. PROP PROP REICH & TANG AM LLC PROP PROP REICH & TANG SERVICES, INC. PROP PROP SEAPORT SENIOR HOUSING, LLC PROP PROP SEVENTH COPLEY CORP. PROP SIXTH COPLEY CORP. PROP SNYDER CAPITAL MANAGEMENT, INC. PROP PROP SNYDER CAPITAL MANAGEMENT, LP PROP PROP VAUGHAN NELSON SCARBOROUGH & MC CULLOUGH, INC. PROP PROP VAUGHAN NELSON SCARBOROUGH & MC CULLOUGH, LP PROP PROP VAUGHAN NELSON TRUST COMPANY (formerly VNSM TRUST COMPANY) PROP PROP WESTPEAK FULLAL ADVISORS PROP PROP WESTPEAK INVESTMENT ADVISORS AUSTRALIA LIMITED PROP PROP WESTPEAK INVESTMENT ADVISORS, INC. PROP PROP (1) Consolidation methods FULL = fully consolidated; PROP = proportionally consolidated; EQUI = equity method; NC = non communicated. (2) Sold in However, earnings booked up until the date of the disposals. (*) Merger. 54 /// 2003 Annual Report Caisse des Dépôts Group

56 Auditors report on the consolidated financial statements Year ended December 31, 2003 This is a free translation into English of the statutory auditors report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Chief Executive Officer, In accordance with the assignment entrusted to us, we have audited the accompanying consolidated financial statements of Caisse des Dépôts Group for the year ended December 31, These consolidated financial statements have been approved by you. Our role is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the professional standards applied in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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. In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, financial position and results of the entity formed by the companies included in the consolidation scope, in accordance with French accounting regulations and generally accepted accounting principles. Without qualifying our opinion set out above, we draw your attention to the note to the consolidated financial statements entitled Accounting principles used in preparing the consolidated financial statements of Caisse des Dépôts Group, which describes the changes in accounting methods resulting from the application of CRC Standard relating to the accounting treatment of credit risk and CRC Standard relating to asset depreciation, amortization and impairment; as well as the change in accounting method applicable to recognizing gains and losses on the indexing of inflation-indexed OATs. Paris and La Défense, April 15, 2004 The Auditors PricewaterhouseCoopers Audit Mazars & Guérard Gérard Hautefeuille Guillaume Potel Denis Grison 55

57 CENTRAL SECTOR Balance sheet (Euro millions) Notes ASSETS Interbank and similar transactions 26,388 32,298 Cash, central banks and post office banks 1 Public-sector securities and similar 3 17,930 16,189 Advances and loans to financial institutions 1 8,457 16,109 Customer transactions 2 16,624 4,767 Overdrafts Other loans to customers 15,922 4,122 Bonds, equities, other fixed and variable income securities 38,969 27,753 Bonds and other fixed income securities 3 30,083 19,116 Equities and other variable income securities 3 8,886 8,637 Long-term equity holdings 9,648 10,218 Long-term equity holdings 4 and 5 9,648 10,218 Intangible fixed assets Tangible fixed assets 6 1, Other assets ,582 Accruals and deferrals ,010 TOTAL 93,694 79,181 LIABILITIES Interbank and similar transactions 21,948 23,472 Central banks and post office banks Advances and loans from financial institutions 8 21,902 23,460 Customer transactions 9 46,585 32,073 Customer deposits 26,476 22,827 Other customer advances and loans 20,109 9,246 Debt securities 10 1,284 1,307 Interbank and negotiable debt securities 1,284 1,307 Other liabilities 11 12,547 10,776 Accruals and deferrals Provisions for risks and charges Subordinated debt 2 2 Fund for general banking risks (FGBR) Retained earnings (excluding FGBR) 13 9,864 9,248 Reserves 8,803 8,629 Revaluation adjustments Regulatory provisions and investment subsidies Other retained earnings Income for the year /// 2003 Annual Report Caisse des Dépôts Group

58 Off-balance sheet commitments Financing, guarantee and securities commitments given Financing commitments To financial institutions To customers 1,709 3,072 Guarantees To financial institutions 1, To customers 5,097 6,390 Financing, guarantee and securities commitments received Financing commitments From financial institutions 11,256 11,755 Guarantees From financial institutions 4,805 6,054 From customers 1, Securities transactions Securities to be received Other commitments Other commitments given Other commitments received Off-balance sheet commitments relative to spot and forward foreign currency transactions and to the lending and borrowing of foreign currencies are described in Note 16. Off-balance sheet commitments relative to forward financial instruments are described in Note

59 CENTRAL SECTOR Income statement (Euro millions) Notes Interest and similar revenues 2,116 2,249 Treasury and interbank transactions Customer transactions Bonds and other fixed income securities 22 1,255 1,337 Other interest and similar revenues Interest and similar expenses (1,388) (1,487) Treasury and interbank transactions 20 (406) (790) Customer transactions 21 (510) (536) Bonds and other fixed income securities 23 (49) (159) Other interest and similar expenses (423) (2) Revenues from variable income securities Commissions (revenues) Commissions (expenses) 24 (40) (38) Gains or losses on trading security transactions 25 (1) (99) Gains or losses on available-for-sale security transactions and similar (517) Other net operating banking revenues and expenses 27 (72) (91) NET BANKING INCOME 1, Operating expenses (287) (318) Payroll expenses 28 (387) (399) Other administrative expenses (220) (237) Rebillings Net amortization, depreciation and provision charges 29 (48) (43) GROSS INCOME FROM OPERATIONS 1, Cost of risk 30 (47) (31) NET INCOME FROM OPERATIONS 1, Gains or losses on fixed assets 31 (30) 55 RECURRING INCOME BEFORE INCOME TAX 1, Net non-recurring income (expenses) Income taxes 32 (227) (117) Net movement in FGBR and regulatory provisions NET INCOME /// 2003 Annual Report Caisse des Dépôts Group

60 Notes to the financial statements Accounting principles used in preparing the financial statements The financial statements for the year ended December 31, 2003 have been prepared in accordance with generally accepted accounting principles applicable to French banking and financial institutions. The financial statements are presented in accordance with CRC Regulation related to the preparation of individual company accounts by undertakings governed by the Comité de la réglementation bancaire et financière CRBF (French Banking and Finance Regulations Committee). The accounting principles and valuation methods used are identical to those used to prepare the financial statements for the year ended December 31, 2002, with the exception of the following points: 1 - Changes in accounting methods Credit risk CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the CRBF took effect on January 1, Some application methods for this CRC Standard were set forth in the CNC s November 21, 2003 statement on accounting for loans restructured at non-market conditions and in Opinion 2003-G of the CNC Urgent Issues Task Force dated December 18, 2003 concerning methods for reclassifying non-performing loans to irrecoverable loans. Credit risk can be defined as the potential loss arising from the failure by a counterparty to fulfill its obligations. The credit risk arises once it becomes likely that the bank will not receive part or all of the amounts due under the contract, notwithstanding the existence of guarantees and security deposits. This standard applies to all credit-risk-bearing commitments: loans to financial institutions and customers, signature commitments, fixed-income securities (in the available-for-sale or held-to-maturity portfolios) and forward instruments traded over the counter that have a positive market value. Loans Loans are classified as non-performing once the credit risk arises, and in any event no later than three months after payments are past due (six months for real estate loans and nine months for loans to local governments). Similarly, once a loan for a given counterparty is classified as non-performing, all loans to that counterparty are classified as non-performing under the contagion principle. For groups of companies, the contagion principle is applied selectively. The non-performing loans category includes irrecoverable loans. These include loans in default and some loans that have been classified as non-performing for more than one year. CNC Opinion 2003-G of December 18, 2003 clarified the terms under which non-performing loans should be reclassified as irrecoverable loans, especially loans that have been classified as non-performing for more than one year. Non-performing loans are classified as irrecoverable when they require the establishment of a provision and when it is likely that the loan will ultimately be written off. This analysis must be made while taking existing guarantees on these loans into account. Issued late in the year, this opinion could not be applied to the 2003 fiscal year. Thus the total amount of irrecoverable loans reported in the notes to the financial statements is higher than or equal to the amount that would have been reported under the terms of this opinion. Non-performing loans and irrecoverable loans may be reclassified as performing loans when payments have resumed in a steady fashion for the amounts corresponding to the original contractual payment schedule and once the counterparty no longer presents a default risk. They may also be classified as restructured loans if debt has been rescheduled and following a waiting period. For loans with credit risk exposure, provisions are established to cover all projected losses on loans classified as non-performing or irrecoverable. A full provision is established on all outstanding, accrued and unpaid interest. Once the loan is deemed to be definitively irrecoverable, a loss is recorded. The new accounting measures discussed above have no impact on balance sheet and income statement items; nevertheless, supplementary disclosures to the notes to the financial statements are provided. Restructured loans at non-market conditions are broken out separately, where applicable, in a specific sub-category for performing loans. At the time of the restructuring, the loan is recorded at nominal value less a discount corresponding to the amount of forfeited interest. This interest differential will be taken into account in determining the lending margin on the loans concerned. All restructured loans are immediately reclassified as irrecoverable once the borrower fails to make scheduled payments. As of December 31, 2003, there were no material restructured loans at non-market conditions, and no interest differential was therefore calculated to be taken into account for lending margin purposes. 59

61 CENTRAL SECTOR Securities and futures The accounting principles and methods of CRC Standard of December 12, 2002 dealing with the accounting treatment of credit risk for companies governed by the CRBF, described above for loans, also apply to fixed income securities and futures traded on the over-the-counter markets. These new accounting methods have no impact on the financial statements, but they require additional disclosures in the notes to the financial statements. Inflation-indexed OATs In the absence of specific regulations for credit institutions, the indexing effects on the face value of inflation-indexed OATs may be recorded using one of the following methods: at the time the bond is sold or reaches maturity; spread over the bond s term to maturity; as income or expense for the period. In previous years, the method used was indexation of the face value at the time the OATi was sold or reached maturity. Beginning with the year ending December 31, 2003, Caisse des Dépôts decided to use the example of the accounting method prescribed by Article R of the Insurance Code, as amended by decree No of December 24, 2002, and to enter gains or losses related to the indexing of the face value of the bonds to the consumer price index as income or expenses for the year. This change in the accounting method increased opening retained earnings as of January 1, 2003 by 4 million after taxes and gross income for the year ended December 31, 2003 by 7.1 million. Depreciation, amortization and impairment of assets CRC Standard of December 12, 2002 related to the depreciation, amortization and impairment of assets was applied to the Central Sector financial statements for the year ended December 31, In accordance with opinion No F of the CNC Urgent Issues Task Force, which was approved by the CRC on December 12, 2003, the Central Sector neither established provisions for major repairs nor applied the component approach for so-called Category 1 replacement expenses. Provisions for major repairs were, however, booked for so-called Category 2 major maintenance expenses. Application of this standard resulted in a 13.9 million provision for major repairs. This amount, charged against retained earnings at January 1, 2003, corresponds to Category 2 expenses that are part of multi-year maintenance plans (including 7.3 million for investment real estate), and a 2.8 million provision for Retirement commitments The CNC Urgent Issues Task Force opinion of January 21, 2004 provides guidelines on the accounting treatment of the consequences of the French pensions Reform Act (act No of August 21, 2003). Under the new rules, employees can elect to retire before the age of 65, but cannot be required to do so by their employer. The statutory retirement bonus payable when they retire is subject to payroll taxes. However, in light of calculation assumptions applied previously, these modifications do not have a material impact on the provision amounts in the Central Sector financial statements. 2 - Migration to a new accounting platform The migration to the new CEDRE accounting platform on January 1, 2003 resulted in the reclassification of some income statement and balance sheet (mainly interbank and customer transactions) items. These reclassifications did not have a material impact on the presentation of the financial statements as of December 31, Presentation and accounting policies 1 - Income statement items Interest and commissions classified as such are recorded on an accruals basis. Commissions not classified as interest are recorded on a cash basis. 2 - Foreign-currency-denominated transactions Foreign-currency-denominated assets, liabilities and off-balance sheet commitments have been translated at the exchange rates ruling on December 31, Currency gains and losses from ordinary currency transactions are recorded in the income statement. Spot foreign exchange transactions are valued at the spot rate. Forward currency transactions, other than hedging, are valued at the forward rate of the remaining period. Forward currency transactions for hedging purposes are valued by symmetry with the item hedged. Premiums and discounts related to hedged foreign currency transactions are taken as income and expenses over the period remaining until the maturity of these transactions. 60 /// 2003 Annual Report Caisse des Dépôts Group

62 3 - Advances and loans to financial institutions and customers These items include loans, overdrafts and securities purchased under collateralized and uncollateralized fixed resale agreements. Loans Loans are recorded as assets in the balance sheet at redemption value. Accrued interest is recognized as income over the life of the loan. Loans are now accounted for in accordance with the principles of CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the CRBF, which took effect January 1, 2003 and whose application was further complemented by various opinions of the Urgent Issues Task Force and a statement by the CNC. These accounting principles and methods are presented above in the section on changes in accounting methods. Securities purchased under collateralized and uncollateralized fixed resale agreements These securities are recorded as assets in the balance sheet on the line representing the receivable arising from the transaction. The corresponding income is recognized on an accruals basis. Securities received as collateral and subsequently sold are recorded as liabilities and valued at market value. 4 - Securities and securities transactions Securities are classified under five accounting categories corresponding to the institution s activities. Trading securities Trading securities include in particular Treasury bills and negotiable debt securities. They are expected to be held for periods not exceeding six months. They are highly liquid and are marked to market. Valuation differences are recognized in the income statement. Available-for-sale securities Available-for-sale securities represent securities that are not to be held until maturity or for trading purposes. They also include trading securities reclassified after being held for a period of more than six months. In this case, the reclassification is made at market value on the date of the transfer. Available-for-sale securities are treated according to the FIFO method and are valued as follows: bonds and equities: unrealized losses calculated based on their year-end closing price are taken to expenses through a provision for impairment; Treasury bills, negotiable debt securities, and interbank instruments: provisions are made on the basis of the individual situation of the issuer and market indicators. Any premiums and discounts are written off over the residual life of the asset on a yield-to-maturity basis for negotiable debt securities and on a straight-line basis for other securities. The accounting methods of CRC Standard dealing with credit risk for companies governed by the CRBF apply, where relevant, to credit risk for fixed-income available-for-sale securities. These measures are presented above in the paragraph on changes in accounting methods. Held-to-maturity securities This portfolio comprises fixed income securities that are intended to be held until maturity, and financed with dedicated long-term resources or covered through hedging instruments. Unrealized capital losses resulting from differences between book and market values are not covered by provisions. However, if applicable, default risks are taken into account in determining the value of these securities at year-end. The difference between the acquisition price and the redemption value of the securities (premium or discount) is amortized using the yield-to-maturity method for negotiable debt securities and the straight-line method for other securities. The accounting methods of CRC Standard dealing with credit risk for companies governed by the CRBF apply, where relevant, to credit risk for held-to-maturity securities. These measures are presented above in the paragraph on changes in accounting methods. Portfolio securities (TAP) Portfolio securities are investments made on a regular basis with the aim of realizing a capital gain in the medium term but without the intention of investing on a long-term basis in the development of the business or taking an active part in the operational management of the issuing undertaking. These securities are recorded at the lower of cost or fair value. Fair value is determined by taking into account the general economic outlook for the issuer and the remaining period for which the securities will be held. For listed companies, fair value is generally represented by the average listed share price over a sufficiently long period that reduces the impact of sharp price fluctuations over the expected holding period. 61

63 CENTRAL SECTOR Subsidiaries and affiliates Subsidiaries and affiliates are recorded at acquisition cost. They are valued on the basis of their fair value, with reference to various criteria such as net assets, share price, and capitalization of earnings. Provisions are constituted to reflect any permanent impairment in fair value. Lending and borrowing of securities Securities are valued using the rules applicable to the portfolio of origin. Borrowed securities are recorded as an asset under trading securities at their market value on the day they were borrowed, and as a liability to recognize the debt towards the lender. They are valued on the basis of their year-end market value. Loans and borrowings guaranteed by cash and notes are treated in the same way as collateralized resale agreements. Income from these transactions is recognized on an accruals basis in the income statement. 5 - Forward financial instruments In application of the strategy defined for the development of its trading activities and the management of market risks, Caisse des Dépôts operates on all organized and over-the-counter markets for interest rate, currency and equity futures and options. In France as well as abroad, these transactions are entered into as part of: specific or general hedging; in connection with specialized management of trading portfolios. For all of these instruments, whatever the management policy pursued, the face value of the futures and options contracts, the value of the underlying assets, or the exercise price is recorded in the off-balance sheet. The method of accounting for expenses and revenues on these instruments depends on the management policy pursued. The accounting methods of CRC Standard dealing with credit risk for companies governed by the CRBF apply, where relevant, to credit risk for futures traded over the counter. These measures are presented above in the paragraph on changes in accounting methods. Interest rate and currency swaps Hedging transactions expenses and revenues resulting from hedging instruments (taken singly or as a homogeneous group) are recognized symmetrically with the revenues and expenses resulting from the transaction hedged. Expenses and revenues from hedging instruments for non-specific risks are recorded on an accruals basis. Specialized portfolio management transactions: contracts are valued at year-end at their market value. In accordance with regulations, the market value takes into account an adjustment for default risks and the discounted value of future management costs. The total net valuation difference is recognized in the income statement. Other interest rate and currency transactions These transactions relate primarily to futures and options. Hedging transactions: expenses or revenues are recognized in the income statement on a symmetrical basis with the revenues or expenses on the transaction hedged. Other transactions: these transactions are marked to market. Unrealized gains or losses at year-end are recognized in the income statement. In a departure from French regulations and in order to provide a fair value of these instruments, those that are not highly liquid are also valued by reference to their theoretical market value. Complex transactions Complex transactions include derivatives, which combine repackaged instruments of various types, characteristics and pricing methods. Each component of the transaction is recorded in the on- or offbalance sheet according to the nature of the underlying. The result is considered globally and recorded through one entry reflecting the economic nature of the transactions, as if they were a single instrument. In the case of totally new products, when not governed by explicit regulation, the accounting approach for recognition of any gains and losses is based on similar existing products. The method of accounting for gains and losses depends on the management policy pursued: hedging transactions: for reasons of prudence, notably when market liquidity is low, results are recorded on a time basis. A provision is made when market value is negative; trading portfolio or transactions for which the result can be considered as an arrangement fee: the result is recognized when the transaction is initiated. A discount is applied to take into account future management expenses and possible default risks. 62 /// 2003 Annual Report Caisse des Dépôts Group

64 Market values When the market price of the instruments or the valuation parameters are not officially quoted, alternative valuation methods are used, making reference to one or more of the following components: price confirmation by brokers or outside counterparties, comparison with actual transactions and research by issuer or instrument category. When instruments are valued using models, these integrate the parameters that affect the valuation of the instruments, in particular the liquidity level of the related markets. Applying a prudent approach, the calculations are adjusted to take account of the weaknesses of some of these parameters, in particular their relevance over a long period. 6 - Tangible and intangible fixed assets Fixed assets are valued at cost. In the case of buildings, initial fixtures, fittings and installation expenditure may be added to the cost of acquisition. Depreciation is calculated using the straight-line method and according to the type and quality of the building, over its estimated useful life. Thus, buildings are depreciated over twenty to fifty years. Partial renovation work on old buildings is depreciated over periods of between fifteen and twenty-five years. Installations, improvements and fittings are generally depreciated over ten years. Software is generally depreciated over three years. Forests are subject to provisions for impairment as required. In the event of an irreversible loss, an exceptional depreciation charge is taken for the amount of the loss. 8 - Advances and loans from financial institutions and customer deposits These liabilities include deposits, loans and securities sold under collateralized and uncollateralized fixed repurchase agreements. Loans Loans are recorded in the balance sheet at redemption value and accrued interest is charged to income over the life of the loan. Securities sold under collateralized fixed repurchase agreements The debt is recorded under liabilities. The securities are maintained in their original portfolio and valued according to the rules applicable to that portfolio. The corresponding interest is recognized through the income statement as it is accrued. 9 - Debt securities Debt securities are reported according to the type of security: interbank and negotiable debt securities (certificates of deposit and medium-term notes). Accrued interest is recorded on the same balance sheet line as the debt security and is charged to income. 7 - Investment property risks Caisse des Dépôts owns a large portfolio of rental properties held as long-term investments. A provision is booked for any permanent impairment in value of these properties as well as properties earmarked for sale in the medium term. This provision represents the difference between carrying value and market value. Market values for material investment properties are determined regularly by independent appraisers. 63

65 CENTRAL SECTOR 10 - Provisions for risks and charges This heading includes: provisions for specifically identified risks related to banking transactions and financial instruments as well as losses related to certain business sectors; provisions for pension-related commitments corresponding mainly to retirement benefits and expenses related to the establishment of a framework agreement in July 2002; provisions for risks and charges established in accordance with CRC Standard regarding the accounting treatment for liabilities. These provisions are intended to cover risks and charges that are clearly defined but whose amount or timing remains uncertain. The establishment of these provisions is subject to the existence of an obligation to a third party at yearend, and the absence of at least an equivalent consideration from this third party. These provisions also include those intended to cover foreseeable charges related to stated fiscal litigation: a provision for deferred taxes related to the deferred tax schedule for share exchange offers (Offres Publiques d Echange OPE mergers); provisions for major repairs established in accordance with CRC Standard related to the depreciation, amortization and impairment of assets and whose application methods are described in the section on changes in accounting methods Fund for general banking risks This fund is constituted to cover operational risks and losses arising from banking activities and the management of financial assets that are not covered by general or specific provisions. Transfers are made to and from this fund on a regular basis to cover these risks Income taxes Each year, the Central Sector makes a voluntary payment in lieu of taxes to the Treasury. The amount of this payment is equivalent to what would be its corporate income tax liability. This amount is provisioned in the financial statements under income taxes. A provision for deferred taxes is calculated by applying the most likely future tax rate to these transactions. The deferred tax rates were 35.43% for the full rate and 20.20% for the reduced rate, unchanged from Pension and related commitments In France, pension liabilities are generally covered by contributions taken as expenses and paid to retirement or insurance funds, which then handle pension payments, or paid to the government in the case of civil servants. Provisions are made for employee retirement benefits for each category of employees based on collective bargaining agreements. These provisions are calculated using an actuarial method taking into account the age and seniority of the personnel, the mortality rate and probable remaining service with the company until retirement age and estimated future salary levels. This provision is adjusted each year based on changes in the actuarial liabilities. Commitments related to bonuses awarded for work medals or Caisse des Dépôts medals are calculated using the same method as is used to determine commitments for retirement benefits. 64 /// 2003 Annual Report Caisse des Dépôts Group

66 Note 1 - Interbank and similar transactions Advances and loans to financial institutions (Euros millions) Ordinary accounts 6,233 8,478 Current accounts of savings funds Accrued interest Sight amounts due from financial institutions 6,484 8,662 Term loans and advances 1,611 3,221 Securities purchased under collateralized fixed resale agreements 318 4,167 Subordinated loans Non-performing loans Provisions (13) (13) Accrued interest 9 22 Term amounts due from financial institutions 1,973 7,447 ADVANCES AND LOANS TO FINANCIAL INSTITUTIONS 8,457 16,109 Note 2 - Customer transactions (assets) (Euros millions) Overdrafts Non-performing loans 12 8 Provisions (7) (8) Overdrafts Loans to financial sector customers Other cash advances (1) 14,286 2,498 Loans for infrastructure projects Loans for housing projects Other loans to customers Subordinated loans Non-performing loans Provisions (94) (43) Accrued interest (2) Other loans to customers 15,922 4,122 CUSTOMER TRANSACTIONS 16,624 4,767 Total at sight Total at term 15,922 4,122 (1) Of which ACOSS: 2,285 million as of December 31, 2002 compared with 14,130 million as of December 31, (2) Of which 3 million on non-performing loans. 65

67 CENTRAL SECTOR Note 3 - Transactions on trading, available-for-sale, held-to-maturity and portfolio activities A) BREAKDOWN BY NATURE AND TYPE OR PORTFOLIO Available- Held-to- Available- Held-to- Trading for-sale maturity Portfolio Trading for-sale maturity Portfolio securities securities securities securities TOTAL securities securities securities securities TOTAL Public-sector securities and similar 7, ,686 13,864 4,720 1,037 6,313 12,070 Securities on loan (1) 4,066 4,066 4, ,119 Public-sector securities and similar 11, ,686 17,930 8,829 1,047 6,313 16,189 Bonds ,578 7, ,958 7,777 Other fixed income securities (2) 20,971 1,332 22,303 9,302 1,501 10,803 Securities on loan Bonds and other fixed income securities 26 21,620 8,437 30, ,066 8,995 19,116 Equities 523 7,128 7, ,738 7,132 Mutual funds (3) 1, ,233 1, ,503 Securities on loan Equities and other variable income securities 1,644 7,242 8,886 1,648 6,989 8,637 TOTAL BY TYPE OF PORTFOLIO 11,919 23,615 14,123 7,242 56,899 8,884 12,761 15,308 6,989 43,942 (1) Trading securities on loan are held against a loan from the DFE (see Note 11). (2) The increase is due mainly to the FRR deposit at the year-end ( 11,583 million). (3) As of December 31, 2003, an opening balance of 147 million of shares in mutual funds was reclassified as equities. Held-to-maturity securities totaling 35 million were sold during the year (2002: 136 million). There were no transfers between the available-for-sale and portfolio security categories as of December 31, /// 2003 Annual Report Caisse des Dépôts Group

68 Note 3 (cont.) B) TRANSACTIONS ON TRADING, AVAILABLE-FOR-SALE, HELD-TO-MATURITY AND PORTFOLIO ACTIVITIES Euro millions) Available- Held-to- Available- Held-to- Trading for-sale maturity Portfolio Trading for-sale maturity Portfolio securities securities securities securities TOTAL securities securities securities securities TOTAL Public-sector securities and similar Gross value (1) 11, ,481 17,713 8, ,079 15,872 Premiums/discounts Accrued interest Provisions Net book value 11, ,686 17,930 8,829 1,047 6,313 16,189 Market value of trading and available-for-sale securities 11, ,829 1,176 Bonds and other fixed income securities Gross value (1) 26 21,580 8,178 29, ,009 8,732 18,796 Premiums/discounts (3) 15 Accrued interest Provisions (7) (7) (11) (11) Net book value 26 21,620 8,437 30, ,066 8,995 19,116 Market value of trading and available-for-sale securities 26 21, ,094 Equities and other variable income securities Gross value 1,716 8,768 10,484 1,849 8,674 10,523 Accrued interest Provisions (2) (72) (1,529) (1,601) (201) (1,687) (1,888) Net book value 1,644 7,242 8,886 1,648 6,989 8,637 Market value of available-for-sale securities and value-in-use for portfolio securities 1,932 8,939 10,871 1,687 9,920 11,607 (1) The gross values shown for available-for-sale and held-to-maturity securities correspond to redemption values. (2) The net change in provisions as of December 31, 2003 was minus 157 million. This change comprised a 118 million net writeback of provisions and foreign exchange income of 39 million. 67

69 CENTRAL SECTOR Note 4 - Long-term equity holdings Movements Acquisition/ Disposals/ (Euro millions) charges reversals SPIPL Long-term equity holdings Gross value 9, (12) (381) (1) 9,641 Provisions (188) (32) 26 1 (2) (193) Net book value 9, (380) 9,448 Advances Gross value (92) (603) (3) 367 Provisions (179) (20) (4) (167) Net book value (77) (586) 200 LONG-TERM EQUITY HOLDINGS 10, (63) (966) 9,648 (1) This movement reflects the reclassification of long-term equity holdings in Sociétés propriétaires d immeubles de placement (SPIPL real estate investment companies) to tangible fixed asset investment properties, in an amount of 381 million. (2) Reclassification of SPIPL-related provisions. (3) Reclassification of SPIPL-related advances and receivables to fixed asset investment properties. (4) Reclassification of provisions on SPIPL-related advances and receivables. Note 5 - Principal long-term equity holdings (Euro millions) Shareholding Advances Provisions Total Companies in which the Central Sector has a net investment of more than 40 million AREVA BDPME CAISSE DES DEPOTS DEVELOPPEMENT C3D ,015 CDC Holding Finances (formerly Sodeve) 2,907 2,907 CDC IXIS 2,227 2,227 CDC IXIS ITALIA HOLDING CDC KINEON 100 (20) 80 CDC PME CNP ASSURANCES ( * ) COMPAGNIE NATIONALE DU RHONE DEXIA CREDIT LOCAL DE FRANCE ( * ) SCIC HABITAT (10) 136 SICOVAM HOLDING SNI Total principal long-term equity holdings and advances 9, (30) 9,361 Other long-term equity holdings and advances (330) 287 TOTAL LONG-TERM EQUITY HOLDINGS AND ADVANCES 9, (360) 9,648 Of which listed investments ( * ) 1,681 1, /// 2003 Annual Report Caisse des Dépôts Group

70 Note 6 - Tangible and intangible fixed assets A) BREAKDOWN Gross Amortization Net Gross Amortization Net value and provisions value value and provisions value Operating fixed assets 547 (303) (291) 248 Investment properties 1,479 (144) 1, (117) 250 Construction in progress Land and buildings 340 (121) (117) 226 Forests and undeveloped land Real estate investment companies (SPIPL) 1,118 (23) 1,095 TANGIBLE FIXED ASSETS 2,026 (447) 1, (408) 498 Concessions, licenses, and patents 113 (94) (79) 23 Other intangible fixed assets INTANGIBLE FIXED ASSETS 151 (94) (79) 55 TANGIBLE AND INTANGIBLE FIXED ASSETS 2,177 (541) 1,636 1,040 (487) 553 B) MOVEMENTS Acquisitions/ Disposals/ Other (Euro millions) charges reversals movements Tangible operating fixed assets, gross (13) 547 Depreciation and provisions (291) (24) 12 (303) TANGIBLE OPERATING FIXED ASSETS 248 (3) (1) 244 Investment properties, gross (9) 361 Depreciation and provisions (117) (9) 5 (121) Investment properties held by SPIPL, gross 174 (40) 984 (1) 1,118 SPIPL-related provisions (6) 1 (18) (2) (23) INVESTMENT PROPERTIES (43) 966 1,335 Intangible fixed assets, gross (9) 151 Amortization and provisions (79) (23) 8 (94) INTANGIBLE FIXED ASSETS 55 3 (1) 57 TANGIBLE AND INTANGIBLE FIXED ASSETS (45) 966 1,636 (1) This amount corresponds to the reclassification of long-term equity holdings in SPIPL in an amount of 381 million and of receivables related to these companies in an amount of 603 million, a total of 984 million. (2) Reclassification of provisions, of which 1 million relating to SPIPL securities and 17 million relating to SPIPL-related advances and receivables. 69

71 CENTRAL SECTOR Note 7 - Accruals, deferrals and other assets Deferred charges 3 5 Prepaid expenses 4 5 Accrued income Currency and forward financial instrument adjustment accounts Collection accounts (1) 896 Other (1) Accruals and deferrals 62 2,010 Premiums on purchases of options 6 26 Miscellaneous receivables Settlement accounts on securities transactions 9 1,109 Inventories and similar Impairment provisions (12) (37) Other assets 367 1,582 ACCRUALS, DEFERRALS AND OTHER ASSETS 429 3,592 (1) Difference in the type of accruals accounts related to the migration to a new accounting application. Note 8 - Interbank and similar transactions Advances and loans from financial institutions Current accounts 2,584 4,003 Current accounts of the savings funds 1,751 1,979 Accrued interest 1 16 Sight amounts due to financial institutions 4,336 5,998 Term loans and advances Securities sold under collateralized fixed repurchase agreements 17,198 17,097 Accrued interest Term amounts due to financial institutions 17,566 17,462 ADVANCES AND LOANS FROM FINANCIAL INSTITUTIONS 21,902 23, /// 2003 Annual Report Caisse des Dépôts Group

72 Note 9 - Customer transactions (liabilities) Current accounts (1) 26,475 22,826 Accrued interest 1 1 Customer deposits 26,476 22,827 Loans from financial sector customers Escrow accounts ( consignations ) 2,593 2,490 Term deposits (2) 16,908 5,947 Securities sold under collateralized fixed repurchase agreements 254 Other 3 5 Accrued interest Other customer advances and loans 20,109 9,246 CUSTOMER TRANSACTIONS 46,585 32,073 (1) Of which, ACOSS: 100 million as of December 31, (2) Of which, FFR: 11,583 million as of December 31, Note 10 - Debt securities Negotiable medium-term notes 220 1,302 Other negotiable debt securities 1,060 Accrued interest 4 5 Interbank and negotiable debt securities 1,284 1,307 DEBT SECURITIES 1,284 1,307 Note 11 - Accruals, deferrals and other liabilities Deferred income 11 1 Accrued charges Currency and forward financial instrument adjustment accounts 4 39 Collection accounts (1) 302 Other (1) Accruals and deferrals Premiums on sale of options Securities on loan (2) 11,919 8,884 Miscellaneous payables Settlement accounts on securities transactions 1,266 Accrued interest (4) Other liabilities 12,547 10,776 ACCRUALS, DEFERRALS AND OTHER LIABILITIES 12,660 11,733 (1) Difference in the type of accruals accounts related to the migration to a new accounting application. (2) Of which, loan from the DFE of 11,892 million (see Note 3A). 71

73 CENTRAL SECTOR Note 12 - Provisions for risks and charges Reversals Reversals (Euro millions) Charges used not used Other Public-interest programs Provisions for retirement and other employment-related charges (1) Provisions for real estate risks (2) Provisions for default risks (9) (33) 86 Provisions for deferred taxes 530 (4) 526 Other provisions for risks and charges (9) (26) 76 Of which, framework agreement 63 (18) 45 Of which, risks on long-term equity holdings (1) 26 Other 19 2 (9) (7) 5 PROVISIONS FOR RISKS AND CHARGES (22) (59) (1) Provisions relating to the Collective Bargaining Agreement. They comprise: retirement provisions for personnel aged below 60 ( 21 million) and long-service awards ( 9 million). The net charge for the year comprises 8 million for retirement provisions and 4 million for long-service awards. (2) 14 million of provisions for major repairs were charged directly to the opening balance of retained earnings. Note 13 - Changes in retained earnings Fund for Regulatory general provisions Other Income banking General Revaluation and investment retained for the Retained (Euro millions) risks reserve reserve subsidies earnings year earnings Retained earnings as of December 31, , ,283 10,535 Appropriation of 2001 earnings (1,283) 0 Distribution in 2002 of 2001 earnings (909) (909) Other (259) (16) (15) (290) 2002 earnings Retained earnings as of December 31, , ,856 Appropriation of 2002 earnings (520) 0 Distribution in 2003 of 2002 earnings (264) (264) Other (2) (10) (12) 2003 earnings (82) RETAINED EARNINGS AS OF DECEMBER 31, , ,472 Dividends paid in 2003 in respect of 2002 earnings were calculated on the basis of the 346 million contribution to income from mandatory deposits. The amount actually paid to the government totaled 264 million. The balance of 82 million corresponded to the indemnification related to the Sagitrans loan, which was guaranteed by the State. The 10 million remaining change to other retained earnings represents the constitution of a provision for major repairs in respect of 2002 ( 14 million) and a net 4 million adjustment relating to indexed OATs for 2002 (including tax of 2 million). 72 /// 2003 Annual Report Caisse des Dépôts Group

74 Note 14 A) ADVANCES AND LOANS TO FINANCIAL INSTITUTIONS Gross Gross Provisions performing doubtful deducted (Euro millions) loans loans from assets Total France 8, (13) 8,457 Breakdown by geographic region 8, (13) 8,457 3 months or less 6, (13) 6,864 3 months to 1 year to 5 years More than 5 years 8 8 Breakdown by term to maturity 8, (13) 8,457 Provisions constituted (13) (13) PROVISIONS DEDUCTED FROM ASSETS 0 (13) 0 (13) B) ADVANCES AND LOANS TO CUSTOMERS Gross Gross Gross Provisions performing non-performing irrecoverable deducted (Euro millions) loans loans loans from assets Total France 16, (101) 16,624 Breakdown by geographic region 16, (101) 16,624 3 months or less 1, (63) 1,356 3 months to 1 year 13, ,729 1 to 5 years (9) 776 More than 5 years (29) 763 Breakdown by term to maturity 16, (101) 16,624 Sovereign 14,757 14,757 Local governments 94 7 (2) 99 Insurance and reinsurance Other financial institutions Corporate (32) 696 Small businesses and professionals (3) 192 Private individuals (64) 811 Breakdown by sector 16, (101) 16,624 Provisions constituted (51) (51) Charges (36) (1) (37) Provision reversals not utilized Reclassification from non-performing to irrecoverable 83 (83) 0 Reclassification of provisions on miscellaneous assets as provisions for other customer transactions (23) (23) PROVISIONS DEDUCTED FROM ASSETS 0 (20) (81) 0 (101) Amounts written off (12) (12) 73

75 CENTRAL SECTOR Note 14 (cont.) C) FIXED INCOME SECURITIES (AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES) Gross Gross Provisions performing doubtful deducted (Euro millions) receivables receivables from assets Total Euro 35,939 (7) 35,932 U.S. dollar Pound sterling Breakdown by currency 36,101 0 (7) 36,094 3 months or less 19, ,432 3 months to 1 year 3, ,171 1 to 5 years 7,737 (1) 7,736 More than 5 years 5,761 (6) 5,755 Breakdown by term to maturity 36,101 0 (7) 36,094 Provisions constituted 0 (11) (11) Charges (1) (1) Provision reversals not utilized 6 6 Reclassification (1) (1) PROVISIONS DEDUCTED FROM ASSETS 0 (7) 0 (7) Note 15 A) BALANCE SHEET ITEMS BY CURRENCY U.S. Pound Total (Euro millions) Euro dollar sterling Other ASSETS Advances and loans to financial institutions 7, ,457 Advances and loans to customers 16,624 16,624 Trading securities Public-sector securities and similar 11,893 11,893 Bonds and other fixed income securities Available-for-sale securities Public-sector securities and similar Bonds and other fixed income securities 21, ,620 Held-to-maturity securities Public-sector securities and similar 5,686 5,686 Bonds and other fixed income securities 8, ,437 LIABILITIES Advances and loans from financial institutions 21, ,902 Customer deposits and advances 46, ,585 Debt securities Bonds Other fixed income securities 1,284 1, /// 2003 Annual Report Caisse des Dépôts Group

76 Note 15 (cont.) B) BALANCE SHEET ITEMS BY TERM TO MATURITY 3 months 3 months 1 to More than Total (Euro millions) or less to 1 year 5 years 5 years ASSETS Advances and loans to financial institutions 6, ,457 Advances and loans to customers 1,356 13, ,624 Available-for-sale securities Public-sector securities and similar Bonds and other fixed income securities 18,772 1, ,620 Held-to-maturity securities Public-sector securities and similar , ,686 Bonds and other fixed income securities ,583 4,507 8,437 LIABILITIES Advances and loans from financial institutions 4,365 17, ,902 Customer deposits and advances 39,754 5, ,185 46,585 Debt securities Other fixed income securities 1,284 1,284 Note 16 - Off-balance sheet commitments relative to spot and forward foreign currency transactions and to the lending and borrowing of foreign currencies Spot transactions Euros purchased to be received 4 Foreign currencies purchased to be received 2 Euros sold to be delivered 2 Foreign currencies sold to be delivered 4 Forward transactions Euros to be received against foreign currencies to be delivered Euros to be received 1, Foreign currencies to be delivered 1,569 1,899 Foreign currencies to be received against euros to be delivered Foreign currencies to be received 736 1,100 Euros to be delivered Foreign currencies to be received against foreign currencies to be delivered 417 Foreign currencies to be delivered against foreign currencies to be received 854 Unaccrued premiums/discounts To be received 3 5 To be paid

77 CENTRAL SECTOR Note 17 - Forward financial instruments Cash/ Transaction hedge Purchase/ Sale/ Purchase/ Sale/ (Euro millions) borrowing loan borrowing loan FUTURES TRANSACTIONS Organized markets Interest rate contracts 108 Over-the-counter markets Interest rate swaps (1) 39,030 18,987 OPTIONS Organized markets Interest rate options Over-the-counter markets Caps, floors 1,830 1, Swaptions Other options (1) For the most part, these transactions mirror transactions contributed to CDC Ixis. Note 18 - Credit risks SIGNATURE RISKS Gross (Euro millions) performing loans Total France 8,330 8,330 Breakdown by geographic region 8,330 8,330 FORWARD FINANCIAL INSTRUMENTS (OVER-THE-COUNTER TRANSACTIONS) Gross (Euro millions) performing loans Total France 64,202 64,202 Breakdown by geographic region 64,202 64, /// 2003 Annual Report Caisse des Dépôts Group

78 Note 19 A) FORWARD FINANCIAL INSTRUMENTS BY CURRENCY U.S. Pound Total (Euro millions) Euro dollar sterling Other FUTURES TRANSACTIONS Interest rate contracts (73) Interest rate swaps 50, ,654 58,017 OPTIONS Interest rate options Caps, floors 3, ,356 Swaptions 1, ,526 Other options B) FORWARD FINANCIAL INSTRUMENTS BY TERM TO MATURITY months 3 months 1 to More than (Euro millions) or less to 1 year 5 years 5 years Total FUTURES TRANSACTIONS Interest rate contracts Interest rate swaps 58,017 58,017 OPTIONS Interest rate options Caps, floors 218 1,307 2, ,356 Swaptions ,526 Other options Note 20 - Interest and similar revenues and expenses on Treasury and interbank transactions Interest on central bank and post office bank accounts Interest on current account advances Interest on other loans and securities purchased under uncollateralized fixed resale agreements Interest on securities purchased under collateralized fixed resale agreements Premium/discount income Other interest and similar income INTEREST AND SIMILAR REVENUES ON TREASURY AND INTERBANK TRANSACTIONS Interest on current accounts (50) (132) Interest on loans and securities sold under uncollateralized fixed repurchase agreements (9) (51) Interest on securities sold under collateralized fixed repurchase agreements (335) (545) Premium/discount expenses (6) (48) Other interest and similar expenses (6) (14) INTEREST AND SIMILAR EXPENSES ON TREASURY AND INTERBANK TRANSACTIONS (406) (790) 77

79 CENTRAL SECTOR Note 21 - Interest and similar revenues and expenses on customer transactions Interest on overdrafts Interest on loans to customers Interest on cash advances 5 6 Interest on loans for infrastructure projects Interest on loans for housing projects Interest on other loans to customers Interest on other loans and securities purchased under uncollateralized fixed resale agreements 14 5 Other interest and similar income 5 35 Doubtful interest receivables 1 INTEREST AND SIMILAR REVENUES ON CUSTOMER TRANSACTIONS Interest on current accounts (239) (312) Interest on escrow accounts ( consignations ) (35) (39) Interest on term deposits, borrowings and securities sold under uncollateralized fixed repurchase agreements (220) (183) Interest on securities sold under collateralized fixed repurchase agreements (14) (1) Other interest and similar expenses (2) (1) INTEREST AND SIMILAR EXPENSES ON CUSTOMER TRANSACTIONS (510) (536) Note 22 - Revenues from securities portfolios Interest and similar revenues from available-for-sale securities Public-sector securities Bonds Other fixed income securities Interest and similar revenues from held-to-maturity securities Public-sector securities Bonds Other fixed income securities INTEREST AND SIMILAR REVENUES FROM BONDS AND OTHER FIXED INCOME SECURITIES 1,255 1,337 Revenues from available-for-sale securities Equities 7 9 Mutual funds Revenues from portfolio securities Revenues from long-term equity holdings REVENUES FROM VARIABLE INCOME SECURITIES Note 23 - Interest and similar expenses on bonds and other fixed income securities Interest on negotiable certificates of deposit (1) (1) Interest on negotiable medium-term notes (42) (53) Interest and expenses on bonds (7) (2) Other interest expenses (2) (103) INTEREST AND SIMILAR EXPENSES ON BONDS AND OTHER FIXED INCOME SECURITIES (49) (159) (1) Following the Cèdre migration, 52 million was reclassified from interest on certificates of deposit to interest on medium-term notes. (2) Reclassification of interest on micro-hedge swaps as other interest and similar expenses. 78 /// 2003 Annual Report Caisse des Dépôts Group

80 Note 24 - Commissions revenues and expenses (Euro millions) Revenues Expenses Revenues Expenses Customer transactions 3 3 Securities transactions (20) (12) Financial services and other 13 (20) 25 (26) COMMISSIONS 16 (40) 28 (38) (24) (10) Note 25 - Gains or losses on trading security transactions Net gains (losses) on trading securities (8) Net gains (losses) on foreign currency instruments (1) 31 (33) Net gains (losses) on financial instruments (32) (58) GAINS OR LOSSES ON TRADING SECURITY TRANSACTIONS (1) (99) (1) Of which 23 million foreign currency gain relating to prior years. Note 26 - Gains or losses on available-for-sale and portfolio security transactions Net gains (losses) on the sale of available-for-sale securities 25 (156) Other income and expenses on available-for-sale securities (3) (9) Provisions taken/reversed on available-for-sale securities 133 (31) Gains (losses) on available-for-sale securities 155 (196) Net gains (losses) on the sale of portfolio securities Provisions taken/reversed on portfolio securities 119 (928) Gains (losses) on portfolio security transactions 314 (321) GAINS (LOSSES) ON AVAILABLE-FOR-SALE AND PORTFOLIO SECURITY TRANSACTIONS 469 (517) Note 27 - Other net operating banking revenues and expenses (Euro millions) Revenues Expenses Revenues Expenses Gains and losses on disposal of investment properties 3 2 (2) Amortization and provision charges/reversals on investment properties 5 (20) 5 (8) Income and expenses on investment properties 103 (39) 60 (40) Total revenues and expenses on investment properties 111 (59) 67 (50) Public-interest programs (43) (16) Provisions taken/reversed on public-interest programs 1 Total revenues and expenses on public-interest programs (43) 1 (16) Expenses rebilled, revenues retroceded and expenses transferred 1 2 Agent commissions (81) (87) Other operating income and expenses 52 (54) 20 (29) Provision charges and reversals on other operating income and expenses 1 1 Other operating income and expenses 54 (135) 23 (116) OTHER OPERATING BANKING REVENUES AND EXPENSES 165 (237) 91 (182) NET OPERATING BANKING REVENUES AND EXPENSES (72) (91) 79

81 CENTRAL SECTOR Note 28 A) PAYROLL EXPENSES Salaries (242) (272) Retirement expenses and related provision charges and reversals (1) (53) 37 Other employee-related expenses (1) (66) (103) Incentive programs and profit sharing (9) (8) Payroll taxes (35) (32) Provision charges and reversals (2) 18 (21) PAYROLL EXPENSES (387) (399) (1) Retirement expenses as of December 31, 2003 of public and private sector personnel totaled 41 million and the net charge to provisions totaled 12 million, comprising 8 million for retirement indemnities for private sector personnel and 4 million for long-service awards (see Note 12). The change between 2003 and 2002 is due mainly to: the reclassification of retirement expenses ( 42 million), recorded under other employee-related expenses in 2002; reversal of a 41 million provision as of December 31, 2002 linked to reconsideration of the methods of calculation. (2) Of which 18 million provision reversal in connection with the framework agreement (see Note 12). B) STAFF EMPLOYED Average number of management staff 1,750 1,646 Of which, public sector Of which, private sector 1,106 1,006 Average number of non-management staff 4,502 4,570 Of which, public sector 4,334 4,378 Of which, private sector TOTAL AVERAGE NUMBER OF STAFF 6,252 6,216 Number of management staff at year-end 1,778 1,687 Of which, public sector Of which, private sector 1,140 1,052 Number of non-management staff at year-end 4,446 4,582 Of which, public sector 4,283 4,395 Of which, private sector TOTAL NUMBER OF STAFF AT YEAR END 6,224 6, /// 2003 Annual Report Caisse des Dépôts Group

82 Note 29 - Net amortization, depreciation and provisions on tangible and intangible fixed assets Depreciation of operating fixed assets (47) (43) Net depreciation of operating fixed assets (47) (43) Provisions against operating fixed assets (1) Net provisions against operating fixed assets (1) NET AMORTIZATION, DEPRECIATION AND PROVISIONS ON TANGIBLE AND INTANGIBLE FIXED ASSETS (48) (43) Note 30 - Cost of risk (net appropriations to provisions) Provision charges in respect of Impairment of receivables (39) (37) Signature risk (4) (7) Default risk (38) (19) Other risks (1) PROVISION CHARGES (81) (64) Reversals of provisions in respect of Impairment of receivables Signature risk Default risk REVERSALS OF PROVISIONS Losses on irrecoverable receivables and recoveries (20) (11) LOSSES AND RECOVERIES (20) (11) COST OF RISK (NET APPROPRIATIONS TO PROVISIONS) (47) (31) Note 31 - Gains and losses on fixed assets Gains (losses) on disposals of tangible and intangible fixed assets (1) GAINS (LOSSES) ON DISPOSALS OF OPERATING FIXED ASSETS (1) Gains (losses) on transactions concerning long-term equity holdings and advances (31) 62 Gains (losses) on disposals of long-term equity holdings and advances (13) (10) Provision charges and reversals on long-term equity holdings and advances (18) 72 Net gain (loss) on transactions concerning held-to-maturity and other long-term securities 1 (6) Gains (losses) on disposals of held-to-maturity and other long-term securities 1 (6) GAINS (LOSSES) ON TRANSACTIONS CONCERNING LONG-TERM EQUITY HOLDINGS AND OTHER LONG-TERM SECURITIES (30) 56 GAINS AND LOSSES ON FIXED ASSETS (30) 55 81

83 CENTRAL SECTOR Note 32 - Income tax Contribution representative of corporate income tax (230) (131) Deferred taxes 3 14 TAX CHARGE (227) (117) Note 33 - Movement in fund for general banking risks and regulatory provisions Net charge to/writeback from fund for general banking risks 259 Net charge to/writeback from regulatory provisions 2 16 MOVEMENT IN FUND FOR GENERAL BANKING RISKS AND REGULATORY PROVISIONS Note 34 a) Guarantee given by Caisse des Dépôts et Consignations to CDC IXIS Since December 1, 2000, some of the transactions carried out by CDC IXIS have been covered by a joint guarantee from Caisse des Dépôts et Consignations. The transactions concerned are, first of all, transactions on financial instruments, including the issuing of such instruments, with the exception of subordinated issues, and interbank and Treasury transactions, as well as various types of guarantee commitments (endorsements, sureties and other guarantees). Under the terms of the agreement, CDC IXIS can in turn give guarantees to certain of its subsidiaries under certain conditions. In accordance with the agreement signed with the European Commission in May 2003, this guarantee will expire on January 23, Since April 1, 2003, balance sheet commitments that reach maturity after January 23, 2017 are no longer guaranteed. As from January 23, 2004, off-balance sheet items that reach maturity after January 23, 2017 will no longer be guaranteed. Effective April 1, 2003, the payment on the guarantee is the highest of the following three amounts: a) an amount based on the ratio, on a consolidated basis, between capital at risk and Tier 1 capital, as defined for capital adequacy purposes; b) the amount of total financial instruments outstanding issued by CDC IXIS multiplied by the difference, at the time of issue, between compensation paid on financial instruments of comparable maturity by financial institutions with the same rating as CDC IXIS (without guarantee) and the compensation paid on such instruments by financial institutions enjoying the same rating as CDC IXIS and guaranteed; c) 8 million. In 2003, compensation due by CDC IXIS to Caisse des Dépôts amounted to 10.2 million. b) Sanpaolo IMI (SP IMI) commitment Caisse des Dépôts Group and Sanpaolo IMI have signed an agreement that expresses their intention to create a lasting strategic partnership. Along with this agreement, the two groups acquired crossholdings. In that context, Caisse des Dépôts granted Sanpaolo IMI two options to purchase CDC IXIS shares, the first in the event of a change in CDC IXIS s controlling ownership, the second, which includes a liquidity commitment, in the event that the shares are not listed on an organized European market. In addition, Caisse des Dépôts has an option to buy CDC IXIS shares owned by Sanpaolo IMI, which can be exercised in the event of a change in the controlling interest in Sanpaolo IMI. These commitments expire in The sale price of the shares in the event the options are exercised shall be determined by expert financial appraisals. c) Guarantee granted in respect of CDC Holding Finance (CDC HF) Caisse des Dépôts has given an undertaking to ensure that CDC Holding Finance will be able to fulfill its commitments as part of the reciprocal guarantees signed by CDC HF and CNCE at the time of the Alliance transaction, in the event it should be called upon to do so. 82 /// 2003 Annual Report Caisse des Dépôts Group

84 Auditors report on the financial statements of the Central Sector Year ended December 31, 2003 This is a free translation into English of the statutory auditors report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Chief Executive Officer, In accordance with the assignment entrusted to us, we have audited the accompanying financial statements of the Central Sector of Caisse des Dépôts et Consignations for the year ended December 31, These financial statements have been approved by you. Our role is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the professional standards applied in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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. In our opinion, the financial statements give a true and fair view of the results of the Central Sector for the year ended December 31, 2003 as well as of its assets, liabilities and financial position at that date, in accordance with French accounting regulations and generally accepted accounting principles. Without qualifying our opinion set out above, we draw your attention to the note to the financial statements entitled Accounting principles used in preparing the financial statements, which describes the changes in accounting methods resulting from the application of CRC Standard relating to the accounting treatment of credit risk and CRC Standard relating to asset depreciation, amortization and impairment; as well as the change in accounting method applicable to recognizing gains and losses on the indexing of inflation-indexed OATs. Paris and La Défense, April 15, 2004 The Auditors PricewaterhouseCoopers Audit Mazars & Guérard Gérard Hautefeuille Guillaume Potel Denis Grison 83

85 SAVINGS FUNDS Introductory note The activities of Caisse des Dépôts et Consignations comprise two main missions: the direct business of the Central Sector the financial and administrative entity of Caisse des Dépôts and of the subsidiaries and long-term equity interests attached to it, notably the CDC IXIS, C3D and CNP groups; the management of the funds entrusted to Caisse des Dépôts: the accounting structure of Caisse des Dépôts reflects the nature of the relationship existing between the public institution and these funds. A series of legal, regulatory and contractual provisions defines the nature of the services provided by Caisse des Dépôts et consignations and their remuneration. The regulations governing the savings funds are contained for the most part in the Caisses d Epargne Code and the Monetary and Finance Code. The administration of the savings funds is largely determined by the practical implementation of these regulations, particularly because the funds are not established as separate legal entities; revenues must in some cases be identified separately; and state guarantees may apply to certain deposits. The accounting systems used make it possible to identify each fund s resources, their uses and the earnings generated. Therefore, a balance sheet, an income statement and a statement of off-balance sheet commitments are drawn up for each fund. This section presents the financial statements relating to the savings funds centralized by Caisse des Dépôts. These include deposits taken on the Livret A and LEP passbook accounts and CODEVI accounts of Caisses d Epargne, the Livret Bleu passbook accounts of Crédit Mutuel, the LEP passbook accounts and Codevi accounts of banks and the deposits collected by La Poste (Livret A, Livret B, PEP, LEP, CODEVI, CNE home-purchase savings plans and Livret Jeunes passbook accounts). 84 /// 2003 Annual Report Caisse des Dépôts Group

86 Balance sheet of savings funds centralized by Caisse des Dépôts (Euro millions) Note ASSETS Public-sector securities and similar 3 72,026 66,469 Interbank and Treasury transactions 1 1,622 2,340 Ordinary accounts 1,388 1,667 Other amounts due by financial institutions Financing transactions 2 111, ,530 Infrastructure loans 4,791 5,989 Housing loans 85,208 85,239 Other loans 21,795 20,302 Bonds and other fixed income securities 3 40,327 40,801 Equities and other variable income securities 3 5,982 5,220 Long-term equity holdings and other long-term investments Tangible fixed assets Accruals, deferrals and other assets TOTAL ASSETS/LIABILITIES 231, ,696 LIABILITIES Interbank and Treasury transactions 7 1,706 5,149 Term loans 1,706 5,149 Savings deposits centralized with Caisse des Dépôts 8 217, ,247 Deposits 211, ,275 Livrets A and B 111, ,049 Livret d Epargne Populaire 46,018 42,612 Livret Jeunes 1, CODEVI 8,329 7,644 Home-purchase savings 28,387 26,402 PEP CNE 1,069 1,054 Livret Bleu 15,108 14,557 Accrued interest on deposits 5,894 5,946 Withholding on interest payable to depositors Accruals, deferrals and other liabilities Provisions for risks and charges 10 1,475 1,426 Subsidies 11 1,752 1,763 Fund for general banking risks (FGBR) 12 2,908 2,600 Retained earnings (excluding FGBR) 13 5,632 5,992 Ordinary retained earnings 4,500 5,465 Unappropriated earnings 1,

87 SAVINGS FUNDS Breakdown of the balance sheet of savings funds centralized by Caisse des Dépôts as of December 31, 2003 Livret A Livrets (Euro millions) CEP FRGCE A and B CNE FRGCNE LEP ASSETS Public-sector securities and similar 15, , ,732 Interbank and Treasury transactions , Ordinary accounts Other amounts due by financial institutions Financing transactions 51, , ,654 Infrastructure loans 2, , Housing loans 47,711 31,922 5,345 Other loans 1, Bonds and other fixed income securities 11, , ,500 Equities and other variable income securities 2,917 1,951 1,114 Long-term equity holdings and other long-term investments 1 Tangible fixed assets 4 Accruals, deferrals and other assets TOTAL ASSETS/LIABILITIES 81,602 1,522 58,894 1,293 49,586 LIABILITIES Interbank and Treasury transactions 3, , Term loans Other amounts due to financial institutions 2, , Savings deposits centralized with Caisse des Dépôts 74,688 55,263 47,732 Deposits 72,970 53,993 46,018 Accrued interest on deposits 1,718 1,258 1,714 Withholding on interest payable to depositors 12 Accruals, deferrals and other liabilities Provisions for risks and charges Subsidies 1, Fund for general banking risks (FGBR) Retained earnings (excluding FGBR) 732 1, (35) Ordinary retained earnings 38 1, Unappropriated earnings 694 (2) (41) 86 /// 2003 Annual Report Caisse des Dépôts Group

88 CNE LEP Home- Other reserve Livret purchase savings Combined Inter-fund Consolidated funds Jeunes CODEVI savings PEP CNE funds total financing total , ,026 72, ,010 1, ,911 5,289 1,622 (1) 26 (37) 32 (1) 26 1,388 1, ,047 1, ,523 5, ,951 15, , ,794 4,791 4, , ,208 4,951 15,487 21,795 21, ,872 5, ,327 40,327 5,982 5, ,122 8,718 30,926 1,161 1, ,445 5, , ,995 5,289 1,706 1,706 1, ,289 5,289 1,056 8,578 29,284 1, , ,707 1,015 8,329 28,387 1, , , ,894 5, ,147 (328) 1,475 2, , ,908 2, ,438 5, , ,332 4, , (27) (4) ,092 (40) 1,132 87

89 SAVINGS FUNDS Off-balance sheet commitments of savings funds centralized by Caisse des Dépôts, as of December 31, 2003 (Euro millions) Note Commitments given in respect of financing, guarantees and securities 16 A 9,298 6,748 Financing commitments 8,910 6,710 Offers of loans 4,188 2,709 Housing loans 4,188 2,709 Undertakings to provide loans 2,352 1,914 Housing loans 2,031 1,884 Other loans Loans agreed not disbursed 2,370 2,087 Housing loans 1,621 1,474 Home-purchase loans Guarantee commitments Securities pledged as guarantees 350 Other guarantees given Commitments received in respect of financing, guarantees and securities 76, Guarantee commitments 76, Guarantees received from the State 1, Guarantees received from financial institutions 3,560 Other guarantees received 71,697 Commitments received in respect of securities Securities to be received Other commitments given and received Other commitments given 2 Real estate sales commitments 2 Other commitments received Subsidies to be received on PLA loans Commitments given and received in respect of financial instruments 16 B Commitments given 6,082 5,390 Futures 6,082 5,390 Commitments received 6,702 5,472 Futures 6,082 5,390 Options /// 2003 Annual Report Caisse des Dépôts Group

90 Breakdown of off-balance sheet commitments of savings funds centralized by Caisse des Dépôts, as of December 31, 2003 CNE Livrets Home- Other Livret A A and B purchase PEP savings Combined (Euro millions) CEP FRGCE CNE LEP CODEVI savings CNE funds total Commitments given in respect of financing, guarantees and securities 5,273 2, ,298 Financing commitments 5,273 2, ,910 Offers of loans 3, ,188 Housing loans 3, ,188 Undertakings to provide loans 1, ,352 Housing loans 1, ,031 Other loans Loans agreed not disbursed ,370 Housing loans ,621 Home-purchase loans Guarantee commitments Securities given as guarantees Other guarantees given Commitments received in respect of financing, guarantees and securities 44, ,589 2, ,339 Guarantee commitments 44, ,566 2, ,265 Guarantee commitments received from the State ,008 Guarantee commitments received from financial institutions 2,352 1, ,560 Other guarantee commitments received 42,114 27,400 2,183 71,697 Commitments received in respect of securities Securities to be received Other commitments given and received Other commitments given 2 2 Real estate sales commitments 2 2 Other commitments received Subsidies to be received on PLA loans Commitments given and received in respect of financial instruments Commitments given 1, , ,082 Futures 1, , ,082 Commitments received 1, , ,702 Futures 1, , ,082 Options

91 SAVINGS FUNDS Income statement of savings funds centralized by Caisse des Dépôts, as of December 31, 2003 (Euro millions) Note Interest and similar income 18 9,705 10,062 Treasury and interbank transactions Financing transactions 4,988 5,108 Fixed income transactions 4,580 4,763 Interest and similar expenses 19 (7,276) (7,313) Treasury and interbank transactions (392) (346) Deposits (6,884) (6,967) Revenues from variable income securities Net commissions 21 (2,347) (2,161) Payments to centralizing networks (2,169) (1,992) Other commissions (178) (169) Gains or losses on trading securities 2 (1) Foreign currency transactions 2 (1) Gains or losses on available-for-sale securities 22 1,299 (517) Available-for-sale securities Provisions net of reversals 559 (1,126) OTHER NET OPERATING BANKING REVENUES AND EXPENSES NET BANKING INCOME 1, General and administrative expenses 24 (86) (88) GROSS INCOME FROM OPERATIONS 1, Cost of risk (net appropriation to provisions) 25 (33) 112 Provision charges net of reversals on non-performing loans Provisions for risks and charges net of reversals (49) (67) Charges covered by a provision (1) Gains or losses on irrecoverable debts (1) NET INCOME FROM OPERATIONS 1, Net movement in the FGBR 26 (307) 245 NET INCOME 1, /// 2003 Annual Report Caisse des Dépôts Group

92 Notes to the financial statements I - Highlights for the year 1 - Early repayment of savings fund loans to CDC IXIS The loans acquired from CGLLS were repaid early, effective June 25, These loans corresponded to the refinancing of the former CGLS (Caisse de Garantie du Logement Social): the savings funds initially sold these loans to CAR (Caisse Autonome de Refinancement) between 1988 and 1993; the savings funds then took over the loans as part of the acquisition of CGLS s financing business in 1996 (the savings funds assumed CGLS s loans to CAR as debt); they were then converted to loans to CDC IXIS when CAR was merged into CDC IXIS in The early repayment of these loans was warranted by financially and economically favorable conditions for the savings funds, which used a portion of their significant surplus cash. In addition, this transaction, which required the agreement of both parties, was made at a rate that reflects the creditworthiness of the savings funds and enables them to improve their future earnings by eliminating the related interest expense. The loans were acquired in 1996 with a yield to maturity of 5.46%, and therefore included a premium, which was taken to the income statement over the term of the loans. The residual premium on the loans at the time of their repayment was 260 million, the outstanding balance was 2,804 million and accrued interest totaled 105 million. Under an agreement with the counterparty, the repayment value was calculated on the basis of future payments (packaged with the swaps entered into between the savings funds and CAR between 1988 and 1993 such that the loan and swap package sold corresponds to an asset at a fixed rate equal to the rate at the time of the sale). The difference between this repayment value and the book value totaled 435 million. After writing back the premium, the net expense in 2003 totaled 252 million (see Note 19). 2 - Changes in accounting methods Credit risk CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the Comité de la réglementation bancaire et financière CRBF (French Banking and Finance Regulations Committee) took effect on January 1, Some application methods for this CRC Standard were set forth in the CNC s November 21, 2003 statement on accounting for loans restructured at non-market conditions and in Opinion 2003-G issued by the CNC Urgent Issues Task Force on December 18, 2003 concerning methods for reclassifying nonperforming loans to irrecoverable loans. Credit risk can be defined as the potential loss arising from the failure by a counterparty to fulfill its obligations. The credit risk arises once it becomes likely that the bank will not receive part or all of the amounts due under the contract, notwithstanding the existence of guarantees and security deposits. This standard applies to all credit-risk-bearing commitments: loans to financial institutions and customers, signature commitments, fixed income securities (in the available-for-sale or held-to-maturity portfolios) and forward instruments traded over the counter that have a positive market value. Loans Loans are classified as non-performing once the credit risk arises, and in any event no later than three months after payments are past due (six months for real estate loans and nine months for loans to local governments). Similarly, once a loan for a given counterparty is classified as non-performing, all loans to that counterparty are classified as non-performing under the contagion principle. For groups of companies, the contagion principle is applied selectively. The non-performing loans category includes irrecoverable loans. These include loans in default and some loans that have been classified as non-performing for more than one year. CNC Opinion 2003-G of December 18, 2003 clarified the terms under which a non-performing loan should be reclassified as an irrecoverable loan, in particular for loans that have been classified as non-performing for more than one year. 91

93 SAVINGS FUNDS Non-performing loans are classified as irrecoverable when they require the establishment of a provision and when it is likely that the loan will be ultimately written off. This analysis must be made while taking existing guarantees on these loans into account. Non-performing loans and irrecoverable loans may be reclassified as performing loans when payments have resumed in a steady fashion for the amounts corresponding to the original contractual payment schedule and once the counterparty no longer presents a default risk. They may also be classified as restructured loans if debt has been rescheduled and following a waiting period. For loans with credit risk exposure, provisions are established to cover all projected losses on loans classified as non-performing or irrecoverable. A full provision is established on all outstanding, accrued and unpaid interest. Once the loan is deemed to be definitively irrecoverable, a loss is recorded. Restructured loans at non-market conditions are broken out separately, where applicable, in a specific sub-category for performing loans. At the time of the restructuring, the loan is recorded at nominal value less a discount corresponding to the amount of forfeited interest. This interest differential will be taken into account in determining the lending margin on the loans concerned. All restructured loans are immediately reclassified as irrecoverable once the borrower fails to make scheduled payments. The loans made by the savings funds are almost always guaranteed in full by local governments or the French State. On December 31, 2003, however, a 9 million loan was classified as irrecoverable (see Note 14: Credit risk on financing transactions). There were no material restructured loans at non-market conditions as of December 31, 2003, and no interest differential was therefore calculated to be taken into account for lending margin purposes. Securities and futures The accounting principles and methods of CRC Standard of December 12, 2002 dealing with the accounting treatment of credit risk for companies governed by the CRBF, described above for loans, also apply to fixed income securities and contracts traded on over-the-counter markets. As of December 31, 2003, there was no default risk on fixed income securities and contracts traded on the over-the-counter markets held by the savings funds, nor were any of these securities classified as non-performing (see Note 15: Credit risk on fixed-income securities). Inflation-indexed OATs In the absence of specific regulations for credit institutions, the indexing effects on the face value of inflation-indexed OATs may be recorded at the time the bond is sold or reaches maturity, spread over the bond s term to maturity or entered as income or expense for the period. In previous years, the method used was indexation of the face value at the time the OAT was sold or reached maturity. Beginning with the year ended December 31, 2003, Caisse des Dépôts decided to use the example of the accounting method prescribed by Article R of the Insurance Code, as amended by decree No of December 24, 2002, and to enter gains or losses related to the indexing of the face value of the bonds to the consumer price index as income or expenses for the year. This change in accounting method increased opening retained earnings as of January 1, 2003 by 58 million (see Note 13-A). 3 - Taxation of home-purchase savings plans and accounts Consistency audits have revealed that La Poste had received excess fees on home-purchase savings plans and accounts (PEL and CEL) from 1998 to In 2002, an external audit conducted by La Poste and Caisse des Dépôts confirmed the existence of overcharges in 2001 and previous years and determined their exact amount. Following the submission of this audit report, Caisse des Dépôts asked La Poste to reimburse the sums concerned, which were recorded as receivables of 122 million in the 2002 financial statements. In early July 2003, La Poste paid the amounts due. 4 - Divestment of securities that do not conform with the Investment Code Some held-to-maturity portfolio securities were sold in order to comply with the new Investment Code implemented by the Ministry of the Economy, Finance and Industry in a letter dated February 18, As of December 31, 2003, the book value of the divested securities totaled 457 million, and their sale generated a capital gain of 50 million. 5 - Administration of home-purchase savings with La Poste In accordance with the recommendations of the Noyer-Nasse report, efforts were undertaken to establish a new division of responsibilities between La Poste and Caisse des Dépôts for Income from home-purchase savings plans will be attributed to La Poste in substitution for the current collection and distribution fees. The new administration agreement will apply as of January 1, /// 2003 Annual Report Caisse des Dépôts Group

94 II - Accounting policies and methods The financial statements have been prepared in accordance with generally accepted accounting principles in France and specific regulations applicable to financial institutions. 1 - Fixed assets and long-term equity holdings Fixed assets are valued at cost. In the case of buildings, the cost of initial fixtures, fittings and installations may be added to the acquisition cost. The asset represented by property built on land belonging to a third party and made available under a capital lease is depreciated over eighteen years, which corresponds to the term of the lease. A provision for impairment is recorded in respect of land holdings when there is a lasting decrease in their value. Investments in non-trading real estate investment companies are recorded at cost. Provisions for impairment are recorded when there is a lasting decrease in value determined by reference to the companies net asset value. The application of CRC Standard of December 12, 2002 related to asset depreciation, amortization and impairment had no material impact on the savings funds. 2 - Loans and borrowings Loans Loans are recorded at their redemption value. Loans are now accounted for in accordance with the principles of CRC Standard of December 12, 2002 dealing with credit risk for companies governed by the CRBF, which took effect January 1, 2003 and whose application was further complemented by various opinions of the Urgent Issues Task Force and a statement by the CNC. These accounting principles and methods are presented above (see I-2 Notes to the financial statements). Certain loans are repayable in increasing annual installments, resulting in cumulative differences between interest accrued and interest payable. These differences are recorded as accrued interest, which is collected gradually over the life of the loan. When a single borrower has both preferred and subordinated debt at the same time, the subordinated debt may be subject to a downgrade and the establishment of a provision, even though, as an exception to the contagion principle, the preferred debt is not downgraded to non-performing loan status. The preferred debt risk is clearly less material than the risk on the subordinated debt. Compensation received when loans are repaid early or rescheduled is credited to income in the year when it is received. Capital gains arising on the transfer of loans between savings funds are eliminated in the accounts of the savings funds centralized by Caisse des Dépôts. When the loans and borrowings of CGLLS and former government loans are assumed by the savings funds, the difference between the transaction value and the book value is recorded as a premium or discount, which is amortized by the yield-to-maturity method over the life of the corresponding loans or borrowings. Provisions for impairment are recorded in respect of premiums on loans with a high risk of being rescheduled or repaid early, since any premium paid when these loans were assumed no longer has any financial substance. The amortization schedule is updated every quarter to reflect loans having given rise to early repayment or rescheduling as well as any changes in interest rates. Borrowings Loans payable are recorded in the balance sheet at redemption value. Interest expense is charged to the income statement on an accruals basis. 3 - Available-for-sale securities The rules for the valuation of available-for-sale securities depend on the category to which they belong. Fixed income securities At the time of purchase, fixed income securities are recorded at face value, with the difference (premium or discount) between cost and face value taken to a separate account. At year end: the premium or discount is recognized in the income statement on a straight-line basis over the remaining life of the security; a provision for impairment is taken on a line-by-line basis in respect of any unrealized loss determined by reference to the mark-to-market value at end-december. Fixed income securities are accounted for on a first-in, first-out (FIFO) basis. Variable income securities Variable income securities are recorded at cost and revalued at year-end and when sold using the weighted average cost method. A provision is taken when weighted average cost exceeds markto-market value at end-december or the future realizable value of commitments received, or the latest redemption value in the case of units in mutual funds. Negotiable debt securities and other interbank securities At the time of purchase, these securities are recorded at face value, with the difference (premium or discount) between cost and face value taken to a separate account. At year-end the premium or discount is recognized in the income statement by the yield-to-maturity method over the remaining life of the security. Provisions are taken by reference to the solvency of the issuer and market indicators. 93

95 SAVINGS FUNDS 4 - Held-to-maturity portfolio This portfolio comprises bonds and negotiable debt instruments acquired with the intention of being held on a long-term basis normally to maturity and for which resources considered to have at least the same maturity have been earmarked. The securities are accounted for in accordance with rules applicable to held-to-maturity portfolios. Therefore: provisions are not taken in respect of unrealized capital losses arising only from increased interest rates; any premium or discount is spread over the remaining life of the security by the yield-to-maturity method for negotiable debt securities and on a straight-line basis for bonds. Securities sold are accounted for on a first-in, first-out (FIFO) basis. 5 - Portfolio securities (TAP) Portfolio securities are investments made on a regular basis with the aim of realizing a capital gain in the medium term but without the intention of investing on a long-term basis in the development of the business or taking an active part in the operational management of the issuing undertaking. These securities are recorded at the lower of cost or fair value. Fair value is determined by taking into account the general economic outlook for the issuer and the remaining period for which the securities will be held. For listed companies, fair value is generally represented by the average listed share price over a sufficiently long period that reduces the impact of sharp price fluctuations over the expected holding period. An impairment provision, based on the fair value, is established for unrealized capital losses, determined by line of securities without offsets with unrealized gains. 6 - Temporary divestment of securities Lending and borrowing of securities Securities lent are recorded on a separate line on the assets side of the balance sheet at their book value in the portfolio from which they were transferred, determined using the last-in, firstout (LIFO) method. At year-end, they are valued in accordance with rules applicable to the portfolios from which they were transferred. Securities borrowed are recorded at their market value on the day they were borrowed, as an asset under trading securities and as a liability representing the amount due to the lender. At year-end, these items are marked to market. Interest arising from lending and borrowing of securities is recognized on an accruals basis. Securities sold (purchased) under collateralized fixed repurchase (resale) agreements Securities sold under collateralized fixed repurchase agreements are maintained in their original portfolio and continue to be valued according to the rules applicable to that portfolio. They are recorded on a separate line under liabilities. Securities received as collateral are recorded under assets, with the entry representing the amount receivable. These securities are not revalued. At year-end, income or charges arising from the above agreements are recognized on an accruals basis. 7 - Public exchange offers The exchange value used to determine the result of share exchange offers corresponds to the average stock market price for the company making the offer, calculated over the period commencing on, but not including, the date of publication of the notice of filing of the offer with the appropriate authorities and ending on, and including, the date of publication of the results of the offer by these same authorities. Prices used are market prices at the close of business each day during the reference period. If several offers are filed in respect of the same securities, the period of reference starts on the date of the first offer. 8 - Off-balance sheet commitments (other than interest rate swaps) Off-balance sheet commitments given relate mainly to loans that have been granted but for which the funds have not yet been disbursed. Off-balance sheet commitments received include State guarantees and securities commitments. Until 2002, commitments received from financial institutions and local governments were not recorded. Effective December 31, 2003, these commitments received in the form of guarantees totaling 75.3 million were recorded as off-balance sheet commitments (see Note 16-A). They involve the bulk of the savings funds outstanding loan volume. 9 - Interest rate swaps Interest rate swaps entered into by the savings funds in order to hedge specific, perfectly identified transactions are reported as off-balance sheet commitments. Income and expenses generated by these instruments are recognized in the income statement symmetrically with the results generated by the hedged item Foreign currency transactions Foreign currency assets and liabilities are translated at the yearend exchange rates. Spot transactions are translated at the spot rate, while forward transactions are translated at the forward rate for the remaining term. 94 /// 2003 Annual Report Caisse des Dépôts Group

96 11 - Provisions for risks and charges Provisions are booked for losses that are certain, resulting from loan programs at rates that are lower than the cost of the related resources: for the LEP program, part of the PLI loans has been refinanced by borrowings and a provision has been recorded to cover the actuarial loss; in the case of loans bearing interest at rates that are lower than the cost of the resources, provisions are booked to cover the actuarial loss. This concerns PLA-TS and urban renewal project loans, loans for emergency housing projects and demolition-reconstruction loans indexed on Livret A rates, as well as PLI loans that are not refinanced by borrowings and PPU loans paid out of LEP funds. The provision for losses relating to all Livret A funds is shared across all funds since resources financing these loans are of the same nature and bear identical interest rates. A provision has also been recorded to cover specific risks related to home-purchase savings products. This risk, which corresponds to the commitment to grant loans at a rate that is set contractually in advance, is currently evaluated on a global basis at 2% of all home-purchase savings deposits at the year-end. As of December 31, 2003, 40 million was allocated to this provision Funds for general banking risks (FGBR) The funds for general banking risks are intended to cover general banking risks inherent to the activity of lending and investing in financial markets. These funds have been constituted by each of the savings funds as a complement to specific provisions recorded by each of them, so as to ensure that they satisfy minimal capital adequacy requirements as laid down in applicable banking regulations for default and market risks. Capital adequacy requirements are covered by regulatory reserves when these exist, and by the FGBR, available reserves, retained earnings and income for the year. The method used to calculate the amount of the FGBR is based on covering the risk as follows: by the establishment of reserves as required by regulations; and then by an allocation to the FGBR, with the risk expressed as the sum of the three components representative of the capital adequacy requirements of each fund: a component that corresponds to the capital adequacy requirement arising from the application of the European solvency ratio, based on the assets of each fund; a second component that corresponds to the capital adequacy requirement to cover market risk, based on the trading assets of each fund; a component for so-called projected risks. The coverage of the available-for-sale portfolio s market risk corresponds, in effect, to the year-end capital adequacy requirements. For management purposes, this requirement may be substantially less than the portfolio s potential exposure to market risks. The FGBR s ex ante component represents the additional capital that corresponds to the difference between the maximum potential and actual exposure. The increase in fund assets under management and the market recovery during the year led to an increase in general risks in A net allocation for the period of 371 million was therefore recorded as of December 31, Following the capital adequacy recommendations of the Noyer- Nasse report, and in anticipation of the upcoming implementation of Basel II, the efforts undertaken by the savings funds in 2003 to cover their capital at risk may need to be complemented by additional measures, in particular to handle the interest rate risk component. Given this need for additional capital based on European solvency ratio and Capital Adequacy Directive calculations, and the desire to strengthen the equity portfolio in 2004, the FGBR component for projected risks was maintained as additional capital. The component related to home-purchase savings ( 64 million) was written back in full, however, due to the transfer of administrative responsibility for this fund was to La Poste (see I-5 Notes to the financial statements ). The agreement scheduled to take effect on January 1, 2004 does not include this component in the savings funds initial equity capital allocation. III - Financial information on market risks 1 - Assets-liabilities management The savings funds are exposed to a refinancing risk since they make medium- to long-term loans out of resources repayable on demand. However, given the stability of these resources in the past, the fact that interest rates for most loans are indexed to the cost of these resources and the satisfactory level of liquidity, the savings funds are able to refinance themselves without being exposed to a significant risk. Interest rate and liquidity risks are measured using assetliability management systems calibrated to take into account the characteristics of the assets and liabilities to the utmost level of detail. In particular, it is possible to model the balance sheet to reflect various assumptions regarding deposit taking and lending. To provide depositors with the highest possible level of protection, the size and structure of the portfolio of financial assets are designed to leave real possibilities for adapting the portfolio to possible changes in liquidity risk, while protecting the interest margin earned now and in the future against movements in interest rates. 95

97 SAVINGS FUNDS Following the July 21, 2003 announcement regarding the establishment of an indexing rule for regulated savings products, the savings funds began adapting their models and implementing them in terms of the related portfolio structure and capital adequacy requirements. Throughout the year, the groundwork was laid for the transition to new capital adequacy requirements for the savings funds, in particular to calibrate their level relative to that of the balance sheet risks. 2 - Risk management Risk management at Caisse des Dépôts is organized on a threetier basis, at the levels of the business line, institution and Group. At the Group level, Central Control sets standards and approves systems and methods. The Risk Management Department is responsible, at the level of the public institution, for monitoring the financial risk to which portfolios are exposed. Regarding credit risk, a Default Risk Committee meets each month and is responsible for: defining and monitoring the credit risk policy; approving the method for setting counterparty limits, based on proposals by Risk Management; setting limits by counterparty, based on proposals by Risk Management, bearing in mind that the limits for each portfolio are independent of one another. Risk Management is responsible for controlling day by day that each financial department complies with the limits set. When proposing limits, this work is based on summary data, mainly from the analyses provided by CDC IXIS, credit rating agencies and published information. At end-2003, the savings funds largest commitment by counterparty of the fixed income portfolios was the French State, with 64%, up from 62% in The activity of the savings funds is regulated, and until December 31, 1999 the use of derivative products was limited mainly to interest rate swaps entered into for micro-hedging purposes, namely to cover specific transactions as authorized or requested by the supervisory authorities. These transactions, which are recorded in the off-balance sheet, totaled 1.6 billion as of December 31, 2003, of which 1.2 billion was with Crédit Foncier in connection with PLI loans. In July 1999, the Ministry of the Economy, Finances and Industry authorized the savings funds to make more frequent use of derivative products, with a view to reducing portfolio sensitivity. Therefore, the savings funds have entered into a number of transactions since 2000 that involve derivatives such as swaps and notional contracts traded on the MATIF. At year-end, asset swaps totaled 4.4 billion. In early 2003, swaptions with a notional value of 540 million and expiring in January 2004 were purchased in order to cover the potential impairment of 2012 and 2016 OATs resulting from a significant increase in interest rates. Since rates declined relative to the purchase and exercise rates, no income was recorded from these options. IV - Financial statements presentation The financial statements present the overall situation of the savings funds centralized by Caisse des Dépôts. They include the following funds: Caisses d Epargne et de Prévoyance (CEP): Livret A; CEP Reserve and Guarantee Fund; Caisse Nationale d Epargne (CNE): Livrets A and B; CNE Reserve and Guarantee Fund; Livret d Epargne Populaire (LEP): funds centralized by CEP, CNE, banks and other networks; LEP Reserve Fund; Livret Jeunes (LJ); LJ Reserve Fund; CODEVI Fund; Home-purchase savings plans; PEP-CNE Fund. Other funds: Home Financing Reserve Fund (FRFL); CEP Home Savings Reserve Fund; Home Building Fund; SDR Guarantee Fund; CFF Special Fund. The management of each of these funds is the object of separate financial statements. These financial statements provide an overall view and a breakdown by fund. 96 /// 2003 Annual Report Caisse des Dépôts Group

98 Note 1 - Treasury and interbank transactions Assets Ordinary accounts 1,388 1,667 Current accounts (1) Current accounts representing minimum reserves 1,319 1,269 Accrued interest 1 Other amounts due by financial institutions Securities purchased under collateralized fixed resale agreements Accrued interest 6 1 TOTAL 1,622 2,340 (1) The public institution Caisse des Dépôts, as a legal entity the Central Sector is the savings funds banker. As such, it centralizes the cash resources and provides all the services of a banking nature. Note 2 - Financing transactions Since the financing activity of the savings funds is analyzed fundamentally by reference to the nature of the loans, customer loans (including loans to financial institutions) are grouped under the heading of Financing transactions. As of December 31, 2003, loans to financial institutions amounted to 7,904 million, down from 8,601 million the previous year, including accrued interest. A) INFRASTRUCTURE LOANS Early Other (Euro millions) Payments Repayments repayments movements (1) Infrastructure loans 4,608 (1,087) (64) (8) 5,767 New uses 27 1 (1) 27 Capital 4,635 1 (1,088) (64) (8) 5,794 Accrued interest not due 148 (45) 193 Installments being collected 6 6 Unpaid installments 2 2 TOTAL 4,791 1 (1,088) (64) (47) 5,989 of which: Non-performing loans and interest 126 (11) 137 Provisions (20) (20) (1) Including rescheduled loans and changes in non-performing loans net of related provisions. Including reclassification of 38 million in bond and annuity loans as infrastructure loans and reclassification of 17 million in accrued interest on non-performing housing loans as accrued interest on non-performing infrastructure loans as of December 31,

99 SAVINGS FUNDS Note 2 (cont.) B) HOUSING LOANS Early Other (Euro millions) Payments Repayments repayments movements (1) PLA (2) (3) 44,946 2,283 (839) (81) (27) 43,610 PAM and PRV (3) 6, (678) (55) (16) 7,186 PLI and PHEBE 3, (78) (19) 23 2,814 PAP 1,115 (891) (2) 1 2,007 PPU 2, (198) (44) 7 2,859 Other (3) (4) 20,764 1,029 (1,339) (89) (8) 21,171 Capital 79,857 4,543 (4,023) (290) (20) 79,647 Accrued interest not due 5,226 (235) 5,461 Installments being collected 128 (19) 147 Unpaid installments 4 4 Early repayments being processed (7) 13 (20) TOTAL 85,208 4,543 (4,023) (290) (261) 85,239 (1) Including the reversal or amortization of premiums and discounts, capitalized interest, changes in non-performing loans net of related provisions and rescheduled loans. Including reclassification of 250 million in CFF long-term loans and 12 million in CCCI loans as other loans as of December 31, Including reclassification of 17 million in accrued interest on non-performing housing loans as accrued interest on non-performing infrastructure loans as of December 31, Including reclassification of 1 million in housing loans as other loans as of December 31, (2) Excluding subsidies. (3) Rescheduled PLA, PAM and HLMA-HLMO loans were reclassified under Other housing loans. (4) The Voiron advance of 11 million was reclassified as other housing loans as of June 30, In addition, a provision for impairment was set up for the premium paid on the assignment of the CGLLS PLA loans covering the entire amount remaining to be deferred ( 7 million as of December 31, 2003, down from 10 million the previous year), as it is probable that all loans concerned will be rescheduled at a lower rate than when assigned. Non-performing loans and provisions are analyzed below: Principal Principal (Euro millions) and interest Provisions Net and interest (1) Provisions Net PLA 2, ,294 1, ,568 PAM and PRV PLI and PHEBE PAP 1 1 PPU Other 1, , ,258 TOTAL 4, ,766 4, ,576 (1) Including reclassification of 17 million in accrued interest on non-performing housing loans as accrued interest on non-performing infrastructure loans as of December 31, /// 2003 Annual Report Caisse des Dépôts Group

100 Note 2 (cont.) C) OTHER LOANS Early Other (Euro millions) Payments Repayments repayments movements (1) CODEVI loans BDPME 3, (152) 3,166 SDR (100) 575 Other 18 - (24) 42 Capital 3, (276) 3,783 Accrued interest not due 132 (6) 138 Installments being collected 4 (42) 46 Unpaid installments TOTAL 4, (276) (41) 3,978 of which: Non-performing loans and interest 4 4 Home-purchase loans Primary loans 2, (490) (102) - 2,528 Supplementary loans 10,762 2,369 (712) (530) (2) 9,637 Subsidized loans 2, (91) (154) (1) 1,709 Capital 15,270 3,478 (1,293) (786) (3) 13,874 Accrued interest not due Installments being collected 1 (9) 10 Unpaid installments 1 1 TOTAL 15,316 3,478 (1,293) (786) (11) 13,928 of which: Non-performing loans and interest Provisions (11) (1) (10) Miscellaneous other loans CNCEP 1, (127) 1,203 Other loans (2) 1, (129) (8) 222 1,134 Capital 2, (256) (8) 222 2,338 Accrued interest not due 49 (10) 59 Installments being collected Unpaid installments TOTAL 2, (256) (8) 249 2,397 of which: Non-performing loans and interest (2) Provisions (61) (26) (35) TOTAL OTHER LOANS 21,795 3,914 (1,825) (794) ,302 (1) Including change in non-performing loans net of related provisions. Including reclassification of 250 million in CFF long-term housing loans and 12 million in CCCI loans as other loans as of December 31, 2002; reclassification of 1 million in housing loans as other loans; reclassification of 38 million in bond and annuity loans as infrastructure loans as of December 31, (2) Including a 972 million subordinated loan backed by a 100% State guarantee recorded under off-balance sheet commitments downgraded to non-performing (see Note 16). In accordance with banking regulations, current and unpaid accrued interest was written down in full. 99

101 SAVINGS FUNDS Note 3 - Securities transactions A) BREAKDOWN BY NATURE AND TYPE OF PORTFOLIO, NET OF PROVISIONS Available- Held-to- Available- Held-tofor-sale maturity Portfolio for-sale maturity (Euro millions) securities securities securities securities securities Public-sector securities and similar French government securities 26,570 11,516 24,432 13,876 Treasury bills 20, ,435 2,164 Securities loaned (1) 6,146 6,366 4,094 4,468 Sub-total by portfolio 53,212 18,814 45,961 20,508 Total all portfolios 72,026 66,469 Bonds and other fixed income securities Bonds 18,489 6,566 15,759 6,747 Other fixed income securities 13,829 1,419 16,753 1,490 Securities loaned (1) Sub-total by portfolio 32,342 7,985 32,523 8,279 Total all portfolios 40,327 40,801 Equities and other variable income securities Equities 5,565 5,002 Other variable income securities (including mutual funds) (2) Sub-total by portfolio 5, ,220 Total all portfolios 5,982 5,220 SUB-TOTAL BY PORTFOLIO (3) 91,514 26, ,704 28,787 TOTAL ALL PORTFOLIOS 118, ,490 Details of securities loaned French government securities 3,759 6, ,151 Treasury bills 2, , Bonds TOTAL 6,170 6,366 4,105 4,510 (1) Details of securities loaned. (2) Of which, dedicated mutual fund units FCP Obligation Epargne which had a book value of 22 million and a net asset value of 54 million as of December 31, 2003 (compared with 43 million and 105 million, respectively, the previous year). (3) In 2002 and 2003, some held-to-maturity portfolio securities were sold in order to comply with the new investment code established by the Ministry of the Economy, Finance and Industry. As of December 31, 2003, the book value of the divested securities totaled 457 million, compared with 538 million the previous year, and their sale generated a capital gain of 50 million, compared with 15 million in /// 2003 Annual Report Caisse des Dépôts Group

102 Note 3 (cont.) B) SUPPLEMENTARY INFORMATION Available- Held-to- Available- Held-tofor-sale maturity Portfolio for-sale maturity (Euro millions) securities securities securities securities securities Public-sector securities and similar Gross value 50,923 17,916 44,173 19,437 Premiums/discounts 1, Accrued interest 1, , Provisions (24) Net book value by portfolio 53,212 18,814 45,961 20,508 Net book value of all portfolios 72,026 66,469 Market value of available-for-sale and held-to-maturity securities 52,832 18,877 46,273 20,645 Redemption value of available-for-sale and held-to-maturity securities 50,923 17,916 44,173 19,437 Bonds and other fixed income securities Gross value 31,564 7,693 31,875 7,933 Premiums/discounts Accrued interest Provisions (37) (25) Net book value by portfolio 32,342 7,985 32,523 8,279 Net book value of all portfolios 40,327 40,801 Market value of available-for-sale and held-to-maturity securities 32,408 8,057 32,721 8,326 Redemption value of available-for-sale and held-to-maturity securities 31,564 7,693 31,875 7,933 Equities and other variable income securities Gross value 6, ,832 Provisions (1,015) (1) (1,612) Net book value 5, ,220 Net book value of all portfolios 5,982 5,220 Market value of available-for-sale and held-to-maturity securities 8, ,

103 SAVINGS FUNDS Note 4 - Long-term equity holdings and other long-term investments Long-term equity holdings 1 2 Gross value 1 2 TOTAL 1 2 Note 5 - Tangible fixed assets (Euro millions) Other movements (2) Investment property Buildings (1) 4 (5) 9 Gross value Depreciation (77) (5) (72) Land Gross value 1 1 Provisions (1) (1) TOTAL 4 (5) 9 Gross value Depreciation (77) (5) (72) Provisions (1) (1) (1) This relates to a building erected on land belonging to a third party and made available under a finance lease. (2) This corresponds to asset disposals, depreciation charges and provisions net of reversals. Note 6 - Accruals, deferrals and other assets Accruals and deferrals Accrued income Accrued income on financial instruments Home-purchase premiums receivable 14 Other accrued income (1) Deferred losses on derivatives 5 3 Other assets Interest subsidies and other subsidies receivable 6 47 PLA subsidies receivable 6 9 PRU subsidies receivable 37 Interest subsidies and rebates receivable 1 Advances on Enténial refinancing Other receivables 2 2 TOTAL (1) Of which, 122 million due as part of commission repayments on PEL and CEL deposits as of December 31, This reimbursement was fully paid by La Poste in July 2003 (see I-3 Notes to the financial statements). 102 /// 2003 Annual Report Caisse des Dépôts Group

104 Note 7 - Treasury and interbank transactions Liabilities Term loans 1,706 5,149 From CFF (PLI) (1) 732 Other loans from CFF From Caisse des Dépôts Central Sector (PPU) (2) From CDC IXIS (PLI) (1) 735 Livret Bleu loans (3) 18 Loans assumed from CGLLS (4) 543 3,854 Advances from Caisse des Dépôts Central Sector (5) Accrued interest TOTAL 1,706 5,149 (1) Sale to CFF of 700 million in PLI-PLS refinancing loans by CDC IXIS. (2) Refinancing of PPU loans (maturing 2021). (3) Livret Bleu loan settled in January (4) Early repayment of CGLLS loans to CDC IXIS for 2,804 million, 105 million of accrued interest not yet due and 260 million in write-backs of premiums (see I-1 Notes to the financial statements). (5) Refinancing of participatory loans to Crédit Logement. Note 8 - Deposits Since the centralizing of savings deposits is analyzed fundamentally by reference to the nature of the savings funds centralized, customer deposits (including amounts due to financial institutions) are grouped under the heading of Centralized deposits. As of December 31, 2003, deposits by financial institutions amounted to 122,602 million (up from 112,306 million the previous year), accrued interest included. A) CENTRALIZED DEPOSITS Deposits Capitalized Deposits Deposits Capitalized Deposits as of interest as of as of as of interest as of as of (Euro millions) (1) (1) Livret A CEP 65,617 1,712 63,905 64,726 1,827 62,899 Livrets A and B CNE 49,205 1,255 47,950 48,493 1,343 47,150 LEP 47,851 1,833 46,018 44,339 1,727 42,612 Livret Jeunes 1, , CODEVI (2) 8,329 8,329 7,644 7,644 Home-purchase 29, ,387 27, ,402 PEP-CNE 1, ,069 1, ,054 Crédit Mutuel Livret Bleu (3) 15,108 15,108 14,557 14,557 TOTAL 217,531 5, , ,066 5, ,275 (1) Capitalized interest takes into account cumulative interest accrued during the year as well as specific items (method of centralization of the LEP Funds, etc.). It therefore is not directly comparable with accrued interest reported in the table below. (2) CODEVI deposits have been used to finance an issue of industrial development securities (Titres pour le Développement Industriel, or TDI) paying interest at the CODEVI rate plus 1.5% up to the centralization rate and at the CODEVI rate thereafter. Amounts capitalized on deposits are centralized the following year. (3) Until December 31, 1998 and in accordance with the memorandum of April 27, 1991 on requiring funds collected on Crédit Mutuel s Livret Bleu to be used in the public interest, Caisse des Dépôts centralized 85% of the funds deposited with Crédit Mutuel and invested them for 15% in money market instruments, with the remaining 85% lent to the Livret A to finance public housing. Under the agreement of December 31, 1998, Crédit Mutuel centralized 100% of its deposits with Caisse des Dépôts. The Livret Bleu section has been transferred to the CEP Livret A and the CNE Livrets A and B for 60% and 40%, respectively, i.e. 9.1 billion and 6 billion as of December 31, 2003 (compared with 8.7 billion and 5.8 billion as of December 31, 2002). 103

105 SAVINGS FUNDS Note 8 (cont.) B) RELATED ACCRUED INTEREST Livret A CEP 1,718 1,831 Livrets A and B CNE 1,258 1,343 LEP (1) 1,714 1,621 Livret Jeunes CODEVI Home-purchase PEP-CNE Crédit mutuel Livret Bleu (2) TOTAL 5,894 5,946 (1) Accrued interest on LEP loans as of December 31, 2003 does not take into account interest for the month of December for the bank and local savings bank networks, which has been recorded under Miscellaneous payables ( 124 million as of December 31, 2003, compared with 115 million the previous year), as the corresponding deposits are only centralized in January of the following year. (2) In accordance with the agreement of December 31, 1998 between Caisse des dépôts and Crédit Mutuel, interest on the Livret Bleu is paid on the last working day of the year. C) LEVIES ON INTEREST DUE TO DEPOSITORS Livret B CNE Home-purchase 16 8 PEP-CNE 4 4 TOTAL This relates to withholding tax and various social security contributions payable on taxable savings products. Note 9 - Accruals, deferrals and other liabilities Accruals and deferrals Accrued charges Amounts payable to centralizing networks Accrued charges on financial instruments Home-purchase bonus to be repaid 5 Interest payable on LEP deposits Other accruals Deferred income on financial instruments Other liabilities 8 24 Interest subsidies and other subsidies payable 6 Interest subsidies payable (1) 6 Other miscellaneous payables 8 18 Income on CFF Special Fund payable to the State 8 8 Payables on FRU loan 10 TOTAL (1) 6 million interest subsidy payable on solidarity loans for high school development. 104 /// 2003 Annual Report Caisse des Dépôts Group

106 Note 10 - Provisions for risks and charges (Euro millions) Allocations Reversals PLI and PPU (LEP) (1) SDR and FIM loans (CODEVI) (2) 3 3 Geothermal heating (Livret A) (2) PDR (Livret A) (1) (3) Loans at 3.45% (including PLUS) (Livret A) (1) (4) PLA TS (Livret A) (1) Litigation (5) Home-purchase (6) Hedging instruments TOTAL 1, ,475 (1) These loans generate interest at rates that are below the cost of the related resources. A provision has therefore been booked to cover the resulting actuarial loss adjusted to take account of payments and new loan programs. (2) These loans have been rescheduled and now generate interest at rates that are below the cost of the related resources. A provision has therefore been booked to cover the future actuarial loss arising from this rescheduling. (3) These loans are fully subsidized by UESL since implementation of the new program. (4) These loans were at 4.20% before August 1, (5) Of which, CFF provisions ( 4 million). (6) Specific home-purchase savings provision (see II-11 Notes to the financial statements). Note 11 - Subsidies Subsidies relate mainly to PLA loans granted directly. They are taken to the income statement over the life of the related loans. As of December 31, 2003, subsidies amounting to 6 million had not been received ( 9 million at end-2002) and were therefore recorded under Accruals, deferrals and other assets (Euro millions) CEP CNE CEP CNE Gross subsidies (1) 2,194 1,033 2,087 1,011 Taken to income statement (604) (543) (530) (506) Eliminations between funds (2) (328) (300) Sub-total 1, , TOTAL 1,752 1,763 (1) Including subsidies on PRU loans: 84 million on CEP Livret A and 63 million on CNE Livret A and B loans as of December 31, 2003 (compared with 61 million and 45 million, respectively, the previous year). (2) Subsidy paid by the FRGCE to the CEP Livret A fund to offset the actuarial losses corresponding to the negative spread between lending rates and the cost of the Livret A resources. This subsidy is paid in respect of highly subsidized PLA loans, emergency housing loans and urban renewal project loans. Given the amount paid since 1995 and the additional budget for 2003, 12 million was written back as of December 31, 2003 and 10 million was written back the previous year. 105

107 SAVINGS FUNDS Note 12 - Fund for general banking risks Net allocations (Euro millions) and reversals General risks (CAD + Specific Savings Risks) Livret A CEP Livrets A and B CNE LEP Livret Jeunes 5 (3) 2 CODEVI Home-purchase PEP-CNE 39 (14) 25 Sub-total 1, ,284 Contingent general risks (1) Livret A CEP Livrets A and B CNE LEP Home-purchase 64 (64) Sub-total 687 (64) 623 TOTAL 2, ,908 (1) See II-12 Notes to the financial statements. 106 /// 2003 Annual Report Caisse des Dépôts Group

108 Note 13 - Retained earnings A) FUNDS AND RETAINED EARNINGS Other Appropriation of (Euro millions) movements 2002 earnings Funds Fund CEP 1,295 (239) (3) 282 (7) Fund and guarantee fund CNE (3) (4) 11 (7) 912 Fund LEP (3) 25 (7) 844 Fund Livret Jeunes 56 7 (7) 50 Home building FRFL 1,235 (1,345) 152 2,429 Sub-total A 4,421 (1,541) 476 5,486 Retained earnings Livrets A CEP (5) Livrets A and B CNE (5) 2 LEP 6 6 (5) CODEVI 63 (41) 104 Home-purchase PEP-CNE 11 (10) (4) (3) 24 FREL SDR guarantee funds 1 1 Sub-total B SDR guarantee deposits (C) (1) TOTAL (A + B + C) 4,699 (1,492) (6) 482 5,709 Eliminations (interfund transfers) (200) 44 (244) Other eliminations 1 1 (1) TOTAL (2) (199) 45 (244) GRAND TOTAL 4, ,465 (1) Including 1% of loans paid to regional development companies (SDR) from CODEVI funds. (2) Corresponds to the restatement of capital gains and losses on loan transfers between funds. (3) FRGCE increased the FRGCNE by 16 million and the FRLEP by 18 million. (4) Increase paid to PEP-CNE in 2000 sold back to FRGCNE for 10 million. (5) Increase of 58 million ( 37 million on the CEP Livret A, 15 million on the CNE Livret A and B and 6 million on the LEP) related to the change in accounting method for inflation-indexed OATs (see I-2 Notes to the financial statements). (6) Including state levy of 1,550 million ( 205 million on the FRGCE and 1,345 million on the FRFL). (7) Earnings transferred to the reserve funds correspond to the earnings of the primary funds (CEP Livret A: 256 million; CNE Livrets A and B: 32 million (negative); LEP: 19 million (negative); and Livret Jeunes: 5 million) and of the reserve funds (CEP: 26 million; CNE: 43 million; LEP: 44 million; and Livret Jeunes: 2 million). 107

109 SAVINGS FUNDS Note 13 (cont.) B) UNAPPROPRIATED EARNINGS Total earnings amounted to 1,132 million. Earnings, which are separately identifiable for each of the funds managed, will be appropriated in accordance with applicable regulations: (Euro millions) 2003 earnings Funds (1) Unappropriated earnings Livret A CEP Fund - CEP (2) (2) Livrets A and B CNE Fund CNE LEP (41) (41) Fund LEP Livret Jeunes 7 7 CODEVI (27) (27) Home-purchase (4) (4) PEP-CNE Other funds Sub-total 1,092 1,106 (14) Eliminations (inter fund transfers) (2) 40 TOTAL 1,132 (1) Reserve fund specific to each fund. (2) Corresponds to the restatement of capital gains and losses on loan transfers between funds. C) RETAINED EARNINGS AS OF JANUARY 1, 2004 BEFORE STATE LEVY AND EXCLUDING THE FGBR Unappropri Unappropri- (Euro millions) Total ated earnings Funds earnings Total ated earnings Funds Livret A CEP (1) 2,024 2, , ,295 Livrets A and B CNE (1) 1, , LEP (1) (19) Livret Jeunes CODEVI (27) Home-purchase (4) PEP-CNE FRFL 1,339 1, ,235 1,235 FREL SDR guarantee funds Sub-total 5, ,583 1,092 4, ,421 SDR guarantee deposit TOTAL 5, ,595 1,092 (3) 4, ,434 Eliminations (interfund transfers) (160) (160) 40 (200) (200) Other eliminations TOTAL (2) (159) (159) 40 (199) (199) GRAND TOTAL 5, ,436 1,132 4, ,235 (1) Allocation to reserve funds of unappropriated earnings due to the change in accounting method for inflation-indexed OATs. (2) Corresponds to capital gains and losses on loan transfers between funds. (3) Total earnings of the funds before eliminations. The 2004 budget included an estimate of 1,614 million for the levy on the reserves of the savings funds. 108 /// 2003 Annual Report Caisse des Dépôts Group

110 Note 14 - Credit risk on financing transactions Gross Gross non- Gross performing performing irrecoverable (Euro millions) loans loans loans (1) Provisions (1) Total Breakdown by geographic region 106,996 5, (545) 111,793 Loans to financial institutions 7, (11) 7,904 France 7, (11) 7,904 Customer loans 99,093 5, (534) 103,889 France 99,093 5, (534) 103,889 Provisions on financing transactions Loans to banking institutions Transfers Customer loans Allocations Reversals Other changes (30) (1) Interest related to irrecoverable loans is still accrued and provisions are established. Note 15 - Credit risk on fixed income securities Since the savings funds portfolio mainly comprises securities issued by AAA-rated companies, no securities were downgraded to non-performing as of December 31, Gross performing (Euro millions) securities as of Breakdown by currency 112,353 Available-for-sale securities 85,554 Euro 85,554 Held-to-maturity securities 26,799 Euro 26,

111 SAVINGS FUNDS Note 16 - Off-balance sheet commitments A) COMMITMENTS IN RESPECT OF FINANCING, GUARANTEES, SECURITIES AND OTHER COMMITMENTS GIVEN OR RECEIVED (Euro millions) Note COMMITMENTS GIVEN IN RESPECT OF FINANCING, GUARANTEES AND SECURITIES 16 A 9,298 6,748 Financing commitments 8,910 6,710 Offers of loans 4,188 2,709 Housing loans 4,188 2,709 Undertakings to provide loans 2,352 1,914 Housing loans (1) 2,031 1,884 Other loans (2) Loans granted but not disbursed 2,370 2,087 Housing loans 1,621 1,474 Home-purchase loan Guarantee commitments Securities pledged as guarantees (3) 350 Other guarantees given (4) COMMITMENTS RECEIVED IN RESPECT OF FINANCING, GUARANTEES AND SECURITIES 76, Guarantee commitments 76, Guarantees received from the State (5) 1, Guarantees received from financial institutions (6) 3,560 Other guarantees received (6) 71,697 Commitments received in respect of securities Securities to be received OTHER COMMITMENTS GIVEN AND RECEIVED Other commitments given 2 Real estate sales commitments 2 Other commitments received Subsidies to be received on PLA loans (7) (1) Caisse des Dépôts refinances financial institutions that issue PLI and PLS loans. It committed to refinance 670 million in PLS loans and 160 million in PLI loans in 2002 and As of December 31, 2003, the total unused portion of the lines was 1,042 million, including 300 million in respect of 2001 and 2002, and 742 million in respect of (2) Commitment given to CEPME for 321 million as of December 31, The 30 million commitment as of December 31, 2002 represents the balance of the refinancing following the centralization reform of the Alsace-Moselle Livret A. (3) Securities placed in guarantee as part of the Relit Grande Vitesse settlement/delivery system. (4) This commitment concerns CFF. (5) Including a commitment received from the State, guaranteeing a 972 million loan classified as non-performing, with no impairment recorded on the outstanding balance due (see Note 2C). (6) Presentation in 2003 of guarantees received from financial institutions and local governments. These commitments were not presented in 2002 (see II-8 Notes to the financial statements). (7) This subsidy relates to PLA loan agreements in the French overseas departments that have been signed but for which the corresponding funds have not yet been released. With each release of funds, the subsidies are allocated to liabilities (see Note 11). 110 /// 2003 Annual Report Caisse des Dépôts Group

112 Note 16 (cont.) B) ) FORWARD FINANCIAL INSTRUMENTS Purchase Borrowing Sale Loan Purchase Borrowing Sale Loan FUTURES 6,082 6,082 5,390 5,390 OTC markets 6,082 6,082 5,390 5,390 Interest rate swaps 6,082 6,082 5,390 5,390 OPTIONS OTC markets Caps Swaptions 540 Index options Interest rate swaps consist of: 1,642 million of swaps related to loans (down from 1,878 million as of December 31, 2002): 1,195 million ( 1,241 million as of December 31, 2002) in connection with the refinancing of CFF s PLI loans; 432 million ( 390 million as of December 31, 2002) in connection with the refinancing of variable rate loans to regional development companies (SDR); 14 million ( 16 million as of December 31, 2002) in connection with the refinancing of variable rate loans. Interest rate swaps ( 232 million as of December 31, 2002) related to a swap with CDC IXIS were settled in June 2003 as part of the early repayment of loans to CDC IXIS (see I-1 Notes to the financial statements). 4,440 million (2002: 3,512 million) of securities hedging transactions in the form of asset swaps exclusively. Counterparties for these asset swaps are banking institutions rated at least AA. Note 17 - Credit risk on off-balance sheet commitments No signature or forward financial instrument commitments were downgraded to non-performing as of December 31, A) SIGNATURE COMMITMENTS Gross commitments (Euro millions) as of Breakdown by geographic area Guarantee given 38 France 38 B) FORWARD FINANCIAL INSTRUMENTS (OVER-THE-COUNTER TRANSACTIONS) Gross commitments (Euro millions) as of Breakdown by geographic area Futures 6,082 France 6,082 Options 620 France

113 SAVINGS FUNDS Note 18 - Interest and similar income A) TREASURY AND INTERBANK TRANSACTIONS Revenues from cash advances (1) Revenues from securities purchased under collateralized fixed resale agreements (1) TOTAL (1) Securities purchased under collateralized resale agreements and cash balances are remunerated in accordance with market practices. B) FINANCING TRANSACTIONS Interest revenues (1) 4,720 4,840 Infrastructure loans Housing loans 3,324 3,421 Other loans 1, Penalties received on early repayments (2) Infrastructure loans 8 (1) Housing loans 7 (17) Net reversals of subsidies on PLA loans (3) Housing loans Capital gains or losses (4) Housing loans Net charge or income on hedging transactions (10) (7) Housing loans (21) (16) Other loans 11 9 Provisions net of reversals 4 (7) Infrastructure loans 2 (1) Housing loans (5) 8 (6) Other loans (6) TOTAL 4,988 5,108 Infrastructure loans Housing loans 3,577 3,681 Other loans 1, (1) Including deferred interest. (2) Early repayment penalties are recognized on a cash basis. (3) After elimination of the PLA-TS subsidy paid by FRGCE to the CEP Livret A fund. (4) After elimination of residual capital gains and losses on loan transfers between funds (see Note 13-A). Including the amortization of the net premiums on the loans assumed from CGLLS ( 122 million as of December 31, 2003 and 141 million the previous year). (5) Including the reversal of the provisions relating to the premiums on the CGLLS loans ( 3 million as of December 31, 2003 and 1 million the previous year) (see Note 2 B). 112 /// 2003 Annual Report Caisse des Dépôts Group

114 Note 18 (cont.) C) REVENUES FROM FIXED INCOME SECURITIES Available-for-sale securities 3,339 3,427 Public-sector and similar securities 2,134 2,264 French government securities 1,323 1,419 Treasury bills Bonds Other fixed income securities Net income from hedging transactions (37) (37) Held-to-maturity securities 1,241 1,336 Public-sector and similar securities French government securities Treasury bills Bonds Other fixed income securities TOTAL 4,580 4,763 Note 19 - Interest and similar expenses A) TREASURY AND INTERBANK TRANSACTIONS Charges relating to current accounts (1) (3) (4) Charges relating to securities sold under collateralized fixed repurchase agreements (1) (102) (129) Charges on term borrowings (287) (213) Loans from CFF (PLI) (2) (54) (2) Other loans from CFF (4) (4) Loans from Caisse des Dépôts Central Sector (PPU) (4) (4) Loans from CDC IXIS (PLI) (55) Livret Bleu loans (1) Loans assumed from CGLLS (3) (220) (143) Advances from Caisse des Dépôts Central Sector (4) (4) TOTAL (392) (346) (1) Securities sold under collateralized repurchase agreements and cash balances are remunerated in accordance with market practices. (2) Including 57 million in accrued interest and 3 million in reversals relating to the discount as of December 31, 2003 on PLI-PLS refinancing loans sold to CFF by CDC IXIS. (3) Including 435 million in early repayment penalties on the CDC IXIS loan; 105 million in interest and 260 million in write-backs of premiums relating to the early repayment in June 2003 of the CGLLS loans to CDC IXIS (see I-1 Notes to the financial statements). 113

115 SAVINGS FUNDS Note 19 (cont.) B) DEPOSITS Interest paid to depositors (6,811) (6,878) Livret A CEP (1,742) (1,855) Livrets A and B CNE (1,271) (1,354) LEP (1,862) (1,764) Livret Jeunes (41) (40) CODEVI (334) (329) Home-purchase (884) (836) PEP (35) (36) Livret Bleu (642) (664) Tax withheld at source on deposits (73) (88) Livret B CNE (12) (14) Home-purchase (57) (70) PEP (4) (5) TOTAL (6,884) (6,967) These expenses represent: interest paid by the savings funds managed by Caisse des Dépôts to which is added, in the case of the Crédit Mutuel Livret Bleu, commission paid to the network. Interest rates for the various passbook deposits are regulated, and were as follows: Livret A: 3% from July 1, 2000 through July 31, 2003, and 2.25% since August 1, 2003; CNE Livret B: 2.75% from October 1, 2000 through September 15, 2003, and 2.25% since September 16, 2003; LEP: 4.25% since July 1, 2000; Livret jeunes: 4.25% since October 1, 2000; home-purchase savings: - savings plan: rates, excluding the premium, depending on the generation: 3.21% from July 1, 2000 through July 31, 2003 and 2.50% since August 1, 2003, - passbook deposits: 2% from July 1, 2000 through July 31, 2003, and 1.50% since August 1, 2003; Livret Bleu: - for individuals: 3.27% before taxes from July 1, 2000 to July 31, 2003, and 2.45% since August 1, 2003, - for legal entities: 3.16% before taxes from July 1, 2000 through July 31, 2003, and 2.37% since August 1, Pursuant to Article L of the Monetary and Finance Code, new PEP accounts may no longer be opened as of September 25, As for existing PEP accounts, terms remain the same. The interest on PEP-CNE accounts, which is set each year for the following year, was 3.7% for 2002 and 2003; interest on industrial development securities (TDI) issued on CODEVI accounts (4.50% from July 1, 2000 through July 31, 2003, and 3.75% since August 1, 2003, see Note 8-A). 114 /// 2003 Annual Report Caisse des Dépôts Group

116 Note 20 - Revenues from variable income securities Equities Mutual funds 1 - Other 1 - TOTAL Note 21 - Net commissions A) PAYMENTS TO CENTRALIZING NETWORKS Livret A CEP (789) (754) Livrets A and B CNE (734) (704) LEP (313) (288) Livret Jeunes (7) (7) Home-purchase (1) (316) (228) PEP (10) (10) TOTAL (2,169) (1,992) (1) Commissions net of overpayments: 122 million for the period 1998 to 2002 (see I-3 Notes to the financial statements). B) OTHER COMMISSIONS (Euro millions) Revenues Expenses Revenues Expenses Commissions on loan management Home-purchase (1) Other loans 1-1 Other commissions (2) Sub-total NET TOTAL (178) (169) (1) Payments to La Poste for managing these loans in accordance with the conditions defined by agreement. (2) Of which, commissions for securities-related custodian services performed by CDC IXIS totaling 10 million in 2003 and 14 million in

117 SAVINGS FUNDS Note 22 - Gains and losses on available-for-sale securities A) NET GAINS AND LOSSES ON THE SALE OF AVAILABLE-FOR-SALE SECURITIES Fixed income securities Public-sector and similar securities French government securities Treasury bills Bonds Other fixed income securities Variable income securities Equities Mutual funds Other variable income securities 1 - TOTAL B) PROVISIONS AGAINST AVAILABLE-FOR-SALE AND PORTFOLIO SECURITIES, NET OF REVERSALS (Euro millions) Allocations Reversals Allocations Reversals Against available-for-sale securities , Public-sector and similar securities Bonds and other fixed income securities Equities and other variable income securities ,264 7 Against portfolio securities 1 Equities and other variable income securities 1 Sub-total , NET TOTAL 559 (1,126) Note 23 - Other income and expenses from banking operations (Euro millions) Revenues Expenses Revenues Expenses Net income from tangible fixed assets Revenues and expenses Depreciation 5 5 Thirty-year limit on unused Livret A CNE accounts 3 4 Accrued expenses Special CFF Fund 1 2 Other Sub-total NET TOTAL /// 2003 Annual Report Caisse des Dépôts Group

118 Note 24 - General and administrative expenses Operating expenses billed by Caisse des Dépôts (1) (86) (89) of which: Payroll expenses (20) (19) Information systems expenses (10) (12) Other Caisse des Dépôts services (50) (44) Repayments relating to prior periods 1 TOTAL (86) (88) (1) The Central Sector provides the following services for the savings funds: Banking: cash centralization, cash processing, and intermediation for market transactions; Administration: various resources made available, notably staff and equipment. These services are rebilled to the savings funds. Note 25 - Cost of risk (net appropriation to provisions) (Euro millions) Allocations Reversals Allocations Reversals Provisions for non-performing loans and doubtful receivables Loans Other receivables Sub-total NET TOTAL Provisions for risks and charges net of reversals Loans Home-purchase Litigation 2 Rebate to public housing organizations (1) 7 Hedging instruments Sub-total NET TOTAL (49) (67) (1) Reversal in 2002 of the balance of the provision concerning the rebate paid to public housing organizations. 117

119 SAVINGS FUNDS Note 26 - Transfers to the fund for general banking risks, net of reversals (Euro millions) Allocations Reversals Allocations Reversals General risks (CAD + Specific Savings Risks) Livret A CEP Livrets A and B CNE LEP Livret Jeunes CODEVI Home-purchase PEP-CNE Sub-total NET (371) 245 Contingent general risks Home-purchase 64 Sub-total 64 NET 64 Total NET TOTAL (307) /// 2003 Annual Report Caisse des Dépôts Group

120 Auditors report on the financial statements of the savings funds centralized by Caisse des Dépôts et Consignations Year ended December 31, 2003 This is a free translation into English of the statutory auditors report issued in the French language and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Chief Executive Officer, In accordance with the assignment entrusted to us, we have audited the accompanying financial statements of the savings funds centralized by Caisse des Dépôts et Consignations for the year ended December 31, These financial statements have been approved by you. Our role is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the professional standards applied in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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. In our opinion, the financial statements give a true and fair view of the results of the savings funds centralized by Caisse des Dépôts et Consignations for the year ended December 31, 2003 as well as of their assets, liabilities and financial position at that date, in accordance with French accounting regulations and generally accepted accounting principles. Without qualifying our opinion set out above, we draw your attention to I-2 Notes to the financial statements, which describes the changes in accounting methods resulting from the application of CRC Standard relating to the accounting treatment of credit risk and CRC Standard relating to asset depreciation, amortization and impairment; as well as the change in accounting method applicable to recognizing gains and losses on the indexing of inflation-indexed OATs. Paris and La Défense, March 24, 2004 The Auditors PricewaterhouseCoopers Audit Mazars & Guérard Gérard Hautefeuille Guillaume Potel Pierre Masieri 119

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