FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS AND LIABILITIES, FINANCIAL POSITIONAND PROFITS AND LOSSES 20 No liabilities are due to related parties as of December 31, 2016 Liquidity risk and December 31, 2017, respectively. The Group does not believe that it is exposed to short-term liquidity risk, considering the cash position that it had available as of Note 21: Earnings per share December 31, 2017, amounting to €55,448 K, which was only cash The basic earnings per share is calculated by dividing the net balances and the receipt of the2017 Research Tax Credit amounting income for the period attributable to the shareholders of the to €3,692 K expected during the second half year of 2018. Group by the weighted average number of ordinary shares Management believes that the amount of cash, cash equivalents outstanding during the period. Preferred shares had the same available and the expected receipt of the 2017 Research Tax rights and dividends as ordinary shares for purposes of calculating Credit are sufficient to fund the Group’s planned operations earnings per share. All preferred shares were converted on a one- through the next 12 months. for-one basis into ordinary shares upon completion of the IPO on Foreign currency exchange risk Euronext Paris in July 2016. The Group is exposed to foreign exchange risk inherent in certain Al l outstanding ordinary shares have been taken into services provided in the United States, which have been invoiced consideration for purposes of calculating basic earnings per in U.S. dollars. The Group does not currently have revenues in share. The weighted average number of ordinary shares was euros, dollars nor in any other currency. Due to the relatively low 16,252,765 and 21,936,006 for the years ended December 31, level of these expenditures, the exposure to foreign exchange 2016 and 2017, respectively. risk is unlikely to have a material adverse impact on the results of operations or financial position of the Group. The Group’s exposure The diluted earnings per share is calculated by dividing the net to currencies other than the U.S. dollar is negligible. For the years income for the period attributable to shareholders of the Group ended December 31, 2016 and 2017, less than 22% and 23%, by the weighted average number of shares outstanding plus respectively, of its purchases and other external expenses were any potentially dilutive shares not yet issued from share-based made in U.S. dollars, generating a foreign exchange loss of €59 K compensation plans (see Note 16). and €77 K, respectively. In light of these insignificant amounts, the Dilution is defined as a reduction of earnings per share or an Group has not adopted, at this stage, a hedging mechanism in order increase of loss per share. When the exercise of outstanding to protect its business activity against fluctuations in exchange share options and warrants decreases loss per share, they are rates. As the Group further increases its business, particularly in considered to be anti-dilutive and excluded from the calculation the United States, the Group expects to face greater exposure to of loss per share. Thus, basic and diluted earnings (loss) per share exchange rate risk and would then consider adopting an appropriate are equal as all equity instruments issued, representing 2,761,509 policy for hedging against these risks. potential additional ordinary shares, have been considered anti- Interest rate risk dilutive. As of December 31, 2017, the Group had neither money market As of December 31, funds nor time deposit accounts. In thousands of euros, except The Group has no credit facilities. The repayment of the for earning(loss) per share 2016 2017 Net income (loss) (22,082) (24,112) conditional advances from Bpifrance Financement are not subject of the reporting period to interest rate risk. Adjusted weighted average 16,252,765 21,936,006 Credit risk number of outstanding shares The credit risk related to the Group’s cash and cash equivalents Basic and diluted earnings €(1.36) €(1.10) is not significant in light of the quality of the co-contracting (loss) per share financial institutions. Note 22: Management of financial risks Fair value The fair value of financial instruments traded on an active market, The principal financial instruments held by the Group are cash and such as the securities available for sale, is based on the market rate cash equivalents. The purpose of holding these instruments is to as of December 31, 2017. The market prices used for the financial finance the ongoing business activities of the Group. It is not the assets owned by the Group are the bid prices in effect on the Group’s policy to invest in financial instruments for speculative market as of the valuation date. purposes. The Group does not utilize derivatives. The nominal value, less the provisions for depreciation, of The principal risks to which the Group is exposed are liquidity risk, the accounts receivable and current debts, is presumed to foreign currency exchange risk, interest rate risk and credit risk. approximate the fair value of those items. 210– GENSIGHT BIOLOGICS – 2017 Registration Document