Assystem - 2015 Registration Document

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FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

Cash and cash equivalents The “Cash and cash equivalents” line in the statement of financial position includes cash (cash in hand and demand deposits) and cash equivalents (highly liquid short-term investments readily convertible into a known amount of cash and subject to an insignificant risk of a change in value). Cash and cash equivalents do not include investments in listed shares, investments with an initial maturity of more than three months and no option of early divestment, and bank accounts subject to restrictions (blocked accounts). Net cash and cash equivalents presented in the statement of cash flows corresponds to cash and cash equivalents less bank overdrafts. GENERAL PRINCIPLES Debt and other financial liabilities are initially recognised at fair value less transaction costs, and are subsequently measured at amortised cost determined by the effective interest method. They are classified as “current” when the Group is required to settle them within twelve months after the reporting date and as “non-current” when the settlement is due beyond those twelve months. Debt and other financial liabilities BONDS REDEEMABLE IN CASH AND/OR IN NEW OR EXISTING SHARES (ORNANE BONDS) An Ornane bond is similar to a convertible bond (Océane), whereby investors benefit from the Group’s share price performance through the allocation of an outperformance premium representing the difference between the market price at the maturity date and the face value of the bond. The number of shares that the Group may be required to issue as a result of its Ornane bonds depends on the share price and type of settlement option exercised. Consequently, the conversion option embedded in the Ornane bonds does not meet the criteria in IAS 32 to be recognised as a derivative in equity, as the derivative will not be settled by the issuer exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments. As a result, this conversion option has to be recognised as a derivative at fair value through profit or loss. IAS 39 allows the issuer to choose between either of the following two accounting treatments: ● separate recognition of the derivative, resulting in the recognition of: ● a debt component (the host contract), recognised at amortised cost, ● an embedded derivative, recognised at fair value through profit or loss; or ● the fair value option, whereby all of the Ornane is recognised at fair value, with changes in fair value recognised through profit or loss. The Group has chosen the first option, and therefore recognises the embedded derivative of the Ornane bonds separately. Given its characteristics, the embedded derivative cannot be measured reliably and separately, and consequently its fair value is determined as the difference between the fair value of the hybrid contract and that of the debt component. The fair value of the embedded derivative is

determined by an external expert based on the Cox-Ross-Rubinstein model. Gains or losses arising on changes in fair value of the derivatives embedded in outstanding Ornane bonds at the reporting date are recognised in the income statement under “Fair value remeasurement of the derivative embedded in Ornane bonds”. The Ornane issuance costs have been allocated in full to the debt component. An Odirnane bond is a perpetual instrument without a maturity date, given that its holders do not have a redemption option. The instruments are redeemable in the event that the Company is liquidated, in which case payment would include accrued coupons and any deferred coupons. Payment of the coupons is at Assystem’s discretion and may be deferred when Assystem does not approve a dividend payment. If coupons are not paid, they remain due and take the form of arrears on which interest is paid at the rate applied for the purpose of calculating the bond coupons. The rate of the coupons on the Odirnane bonds has been set at 4.5% until 17 July 2021, and then as from that date a floating rate will apply corresponding to the 6-month Euribor plus a margin of 800 basis points (step-up clause). In the event of a change of control of the Company or an event that reduces the Company’s free float to below 25%, the annual nominal rate will be stepped up by 500 basis points. Bondholders have the option to convert their bonds into shares. The issuer may, however, redeem the bonds in cash, and if the conversion value exceeds the nominal value of the bonds, both in cash and treasury shares of a variable number, or in shares only, by applying the conversion ratio. In certain cases defined in the securities note dated 9 July 2014, Assystem may redeem the Odirnane bonds by buying them back for a pre-defined price (corresponding to their nominal value plus accrued coupons and any arrears). In addition, Assystem may at any time, buy back all or some of the outstanding bonds on the market from the bondholders, at a price to be agreed upon. The Group has recognised the Odirnane bonds as equity instruments in view of the fact that: ● there is no contractual obligation to repay the nominal amount except if the Company is liquidated, as IAS 32 states that the issuer’s requirement to settle the obligation in the event of liquidation does not prevent classification as an equity instrument; and ● either depend on the issuer’s liquidation – as indicated above, the obligation for the issuer to proceed with payment in the event of liquidation does not establish the existence of a debt within the meaning of IAS 32; ● are under the issuer’s control (dividend payment, purchase of treasury shares or equivalent, early redemption decided by the issuer, decision regarding the next coupon payment on the bonds, etc.). PERPETUAL BONDS REDEEMABLE IN CASH AND/OR IN NEW OR EXISTING SHARES (ODIRNANE BONDS) ● the coupon payments to bondholders:

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ASSYSTEM

FINANCIAL REPORT 2015