Assystem - 2015 Registration Document

FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

The Group’s long record of dividend payments on ordinary shares – which automatically triggers the payment of coupons on the instruments – does not call into question the absence of a contractual obligation within the meaning of IAS 32. Lastly, the “step-up” clause under which the amount of the coupons is increased significantly after a certain date if the instruments have not been bought back by the issuer beforehand, and the clause related to late payment interest on the coupons (which is capitalised and accrues at the same interest rate as applicable to the bonds), correspond to economic constraints and not contractual obligations pursuant to IAS 32 and its current interpretations. In view of the characteristics of the instruments and the facts detailed above, Assystem has no contractual obligation to make payments in respect of these perpetual debt instruments. The various options described above do not prevent the Odirnane bonds from being classified as equity instruments. Other non-current liabilities Put options over non-controlling interests (contingent liabilities relating to share acquisitions) The Group may write put options over non-controlling interests in certain of its subsidiaries. The exercise price may be fixed or based on a pre- determined formula. The Group records a financial liability for the put options over the non- controlling interests in the entities concerned. This liability is initially recognised at the present value of the exercise price and at the end of subsequent reporting periods it is measured by reference to the fair value of the shares that would potentially have to be purchased if the exercise price is based on fair value. Subsequent changes in the fair value of the put are recognised in financial income or expenses. Derivative instruments The Group uses derivative instruments to manage and reduce its exposure to changes in interest rates and foreign exchange rates. Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently remeasured at fair value at each reporting date. The method of recognising the resulting fair value gains or losses depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the hedged item. On inception of a hedge, the Group documents the relationship between the hedged item and the hedging instrument. The Group also documents its estimates both on inception and prospectively to determine the effectiveness of the hedge in offsetting changes in fair value or cash flows attributable to the hedged risk.

FAIR VALUE HEDGES Fair value hedges are used to hedge the Group’s exposure to changes in fair value of a recognised asset or liability (or an identified portion of such an asset or liability) or a firm commitment to purchase or sell an asset at a pre-defined price, that is attributable to a particular risk and could affect profit. Changes in fair value are recognised in the income statement. CASH FLOW HEDGES A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profit. The Group applies cash flow hedge accounting when the following conditions are met: ● there is formal designation and documentation of the hedging relationship; The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in the income statement. If the hedging instrument expires, or is sold, cancelled or exercised, the gain or loss initially recognised in other comprehensive income continues to be recorded separately in other comprehensive income until the forecast transaction occurs. If the commitment no longer exists or the forecast transaction is no longer expected to occur, any related cumulative gain or loss on the hedging instrument that had been recognised directly in other comprehensive income is reclassified to profit. Provisions In accordance with IAS 37, a provision is recorded when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the obligation can be measured reliably. Where the effect of the time value of money is material, provisions are discounted using a discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a financial expense. Employee benefit obligations The Group accounts for defined benefit and defined contribution post- employment benefit plans in accordance with the laws and practices of each country in which it operates. ● the hedge is highly effective; and ● the forecast transaction that is the subject of the hedge is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit.

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FINANCIAL REPORT 2015