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FINANCIAL STATEMENTS
6
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.
Debt and other financial liabilities
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.
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.
PERPETUAL BONDS REDEEMABLE IN CASH AND/OR IN NEW OR EXISTING
SHARES (ODIRNANE BONDS)
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
●
the coupon payments to bondholders:
●
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.).
ASSYSTEM
FINANCIAL REPORT
2015
84