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20.4 Notes to the annual financial statements
FINANCIAL INFORMATION CONCERNING ASSETS,
FINANCIAL POSITION AND FINANCIAL PERFORMANCE
20
Loans to associates are recorded at face value. A provision for impairment is
recognized if necessary to reflect the actual value at year end.
20.4.2.3.
RECEIVABLES AND BORROWINGS
Receivables and borrowings are recorded at nominal value. Receivables may
be written down by a provision to reflect potential collection difficulties based on
information available at closing.
Receivables and borrowings in foreign currencies are translated and recorded in
euros based on exchange rates in effect at year end. Unrealized gains and losses
are recorded on the balance sheet as currency translation differences. Receivables
and borrowings in foreign currencies whose exchange rates have been hedged are
recorded in euros based on the hedged rate. Unrealized foreign exchange losses
are recognized through a contingency provision.
20.4.2.4.
FINANCIAL INSTRUMENTS
AREVA SA uses derivatives to hedge foreign exchange risks, interest rate risks and
the price of commodities, both for its own account and for transactions carried out
by its subsidiaries. The derivatives used are mainly forward exchange contracts,
currency and interest rate swaps, inflation swaps, currency options and commodity
options.
The risks hedged relate to receivables, borrowings and firm commitments in foreign
currencies, planned transactions in foreign currencies, and planned sales and
purchases of commodities. Derivatives traded to hedge subsidiaries’ exposure are
issued by banking counterparties. Thus, AREVA SA’s exposure to its subsidiaries
is strictly offset by AREVA SA’s positions with the banks.
Accounting principles:
p
Gains and losses on derivatives traded to hedge the subsidiaries’ exposure are
recognized through profit and loss at maturity, thus matching the gains and
losses recognized on the derivatives negotiated by AREVA SA with the banks.
p
Interest rate derivatives negotiated by AREVA SA are qualified as hedging
instruments. Interest is recognized as accrued.
20.4.2.5.
MARKETABLE SECURITIES
Marketable securities are valued at the lower of their acquisition cost or their net
carrying amount. A provision for impairment is recorded when the valuation at
the end of the period shows an overall capital loss by class of securities. The net
carrying amount is equal to the average closing market price of the securities for
the last month of the period.
A provision for impairment of other cash investments, such as debt instruments that
are not publicly traded, is recorded separately when warranted.
20.4.2.6.
NON-TRADE CURRENT ACCOUNTS
Non-trade current accounts are reported under “cash and cash equivalents” on
the assets side of the balance sheet; otherwise, they appear in borrowings on the
liabilities side.
20.4.2.7.
BOND ISSUES
Bond debt is recognized as borrowings, as provided in generally accepted
accounting principles in France (
Plan comptable général
).
Redemption premiums and deferred charges related to bond issues are amortized
in a straight line over the term of the issue.
20.4.2.8.
PROVISIONS FOR CONTINGENCIES AND LOSSES
AREVA’s provisions for contingencies and losses are consistent with French
accounting board rules on liabilities dated December 7, 2000 (CRC 2000-06).
AREVA SA records provisions for contingencies and losses, for instance to cover
restructuring or litigation expenses.
Contingent liabilities represent obligations that are neither probable nor certain at
the date of closing, or obligations that are probable but where no resource is likely
to be expended. Contingent liabilities are not recognized in provisions, but rather
disclosed in the notes (see Section 4.10).
20.4.2.9.
EMPLOYEE BENEFITS
In the case of defined contribution plans, the group’s payments are recognized as
expenses for the period to which they relate.
The financial statements also reflect all of AREVA’s pension, retirement and related
benefit commitments, both for active personnel and for retirees, net of any plan
assets and unrecognized gains covering the liabilities.
For defined benefit plans, benefit costs are estimated using the projected credit
unit method. Under this method, accrued pension benefits are allocated among
service periods based on the plan vesting formula. If services in subsequent years
result in accrued benefit levels that are substantially higher than those of previous
years, the Company must allocate the accrued benefits on a straight-line basis. The
amount of future benefit payments to employees is determined based on salary
trend assumptions, retirement age andmortality, discounted to present value based
on interest rates for long-term bonds from AAA issuers.
Actuarial gains and losses are spread out over the average expected remaining
working life of personnel taking part in these plans for the portion exceeding the
largest of the following values by more than 10%:
p
the present value of the defined benefit obligation at the balance sheet opening
date;
p
the fair value of plan assets at the balance sheet opening date.
The costs of plan changes are allocated over the vesting period.
20.4.2.10.
EXCEPTIONAL ITEMS
Items related to the company’s ordinary operations are recognized in income before
tax and extraordinary items, even if they are exceptional in terms of frequency or
amount. Only items that are not related to the company’s ordinary operations are
recognized as exceptional items in the income statement, in addition to transactions
specifically qualified as exceptional items under French GAAP (regulated provisions,
reversals of investment subsidies, gains on disposals of certain assets, etc.).
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2016 AREVA
REFERENCE DOCUMENT