Areva - Reference Document 2016

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20.2 Notes to the consolidated financial statements for the year ended December 31, 2016 FINANCIAL INFORMATION CONCERNING ASSETS, FINANCIAL POSITION AND FINANCIAL PERFORMANCE

1.3.8. Valuation of property, plant and equipment and intangible assets

p Pre-mining development expenses concern a project which, as of the date of the financial statements, has a strong chance of technical success and commercial profitability, and are capitalized. Indirect costs, excluding overhead expenses, are included in the valuation of these costs. Capitalized pre-mining expenses are amortized in proportion to the number of tons mined from the reserves they helped identify. GREENHOUSE GAS EMISSIONS ALLOWANCES Following the withdrawal of IFRIC 3 by the IASB, and pending a decision by regulators on accounting for greenhouse gas emission allowances, AREVA does not record an asset or provision as long as the group’s emissions are lower than the allowances it has received. AREVA does not trade speculatively on emission allowance markets. The group’s only transactions were sales of rights corresponding to allowances allocated to it in excess of its actual carbon dioxide emissions. Proceeds from these sales are recognized in profit or loss under other operating income. OTHER INTANGIBLE ASSETS An intangible asset is recognized when it is probable that future economic benefits therefrom will accrue to the company and if the cost of this asset can be reliably estimated based on reasonable and documented assumptions. Intangible assets are recorded at their acquisition or production cost. Goodwill and trademarks produced internally are not capitalized. Depreciation of intangible assets is calculated using the most appropriate method for the asset category (straight-line depreciation or as a function of the production units), starting on the date they were placed in service and over the shorter of their probable period of use or, when applicable, the length of their legal protection. An intangible asset whose useful life is not defined, such as a brand, is not amortized, but is subject to impairment tests (see note 1.3.9). 1.3.8.4. Property, plant and equipment Property, plant and equipment are recognized at acquisition or production cost, including startup expenses, less cumulative depreciation and impairment. The cost of nuclear facilities includes the AREVA group’s share of provisions for end-of-lifecycle operations, estimated at the date they are placed in service, termed “end-of-lifecycle assets – group share” (see note 1.3.17). In accordance with IFRIC 1, changes in provisions for end-of-lifecycle operations coming from changes in estimates or calculation assumptions and relating to nuclear facilities in operation are offset by a change in the same amount of the assets to which these provisions relate. Property, plant and equipment are depreciated based on the approach deemed most representative of the economic depreciation of the assets (straight- line depreciation or as a function of the production units); each component is depreciated over its specific useful life. Mining land is depreciated over the operating period of the deposit; site layout and preparation expenses are depreciated over 10 years; buildings over 10 to 45 years; production facilities, equipment and tooling other than nuclear facilities over 5 to 10 years; general facilities and miscellaneous fixtures over 10 to 20 years; and transportation equipment, office equipment, computer equipment and furniture over 3 to 10 years. The nuclear facilities are depreciated on a straight line over their useful life, measured by taking into account the duration of the portfolios of existing or reasonably foreseeable contracts performed in those facilities.

1.3.8.1. Initial recognition Property, plant and equipment and intangible assets are valued using the amortized cost method. AREVA did not elect to recognize certain property, plant and equipment and intangible assets at fair value, as allowed under IFRS 1 for the first-time adoption of IFRS on January 1, 2004. 1.3.8.2. Inclusion of borrowing costs Borrowing costs are not included in the valuation of property, plant and equipment and intangible assets: p placed in service after that date but for which expenses had been incurred and recognized as assets in progress at December 31, 2008. In accordance with the amended IAS 23 accounting standard, effective as from January 1, 2009, the borrowing costs related to investments in property, plant and equipment and intangible assets for projects initiated after that date and for which the period of construction or development is more than one year are included in the costs of these assets. RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses incurred by AREVA for its own account are expensed as they are incurred. Research and development expenses funded by customers under contracts are included in the production cost of these contracts and recorded under cost of sales when the corresponding revenue is recognized in income. As provided in IAS 38, expenses relating to development projects are recorded as intangible assets if the project meets the following six criteria: p placed in service before January 1, 2009; or 1.3.8.3. Intangible assets

technical feasibility;

p

p intention of completing, using or selling the asset;

p ability to use or sell the asset;

p generation of future economic benefits (existence of a market or internal use);

p availability of adequate financial resources for completion; and p reliability of measurement of costs attributable to the asset.

Capitalized development costs are then amortized over the probable useful life of the intangible asset, as from the commissioning date. They are depreciated on a straight-line basis over a minimum period of time. Costs expensed in a year prior to the decision to capitalize may not be capitalized subsequently. MINERAL EXPLORATION AND PRE-MINING DEVELOPMENT Mineral exploration and pre-development work are valued according to the following rules: p Exploration expenses whose purpose is to identify new mineral resources, and expenses related to assessments and pre-development of identified deposits are incurred before project profitability is determined and are recognized as research and development expenses for the period.

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2016 AREVA REFERENCE DOCUMENT