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

Deferred tax liabilities are recorded for all taxable temporary differences of subsidiaries, associates and partnerships, unless AREVA is in a position to control the timing of reversal of the temporary differences and it is probable that such reversal will not take place in the foreseeable future. Tax accounts are reviewed at the end of each financial year, in particular to take into account changes in tax laws and the likelihood that amounts recognized will be recovered. Deferred taxes are recognized through profit and loss, unless they concern “other items of comprehensive income”, i.e. changes in the value of available-for-sale securities and derivatives considered as cash flow hedges, currency translation adjustments on borrowings considered as hedges of net investments in foreign operations, or actuarial gains and losses resulting from changes in assumptions used to calculate post-employment employee benefits. Deferred taxes related to these items are also recognized under “other items of comprehensive income”. AREVA elected to recognize the value added business tax ( contribution sur la valeur ajoutée des entreprises , CVAE); as of 2010, all of its French subsidiaries are subject to this tax on net income (including the tax for Chamber of Commerce and Industry expenses) at the rate of 1.6%. AREVA considers that the base for calculation of the CVAE is a net amount rather than a gross amount, since the value added of its largest French subsidiaries represents a relatively small percentage of their revenue, bringing the value added business tax into the scope of accounting standard IAS 12, Income Taxes. As provided in IAS 12, this election requires recognition of deferred taxes at the rate of 1.6% on temporary differences for: p assets that produce economic benefits subject to the CVAE tax that cannot be deducted from the value added. At January 1, 2010, the basis selected for

temporary differences consisted of the net carrying amount of property, plant and equipment and intangible assets eligible for depreciation. Beginning in 2010, no deferred tax liability is recognized on asset acquisitions other than business combinations, in application of the exemption provided by IAS 12 for initial recognition of an asset or a liability; p asset impairments and provisions that may not be deducted from the CVAE but that relate to expenses that will be deducted from the value added at a later date. Since the CVAE tax is deductible for income tax purposes, deferred taxes are recognized at the standard rate on deferred tax assets and liabilities recognized for the CVAE, as described in the previous paragraph. Deferred tax assets The recoverable share of the AREVA group’s deferred tax assets is that for which the probability of recovery is higher than 50%. To determine that probability, the group performs a three-stage analysis: (a) demonstration of the non-recurrent nature of the losses; (b) analysis of the outlook for future income; and (c) analysis of tax management opportunities. Regarding the outlook for future income, the probability of future taxable profits to offset losses carried forward is assessed based on forecasts generated as part of the budget process validated by management. The income outlook is determined for a 10-year period for each entity and/or consolidated area, based on the initial budget and income forecasts for the first 3 years; beyond that time, a standard year derived from third-year data is used. The 10-year forecasting horizon selected is consistent with the volume in group’s backlog, the operating period of the assets, and the existence of certain framework agreements.

NOTE 2. SCOPE OF CONSOLIDATION

2.1. CONSOLIDATED COMPANIES AND ASSOCIATES

(number of companies)

2016

2015

Consolidation method

Foreign

French

Foreign

French

Full consolidation

74 18 92

40

84 17

43

Equity method

8

8

Sub-total

48

101

51

TOTAL

140

152

Note 36 provides a list of the main consolidated companies and associates.

2.2. 2016 TRANSACTIONS

Sale of Elta On November 30, 2016, AREVA TA and AREVA SA sold their interests in Elta to ECAGroup, a subsidiary of the Gorgé group. Elta is specialized in the development, marketing and operational readiness of electronic equipment and systems for the aerospace industry. This sale was done in connection with the implementation of AREVA TA’s strategic plan aimed at refocusing its operations on the nuclear field.

Sale of Canberra Inc., Canberra France and their subsidiaries On July 1, 2016, AREVA sold Canberra, an AREVA subsidiary specialized in radioactivity detection and measurement instrumentation, to the industrial group Mirion Technologies, Inc.

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2016 AREVA REFERENCE DOCUMENT