Areva - Reference Document 2016

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20.4 Notes to the annual financial statements FINANCIAL INFORMATION CONCERNING ASSETS, FINANCIAL POSITION AND FINANCIAL PERFORMANCE

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;

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.

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