Orano - Annual Activity Report 2025 333 FINANCIAL STATEMENTS 6 Consolidated financial statements – financial year ended December 31, 2025 maturities by a long-term equilibrium rate (source: ultimate forward rate “UFR” published by the European Insurance and Occupational Pensions Authority for very long-term insurance liabilities, with disbursements beyond market horizons), to which is added an Investment-Grade corporate bond spread and an illiquidity premium. Based on expected disbursements, a single equivalent rate is deducted from the rate curve constructed in this manner. The revision of the discount rate is accordingly a function of market rates and structural changes in the economy resulting in sustainable medium-and long-term changes. According to Articles D. 594-1 et seq. of the French Environmental Code and the order of March 21, 2007 on securing the financing of nuclear expenses, as amended on July 1, 2020, a deficit or surplus in coverage (ratio of earmarked assets at fair value to regulated end-of-lifecycle provisions) is calculated on the basis of the actual discount rate (i.e. net of inflation) thus determined, when: ● the gross discount rate remains lower than the projected rate of return on hedging assets, prudently estimated taking into account the disbursement horizon; and ● the actual discount rate remains below the ceiling rate, set by order of the Ministers responsible for the economy and energy, equal to the unrounded value representative of expectations regarding real long-term interest rates, used for the calculation published by the European Insurance and Occupational Pensions Authority of the ultimate forward rate applicable on the date in question, increased by 150 basis points. In the event that the actual discount rate used to calculate the discounting of end-of-lifecycle commitments is higher than the regulatory ceiling rate, the deficit or surplus in coverage would be determined on the basis of the latter. Treatment of changes in assumptions Changes in assumptions relate to changes in cost estimates, discount and inflation rates, and payment schedules. In application of the prospective method: ● if the facility is in operation, dismantling assets are adjusted in the same amount as the provision; dismantling assets are amortized over the remaining life of the facilities. If the decrease in the provision is greater than the net carrying amount of the dismantling asset, then the gross value of the underlying asset is impacted. If the net carrying amount of the underlying asset is insufficient, then the balance is recognized in operating income; ● if the facility is no longer in operation, or if the operations cover historical waste retrieval and packaging (WRP), the impact is expensed in the year of the change for the remaining share of the cost to the group. The impact of changes in cost estimates is recognized under operating income in “Other operating income and expenses”; the impact of changes in discount and inflation rates related to changes in market conditions and changes in the payment schedules is reflected in net financial income (expense); and ● in the context of a commercial contract involving the acquisition of ownership of waste creating an obligation to constitute an end-of-lifecycle liability, the business margin must be impacted by the cost of this obligation, through an offsetting entry in the provision account of the statement of financial position. End-of-lifecycle assets (third-party share) The group may be required to carry out dismantling operations, funded in part by third parties. Provisions for end-of-lifecycle operations cover all operations. They are recognized against “Dismantling assets of nuclear facilities” for the group’s share, and, as an offset, against the non-current asset account “Dismantling assets – third party share” for the amount of the funding expected from the third party. End-of-lifecycle assets – third party share are not amortized. They are discounted symmetrically with the corresponding provisions. Accretion effects increasing the value of the asset are recorded in a financial income account. They are reduced as the contractual work is performed. 1.3.13 Income tax Income taxes include current tax expense (income) and deferred tax expense (income), calculated in accordance with the tax laws of the countries where the income is taxable. Current tax Current tax assets and liabilities are measured based on the expected amount that will be received from or paid to the tax authorities. Current tax relating to items recognized in equity is also recognized in equity, and not in the statement of income. When the positions it has taken in its tax returns are subject to interpretation, management periodically reviews them, and records provisions accordingly when it deems necessary. Deferred taxes As provided for in IAS 12, deferred tax is determined for all temporary differences between net carrying amounts and the tax basis of assets and liabilities, to which is applied the anticipated tax rate at the time of reversal of these temporary differences, and which has been adopted as of the reporting date. They are not discounted. Temporary taxable differences generate a deferred tax liability. Temporary deductible differences, tax loss carry forwards, and unused tax credits generate a deferred tax asset equal to the probable amounts recoverable in the future. Deferred tax assets are analyzed case by case for recoverability, taking into account the income projections from the group’s strategic action plan. Deferred tax liabilities are recorded for all taxable temporary differences of subsidiaries, associates and joint ventures, unless the group 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 will be recovered.
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