Orano - Annual Activity Report 2024 328 6 STATEMENTS Consolidated financial statements - financial year ended December 31, 2024 ● initial direct costs: these are the incremental costs incurred by the lessee for the conclusion of the contract; and ● the estimated costs of remediation of the leased property; this amount is discounted and recorded against a provision for remediation. In the statement of income, rental expense is replaced by an amortization expense for the right of use and an interest charge. This restatement results in the recognition of deferred taxes. In the statement of cash flows, only the interest expense impacts the cash flows generated by the activity; the repayment of the principal of the lease liability affects the cash flows linked to financing operations. Leases on contracts for assets with a low unit value or for short terms are expensed directly. The right of use and the lease liability are amortized over the term of the lease, which is the firm period of the commitment taking into account optional periods that are reasonably certain to be exercised. The probability of exercising a renewal option or not exercising a termination option is determined by type of contract or on a case-by-case basis based on contractual and regulatory provisions, the nature of the underlying asset, its specific features and its location, as appropriate. For impairment testing, right-of-use assets are allocated to the CGU or group of CGUs to which they belong. To this end, the value of the right-of-use asset is integrated into the carrying amount of the CGU or group of CGUs and the lease payments used to calculate the lease liability are excluded from the future cash flows used to determine the value in use of the CGU or group of CGUs tested. These procedures for carrying out impairment testing in connection with the application of IFRS 16 did not have a material impact on the results of testing in view of the amount of right-ofuse assets. 1.3.7.4. Incorporation of borrowing costs In accordance with IAS 23 revised, effective since January 1, 2009, the borrowing costs related to acquisitions of property, plant and equipment and intangible assets for projects initiated after that date and for which the construction or development period is greater than one year are included in the costs of these assets. Borrowing costs are not included in the measurement of property, plant and equipment and intangible assets when: ● they came into service before January 1, 2009; or ● they came into service after this date, but the expenses were incurred and recognized as non-current assets in progress at December 31, 2008. 1.3.7.5. Impairment of property, plant and equipment, intangible assets and goodwill Assets that do not generate cash flows that are largely independent of each other are grouped together in the cash-generating units (CGUs) to which these assets belong. CGUs are uniform sets of assets whose ongoing use generates cash inflows that are largely independent of the cash inflows generated by other groups of assets. They reflect the way in which activities are managed within the group. Impairment tests are performed on property, plant and equipment and intangible assets with finite useful lives whenever there is an indication of impairment. Impairment losses on property, plant and equipment or intangible assets may be reversed later if there has been a change in the estimates used to determine the recoverable value of the asset and if that amount again comes to be greater than the net carrying amount. The value of the asset after reversal of the impairment loss is capped at the carrying amount net of amortization, as if no impairment loss had been recognized in prior years. The recoverable value of unmined deposits in the Mining business is measured on the basis of multiples of land (i.e., by comparison with resources and reserves valued according to the market capitalization of juniors comparable to the group’s mineral deposits that have not been mined). Reversals of impairment losses, when possible, are assessed in the light of changes in these multiples and future operating prospects. In addition, impairment tests are systematically performed at least once a year for goodwill and intangible assets with indefinite lives, and whenever there is an indication of loss of value. Such tests are performed at the level of the cash-generating units (CGU) or groups of CGUs to which the goodwill and intangible assets belong. Impairment is recognized when the recoverable amount of the CGU is less than the net carrying amount of the assets belonging to it. Impairment losses recognized on goodwill cannot subsequently be reversed. The group performs impairment tests on its assets on the basis of its best estimate of their recoverable value, which is the greater of: ● its fair value less costs to sell, corresponding to the net realizable value based on observable data, when available (recent transactions, offers received from potential acquirers, reported ratios for comparable publicly traded companies, multiples of uranium resources in the ground obtained by comparing the market capitalizations of comparable companies with the stated deposit reserves or resources); and ● its value in use, which is equal to the present value of projected future cash flows generated, resulting from the strategic plan validated by the governance bodies and underlying assumptions, plus the “terminal value”, corresponding to the value forecast and discounted to infinity, of cash flows for the “normative” year estimated at the end of the period covered by future cash flow projections. However, some CGUs or groups of CGUs have finite lives (depending on the volume of ore resources in Mining or the duration of operating permits in nuclear operations); in such cases, the cash flows taken into account to assess their value in use are not forecast and discounted to infinity but within the limit of their expected useful lives. The discount rates used are based on the weighted average cost of capital of each of the assets or groups of assets concerned. They are calculated after tax. Impairment tests are sensitive to the macroeconomic (including the US dollar exchange rate) and sector-based assumptions used, particularly in terms of changes in ore prices or those of
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