Orano - Annual Activity Report 2024 329 STATEMENTS 6 Consolidated financial statements - financial year ended December 31, 2024 conversion and enrichment services, as well as the useful lives of the underlying assets. In view of this sensitivity, the group revises its underlying estimates and assumptions at least once a year, or more often as required by changes in market conditions. 1.3.8. Inventories and work-in-process Inventories are carried at the lesser of their historical cost and their net realizable value, which is the estimated selling price in the ordinary course of business, less anticipated completion costs or costs to sell. Inventory consumption is generally measured using the weighted average unit cost method. The entry cost of inventories includes all direct material costs, labor costs and the allocation of indirect production costs. In the case of material loans with transfer of ownership, the group recognizes in inventory the borrowed material at the weighted average unit cost, which corresponds to its estimated fair value on the transaction date. In return, a liability corresponding to the obligation to return the material, valued at each reporting date, according to the return assumption (based on the group’s future production or external purchases), is recognized in “Trade payables”. 1.3.9. Financial assets and liabilities Financial assets Financial assets consist of: ● financial assets earmarked for end-of-lifecycle operations; ● equity interests in unconsolidated companies; ● loans, advances, and deposits; ● trade accounts receivable and related accounts; ● certain other operating receivables; ● pledged bank accounts; ● cash and cash equivalents; and ● the positive fair value of derivatives. Financial liabilities Financial liabilities include: ● borrowings; ● trade payables; ● certain other operating liabilities; ● bank overdrafts; and ● the negative fair value of derivatives. 1.3.9.1. Classification and measurement of financial assets and liabilities IFRS 9 requires financial assets to be classified in one of three categories: amortized cost, fair value through profit or loss, or fair value through other items of comprehensive income, depending on the business model defined by the entity and the characteristics of its contractual cash flows (the so-called “solely payments of principal and interest” criterion or SPPI). Assets meeting the definition of debt instruments (contractual cash flows associated with interest payments and repayments of capital) are recognized: ● at amortized cost when the group holds them in order to collect all contractual cash flows; ● at fair value through profit or loss when the group holds them in order to sell them and realize a capital gain; ● at fair value through other items of comprehensive income where the group holds them for the mixed purpose of collecting contractual cash flows and selling them (with the gain or loss recycled in profit or loss on the date of transfer). Assets meeting the definition of equity instruments (equities or equity mutual funds) are recognized at fair value through profit or loss unless the group opts irrevocably to recognize them at fair value through other items of comprehensive income (without recycling gains or losses in profit or loss). As an exception to these principles, certain instruments may be recognized at fair value through profit or loss when this treatment makes it possible to offset a matching position affecting the statement of income. 1.3.9.2. Measurement methods for financial assets and liabilities With the exception of financial assets and liabilities measured at amortized cost, the group measures its financial assets and liabilities at fair value at the reporting date. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability as part of a normal transaction between market participants on the measurement date. All assets and liabilities measured at fair value are valued using techniques that seek to maximize the use of observable market data. These techniques are hierarchical, and have three levels: ● level 1 (unadjusted quoted prices): price at which the group may access identical assets or liabilities in active markets; ● level 2 (observable inputs): valuation techniques based on inputs that are observable, either directly or indirectly, in an active market for similar instruments; and ● level 3 (unobservable inputs): valuation techniques primarily using unobservable inputs, including observable inputs with significant adjustments. 1.3.9.3. Financial assets earmarked for end-of-lifecycle operations This heading brings together all the investments that Orano earmarks for the funding of its future end-of-lifecycle operations in nuclear operations, including facility dismantling and waste retrieval and packaging. It includes directly-held publicly traded shares and bonds, earmarked equity mutual investment funds, earmarked bond and money-market mutual investment funds, and cash. It also includes receivables resulting from agreements with third parties for the funding of end-of-lifecycle operations; these receivables are recognized using the method described in Note 1.3.9.5.
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