Financial report 2011

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MANAGING DIRECTOR’S MANAGEMENT REPORT, CONSOLIDATED FINANCIAL STATEMENTS, TRANSACTIONS CARRIED OUT ON BEHALF OF THIRD PARTIES AND AUDITORS’ REPORT

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Financial report 2011

  1. 1. FINANCIALREPORT 2010
  2. 2. FINANCIAL REPORT 2010INDEXMANAGING DIRECTOR’S MANAGEMENT REPORT ..................................................................................................... 4CONSOLIDATED FINANCIAL STATEMENTS ...................................................................................................................................... . 6 CONSOLIDATED BALANCE SHEET – UNEMPLOYMENT INSURANCE.................................................................................. 6 . CONSOLIDATED PROFIT AND LOSS ACCOUNT – UNEMPLOYMENT INSURANCE .................................. 7 CONSOLIDATED CASH FLOW STATEMENT – UNEMPLOYMENT INSURANCE ................................................... 8 . APPENDIX................................................................................................................................................................................................................................................................................................... 9 . 1. Key events of the financial year ....................................................................................................................................................................................................... 9 2. Accounting principles, rules and methods ................................................................................................................................................................ 13 3. Balance sheet analysis ................................................................................................................................................................................................................................. 16 4. Profit and loss account analysis .................................................................................................................................................................................................. 22 5. Additional information ................................................................................................................................................................................................................................... 27TRANSACTIONS CARRIED OUT ON BEHALF OF THIRD PARTIES .......................... . 28AUDITORS’ REPORT ....................................................................................................................................................................................................................................... . 30 2010 – UNÉDIC FINANCIAL REPORT - 03
  3. 3. MANAGING DIRECTOR’S MANAGEMENT REPORT Characteristics of 2010 • enefit expenses increased by 9.4% in one year B - 5.4% for Unemployment benefit (Allocation d’aide au retour à l’emploi – ARE) - 22.8% for the other benefits After a year marked by an • Proceeds from contributions rose by 2%, all factors remaining equal1, unprecedented economic and reflecting the increase in the affiliated wage bill in 2010. financial crisis, growth in emerging countries was very vigorous, while In this context, the technical management transactions are loss-making for the it remained more modest in the 2010 financial year, by 3.21 billion Euros, before assignment of administrative main advanced economies. Thus, management and financial management expenses, in particular. in 2010, GDP in France rose by In terms of financing the Unemployment insurance scheme, it should be an annual average of 1.4%, after emphasised that: dropping by 2.6% in 2009 (Source: • During autumn, the rating agencies confirmed the maximum ratings INSEE (French National Institute of attributed to Unédic (AAA, Aaa,) which may therefore continue to appear Statistics and Economic Studies). on financial markets while benefiting from the best credit terms, After an acceleration recorded in • The Amending Finance Law of 30 December 2010 authorises the Ministry spring 2010, French activity stalled of Economy and Finance to grant a French State guarantee to bond issues in the second half of the year due which Unédic shall launch in 2011 up to the maximum principal amount to several exceptional factors of 7.5 billion Euros. (the cold weather, strikes) which disturbed activity. Growth in 2010 Reconciliation between the change in cash was driven predominantly by strong balance and the accounting result household consumption but also benefited from an improvement in CHANGE IN CASH BALANCE foreign trade. Business investment The net change in cash balance for the Unemployment insurance transactions continued to drop, albeit at a is negative by 2,974 million Euros and is analysed in the following manner: slower pace than in 2009, while the 31 Dec 2009 31 Dec 2010 Change adjustment transaction of business Bond issues -6 200 -4 000 2 200 inventories died down. Bridging facility 0 -650 -650 Commercial papers -2 625 -5 280 -2 655 Together with the economic Overdraft -35 -3 32 recovery, employment affiliated Investments 3 265 1 364 -1 901 to the Unemployment insurance Total -5 595 -8 569 -2 974 scheme rose by 0.7% in 2010, i.e. 119,700 jobs over one year, after and represents the result of current transactions. dropping by 1.5% in 2009. At the same The contribution due to Pôle emploi (State employment agency) for the time, the increase in the number 2010 financial year increased to 2,973 million Euros. Given the payments of unemployed persons receiving made and the set-off of debts and receivables between Pôle emploi and benefits from the Unemployment Unédic, the balance registered in the credit of the Pôle emploi 10% contri- insurance scheme slowed down bution account is reduced to 337 million Euros. (+2.4% in 2010 after +15.1% in 2009). There were 2,196,000 recipients as NET ACCOUNTING RESULT at 31 December 2010 (Seasonally The consolidated net accounting result of the Unemployment insurance adjusted estimate data, mainland scheme, that is to say in terms of expenses and income, represents a deficit France). amounting to 3,246.8 million Euros. The discrepancy between the change in cash balance within the meaning This change in the labour market of “technical equilibrium” and the net accounting result is explained by limited the depreciation of the the transactions with no effect on the cash flow, i.e. a net expense resul- Unemployment insurance scheme’s ting from inventory entries for 273 million Euros (differential on benefits accounts in 2010: to be paid, contributions to be received, current accounts, pension points to be paid, write-offs, benefit overpayments, amortisation, provisions for contingencies and expenses, etc.). (1) Basic changes to the management of income resulting from the transfer of recovery to Acoss (Central Agency of Social Security Organisations)04 - UNÉDIC FINANCIAL REPORT - 2010
  4. 4. MANAGING DIRECTOR’S MANAGEMENT REPORTThe net financial position, taking 4% payable by the employer and 2011 Outlookinto account the result for the 2.4% payable by the employees. In France, the increase in thefinancial year is negative up to The rate is likely to be revised number of unemployed persons9,150 million Euros as of 31 Decem- downwards depending on the receiving benefits from theber 2010. level of the half-yearly operating Unemployment insurance scheme result and that of debt. slowed down in 2010: 51,500Certification of the This agreement shall be recipients after 282,000 in 2009.accounts for the applicable until 31 December 2013. The hypotheses used to forecastfinancial year However, the clause setting out the the 2011 break-even point for the conditions according to which Unemployment insurance schemeThe accounts for the 2010 financial the rate of contributions may beyear have been drawn up in accor- are as follows: reduced shall be applicable until • GDP: +1.8%dance with the chart of accounts 31 December 2016.of the Unemployment insurance • Inflation: +2.0%organisations. The 2010 financial In line with the acceleration of THE EXTENSION OF THE TRANSFER activity recorded at the start ofyear was not marked by any change OF RECOVERY TO ACOSS the year, employment affiliatedin accounting method, but takesinto account the consequences Law no. 2008-126 of 26 February to the Unemployment insuranceof the first stages of the transfer 2008 on the reform of the scheme would rise by 146,000of recovery to Acoss, and also the organisation of the public jobs in 2011. In the wake of jobstart of Unédic’s direct relationship employment service provided creations, the number ofwith the CCMSA (Central Fund for for the transfer of recovery to unemployed persons receivingthe Agricultural Mutual Insurance Acoss after a preparatory stage of benefits from the UnemploymentScheme), taking over the inven- recovery carried out by Pôle insurance scheme would decreasetory operations from Pôle emploi. emploi. The date of transfer to by 79,000 in 2011.Thus, 52 employer accounts from Acoss had been approved by thethe Paris region were managed three organisations and scheduled The rise in inflation and thefor the Unemployment insurance for 1 January 2011. improvement in the labour marketand AGS (Employer Insolvency would benefit the average wage After the completion of two per head of the non-agricultureInsurance) part by the Paris Urssaf(Social Security Contribution test stages with a sample of 52 market sector, which would rise byCollection Agency) from January companies from the Paris region 2.3% in 2011, then by 2.5% in 2012.2010, with the Rhône department as of January 2010, then all of Finally, the wage bill would profitbeing managed by the Rhône the employers from the Rhône from increased employment in theUrssaf as of September 2010. department as of September 2010 non-agricultural market sector: itThe establishment of separate to launch the new procedures and would increase by 3.1% in 2011 thenaccounts for Unemployment recovery circuits, the extension of by 3.5% in 2012.insurance organisations concerns recovery to all the employers was All of these effects lead toonly two institutions, the Lorraine implemented as of 1 January 2011. forecast a deterioration in theand Guyana Assédic agencies, with This measure primarily concerns financial position of the Unem-all the others being integrated into Acoss and the network of Urssaf ployment insurance scheme whichUnédic’s certified accounts. All agencies, but also the Social might be in the region of 2.0 billionof the separate and consolidated Services Compensation Fund Euros over the financial year.accounts were certified unreserve- Unédic’s indebtedness would (CCSS) of Monaco and the Socialdly by the Auditors. therefore be approximately 10.6 Security Fund (CPS) of Saint- Pierre and Miquelon. The CCMSA billion Euros as at 31 December 2011.Events subsequent to and the CCVRP (Social Secu- To guarantee the liquidityclosure rity and Unemployment Benefit required to fulfil its missions, Unédic shall have to contract newUNEMPLOYMENT INSURANCE Management Agency) shall retain loans throughout 2011.AGREEMENT OF 6 MAY 2011 their powers of recovery for their To this end, the Board ofAs of 1 June 2011, this agreement specific business sector while Pôle Directors, which convened on 29shall replace the agreement of emploi shall continue to manage June 2010, approved a 4.5 billion Euro19 February 2009 extended until recovery for casual workers in programme of bond issues, in one31 May 2011 to allow for the the entertainment industry, expa- or more tranches, with a maximumcontinued payment of benefits. triates, the personal redeployment term of 5 years. An initial trancheThe contribution rate remain fixed agreement (CRP) arrangement and was successfully launched in Marchat 6.4% and is divided up as follows: the burden of bad debts. 2011 for 1.5 billion Euros in 3 years. 2010 – UNÉDIC FINANCIAL REPORT - 05
  5. 5. CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheet – Unemployment insurance (in thousands of Euros) ASSETS 2010 2009 Fixed assets 234,8 464,0 Intangible fixed assets 2,8 14,1 Tangible fixed assets 203,1 420,5 Financial fixed assets 28,9 29,4 Current assets 5 445,8 7 832,8 Receivables : 3 930,0 4 256,3 - Benefit receivables 200,3 176,4 - Affiliated receivables 3 729,7 4 079,9 Other receivables 140,8 295,3 Marketable securities 1 364,2 3 265,2 Available capital 2,9 12,7 Prepaid expenses 7,9 3,3 Deferred expenses 2,9 4,4 B ond redemption premiums 8,0 12,2 TOTAL ASSETS 5 691,5 8 313,4 LIABILITIES 2010 2009 N et financial position -9 150,2 -5 903,4 Retained earnings -5 903,4 -4 738,0 Result for the financial year -3 246,8 -1 165,4 P rovisions for contingencies and expenses 60,7 33,0 Debts 14 767,9 14 162,7 Loans and financial debts 9 955,0 8 942,5 - Bond issues 4 006,4 6 266,6 - Other loans and financing 5 932,4 2 627,2 - Bank loans and overdrafts 2,6 34,9 - Other debts 13,6 13,8 Other debts 4 812,9 5 220,2 - Affiliated debts 105,6 102,7 - Benefit debts 2 372,5 2 345,8 - Tax and social security debts 68,5 63,2 - Trade payables 6,0 15,3 - State debts 0,0 0,0 - Other debts 2 260,3 2 693,2 Accruals 13,1 21,1 TOTAL LIABILITIES 5 691,5 8 313,406 - UNÉDIC FINANCIAL REPORT - 2010
  6. 6. CONSOLIDATED FINANCIAL STATEMENTSConsolidated profit and loss account – Unemployment insurance (in millions of Euros)TECHNICAL MANAGEMENT 2010 2009Income 30 809,6 30 886,4 Contributions 30 558,2 30 562,3 Other income 206,7 238,7 Write-back of provisions 23,3 9,8 Transfers of expenses 21,4 75,6Expenses 34 020,8 31 884,2 Unemployment benefit 25 047,6 23 761,3 Other benefits 2 634,1 2 144,2 Redeployment benefits 1 093,6 778,0 Validation of pension points 1 646,7 1 603,5 Other expenses 3 504,8 3 345,7 Provisions 94,0 251,5Technical profit or loss -3 211,2 -997,8ADMINISTRATIVE MANAGEMENTIncome 97,7 121,5 Provision of services 44,2 63,6 Other income 53,5 57,9Expenses 127,1 167,9 Purchases 0,7 0,9 External services 52,5 52,0 Taxes and levies 7,9 7,9 Wages and social security contributions 26,6 27,2 Other expenses 0,0 0,0 Depreciation expenses and provisions 39,4 79,9A dministrative management profit or loss -29,4 -46,4FINANCIAL MANAGEMENTENT Financial income 4,8 2,4 Financial expenses 121,5 118,0F inancial profit or loss -116,7 -115,6EXTRAORDINARY TRANSACTIONS Technical management 0,0 0,0 Administrative management 114,8 -0,8Extraordinary profit or loss 114,8 -0,8Corporation tax and similar levies -4,3 -4,8PROFIT OR LOSS -3 246,8 -1 165,4 2010 – UNÉDIC FINANCIAL REPORT - 07
  7. 7. CONSOLIDATED FINANCIAL STATEMENTS Consolidated cash flow statement – Unemployment insurance (in millions of Euros) 2010 2009 Consolidated net result -3 246,8 -1 165,4 Elimination of transactions with no effect on the cash flow or not linked to the activity: -5,1 314,5 - Amortisation and provisions 110,1 325,8 - Capital gains or losses on disposals -115,2 -11,2 Change in working capital requirement 10,2 191,7 N et cash flow linked to the activity -3 241,7 -659,2 Acquisition of tangible and intangible fixed assets -6,6 -54,1 Disposal of tangible and intangible fixed assets 326,3 24,1 Change in financial fixed assets 0,6 3,1 Change in suppliers of fixed assets -1,5 -8,2 N et cash flow linked to investment operations 318,8 -35,1 Bond issues -2 200,0 4 000,0 Short-term credit lines 650,0 0,0 Commercial papers 2 655,0 -375,0 Other transactions -60,4 -3,9 Net cash flow linked to financing transactions 1 044,6 3 621,1 Change in cash flow (all schemes) -1 878,5 2 926,9 Net cash flow at the opening of the period 3 243,0 316,1 Positive cash flow: available capital 3 277,9 394,6 Negative cash flow: bank loans and overdrafts -34,9 -78,5 Net cash flow at the closing of the period 1 364,5 3 243,0 Positive cash flow: available capital 1 367,1 3 277,9 Negative cash flow: bank loans and overdrafts -2,6 -34,98 - UNÉDIC FINANCIAL REPORT - 2010
  8. 8. APPENDIX: KEY EVENTS OF THE FINANCIAL YEARAPPENDIX1. KEY EVENTS OF THE FINANCIAL YEAR1.1. The first stages These results and guarantees sector and with Acoss for specific obtained for the three organisations arrangements such as “individualof the transfer of which were joined by the employers”, employer moneyrecovery Employer Insolvency Insurance vouchers for associations Association (AGS) led to the (chèques emploi associatifs) andLaw no. 2008-126 of 13 February signing of the agreement on the arrangements not included in the2008 on the reform of the organisation recovery of contributions and general agreement with Acoss.of the public employment service dues owed by the employers onprovided for the transfer of Pôle emploi shall permanently 17 December 2010.recovery to Acoss no later than retain the recovery of contributions1 January 2012. Financial flows for the sum of from casual workers in the enter- 615 million Euros were recorded tainment industry and expatriatesWork on this project carried out in 2010 for both these protocols and, for now, the management ofby Acoss, Pôle emploi and Unédic to which is added an amount of individual contributions linkedresulted in an early transfer on 155 million Euros collected in to the personal redeployment1 January 2011, but also in January 2011 for 2010. agreement (CRP) and thethe implementation of twoexperiments: Besides the work carried out occupation transition contract with Acoss and Pôle emploi for (CTP). It is also responsible for the• concerning 52 employers from the transfer of recovery, Unédic recovery of bad debts recorded as at the Paris region who accepted prepared with the other recovery 31 December 2010. the recovery of Unemployment operators the operating procedures insurance contributions and AGS dues from 1 January 2010 by the applicable as at 1 January 2011. 1.2. Financial Paris Urssaf, following the signing Thus, an agreement was signed with relationships between of a cash flow protocol on the Social Services Compensation Pôle emploi and Unédic 5 February 2010; Fund (CCSS) of Monaco to ensure Pôle emploi and Unédic have• relating to the employers from recovery from Monaco-based financial relationships within the the Rhône department for whom employers. framework of bipartite agreements the contributions and dues were This action was also carried out (benefit payments and recovery invoked from 1 September 2010 with the Social Security Fund of contributions), the payment by the Rhône Urssaf, following (CPS) of Saint-Pierre and Miquelon of the 10% contribution for the the signing of a cash flow protocol which replaces Pôle emploi as of functioning of Pôle emploi and on 26 July 2010. 1 January 2011 in this geographical the joint management of individualThese experiments tested the area. arrangements (CRP, CTP, Recovery Plan).procedures provided for in the Finally, Unédic shall directlyproject, both for financial transactions manage relations with the CCMSAand exchanges of information. for employers from the agricultural 2010 – UNÉDIC FINANCIAL REPORT - 9
  9. 9. FRAMEWORK AGREEMENT SALE TO PÔLE EMPLOI OF confirmed that its status as a FOR DISPOSAL OF MOVABLE REAL ESTATE SITES public administrative company PROPERTY This concerned fixed assets used was incompatible with its inclusion The financial relationships also by Pôle emploi which derived from in the Unemployment insurance concern extraordinary transactions the network of Assédic agencies or scheme. for the disposal of assets. Unédic establishments, in particular A repayment of the contributions for IT equipment and software. and dues paid, i.e. approximately Thus, in accordance with the com- 44 million Euros, shall take place in mitments of both organisations Furthermore, Pôle emploi wanted 2011. and the framework agreement for to acquire 78 real estate sites, the disposal of movable property property of the Unemployment of 15 November 2010, Unédic sold insurancescheme, for the sum of 1.3. Joint arrangements to Pôle emploi the following tan- 179.1 million Euros. The corres- between the State and gible and intangible fixed assets: ponding notarised instruments Unédic • ffice furniture for 14.7 million o were signed in November and Euros; December 2010. In an agreement of 5 November 2010, the State and Unédic agreed • ttings of premises whose leases fi DISSOLUTION OF GIE to indemnify those jobseekers were taken over by Pôle emploi SI CONVERGENCE EMPLOI who exhausted their entitlement for 33.6 million Euros; (FRENCH-LAW ECONOMIC to unemployment insurance specific installations for 12 million INTEREST GROUP) benefit between 1t January and Euros; 31t December 2010. This arrangement ANPE (National Employment • T equipment for 12 million Euros; I pays exceptional employment Agency) and Unédic had • oftware for 11 million Euros; s established an EIG in 2007, named benefits financed equally by the SI Convergence emploi, in State and Unédic and managed • ogiciels pour 11 millions d’euros ; l order to establish a common IT by Pôle emploi. It represents an • arious other fixed assets for v expenditure of 5.2 million Euros 1.9 million Euros. architecture and to share all of the projects relating to managing during 2010. jobseekers. As these IT projects have been managed directly since Furthermore, Unédic and the 19 December 2008 by Pôle emploi, DGEFP (Delegation-General for it was agreed on 28 September Employment and Vocational 2010 to implement the dissolu- Training) continued their tion of the EIG. This operation is relationship within the framework ongoing as at 31 December 2010, of the agreement on Long-term with the financial arrangements yet reduced activity (APLD). This to be specified. agreement signed on 4 Decem- ber 2009 allows for the payment of PÔLE EMPLOI’S EXCLUSION additional partial unemployment FROM UNEMPLOYMENT benefits to employees experien- INSURANCE CONTRIBUTIONS cing a reduction in activity. This Pôle emploi had continued to measure benefited from being contribute to the Unemploy- managed by Unédic for the sum of ment insurance scheme for staff 44 million Euros in 2010. under private status since its crea- tion on 19 December 2008 until Finally, Unédic and the State 31 December 2009. ensured the continued financing This decision was challenged by of benefits supporting CRP and Pôle emploi, as a court decision CTP arrangements.10 - UNÉDIC FINANCIAL REPORT - 2010
  10. 10. APPENDIX: KEY EVENTS OF THE FINANCIAL YEARWithin the framework of the CTP, 1.5.1.1. Bond issues and bank loans The total outstanding liability ofUnédic finances the indemnification In 2009, Unédic opened a 12 billion the programme as at 31 Decemberof recipients up to the amount Euro EMTN (Euro Medium Term 2010 is 5,280 million Euros.of the Unemployment benefit Notes) programme within which(ARE), while the State ensures its bond issues shall be launched. These commercial papers shall bethat the arrangement breaks even drawn down as required. An initial public offering wasby supplementing employers launched with this in mind incontributions. This programme of commercial December 2009. Unédic then papers obtained the short-termWith regard to the CRP, raised 4 billion Euros in 3 years rating “A1+” by the Standard Unédic integrates the result of this which constitutes its only bond Poor’s rating agency and “P1” byarrangement, consisting of issue at the end of the 2010 Moody’s as of its launch in Januaryemployers revenues and minus financial year. 2004. Since July 2009, it has alsospecific benefits paid to members, The EMTN programme benefits benefited from the rating “F1+”into its technical management from the rating attributed to Unédic from the Fitch Rating Agency.profit or loss. by the SP (AAA), Moody’s (Aaa) and Fitch (AAA) rating agencies. Initially, at the request of the1.4. Review of Moody’s rating agency, syndicated Given the constraints imposedunemployment by Article 213-15 of the French and confirmed credit lines wereinsurance benefits Monetary and Financial Code put in place to ensure 100% coverage of this programme andUnédic’s Board of Directors governing the issue of bonds by therefore mitigate any Europeandecided, in its meeting of 29 June the associations on the financial money market failures.2010, to review the reference markets, the Board of Directorswage, which serves as a basis for decided to apply for the State Since July 2009, the agenciescalculating benefits, by 1.2% as of guarantee for its bond issues in coverage requirement has been1 July 2010. 2011. reduced to 50% of the authorised programme.1.5. Financing the In November 2010, a 3 billion EuroUnemployment bridging facility over 6 months wasinsurance scheme therefore authorised in order to cover the cash flow requirements1.5.1. 2010 FINANCING until the launch of the first bondTRANSACTIONS issue guaranteed by the StateAt the end of the 2010 financial (March 2011).year, the net financial position is8,566 million Euros, i.e.: 650 million Euros of this facility was used as at 31 December 2010.• ond issues: 4,000 million Euros, b• ank loan: 650 million Euros, b 1.5.1.2. Commercial papers• ommercial papers: 5,280 million c The use of this financing Euros, solution for the associations was• nvestments: -1,364 million Euros, i authorised, under certain• funds available at bank: 0.2 million conditions, in Article 37 of law no. Euros. 2003-706 of 1st August 2003. TheN.B.: the net global debt including initial amount of 1.2 billion Eurosthe sums owed to Pôle emploi in 2004 was gradually increased tounder the 10% contribution and reach a ceiling amount of 6 billionnot yet paid (337 million Euros) Euros authorised by the Board oftherefore stands at 8,903 million Euros. Directors in June 2009. 2010 – UNÉDIC FINANCIAL REPORT - 11
  11. 11. APPENDIX: KEY EVENTS OF THE FINANCIAL YEAR 1.5.1.3 Traditional bank financing The threefold strategy set out and Very short-term financing require- approved by the Board of Directors ments are covered in the form of from 2009 remains operational. bank overdrafts mutually agreed The work carried out with the rating with Unédic’s bank partners (1.5 agencies confirmed the ratings billion Euros negotiated). attributed to Unédic which The use of these overdrafts at the continues to benefit from a end of the 2010 financial year is rating enabling it to raise the 3 million Euros for Unédic. necessary resources under the best conditions (AAA, Aaa, AAA). 1.5.1.4 Investments A commitment was made with The 12 billion Euro EMTN regard to the rating agencies to programme was updated and build up a reserve of liquid assets shall enable Unédic to retain the when the drawdowns on the responsiveness needed for its commercial papers programme future bond issues. An issue made exceed an outstanding liability of in March 2011 raised 1.5 billion 3 billion Euros. It is in return for Euros over a maturity of 3 years. this commitment that the level of The commercial papers programme coverage could be reduced to 50% continues to enable Unédic to raise of the amount of the programme the additional short-term resources concerning 6 billion Euros. it needs under the best conditions, thereby spreading its exposure to Given a commercial paper outstan- interest rate risk evenly. ding liability of 5,280 million Euros as at 31 December 2010, the The possibility of a further investments represent 1,364 million extension of the commercial to this date, intended to cover papers programme shall be put to the commitments (33.33% of the the June 2011 Board of Directors. If commercial paper outstanding necessary, such an extension would liability exceeding 3 billion Euros) provide greater adaptability to made with the rating agencies accompany the reduction in and to contribute to repaying a Unédic’s indebtedness. 770 million Euro debt maturing on 3 January 2011. 1.5.2. FINANCING OF THE 2011-2012 PERIOD The gradual emergence from recession envisaged over the next few years leads the Unemployment insurance scheme to anticipate results which should remain negative in 2011 and break even in 2012. On the basis of growth rate assump- tions of 1.80% in 2011 and 1.70% in 2012, the financial position could therefore be at -10.6 billion Euros at the end of 2011 and at -10.3 billion Euros at the end of 2012.12 - UNÉDIC FINANCIAL REPORT - 2010
  12. 12. APPENDIX: ACCOUNTING PRINCIPLES, RULES AND METHODSAPPENDIX2. ACCOUNTING PRINCIPLES, RULESAND METHODS2.1. General principles 2.2. Unemployment 2.2.3. BENEFIT RECIPIENTThe Unemployment insurance benefits RECEIVABLESscheme’s consolidated annual 2.2.1. EXPENSES The accounts receivable of benefitaccounts for the financial year recipients (undue payments and Regulatory provisions stipulateended 31 December 2010 drawn advances) are the subject of a that jobseekers register thenup in Euros, including the balance provision built up according to the provide Pôle emploi with evidencesheet, the profit and loss account age of the debts. of their situation on a monthlyand the appendix were drawn upin accordance with the Unem- basis to avoid their entitlements The method for calculating provisionsployment insurance organisations being called into question. These for depreciation of the benefitchart of accounts approved by formalities enable the benefits to recipients undue payments isthe National Accounting Council be dealt with on a monthly basis based on statistical law making it(CNC) dated 9 January 1995 (notice under technical management possible to measure the probabilityof compliance no. 79). expenses. of recovering them. For persons exempt from checking,They take into account the Undue payments for fraud werespecific information linked to the accounting is, the aforementioned the subject of a 100% provision ofdeclaratorynatureofUnemployment notwithstanding, also carried out their amount.insurance and the consequences on a monthly basis.which arise therefrom, with regardto both the declarations of affiliates 2.2.2. BENEFIT RECIPIENT DEBTSand payments to recipients. Under the item “Benefit RecipientThe signatory organisations of the debts” is the amount of benefitsagreement of 19 February 2009 on considered as owing for theUnemployment insurance in view current financial year, according toof Article L.351-3-1 of the French the principles referred to above,Labour Code on the method of and which are calculated by usingfinancing benefits paid under the benefits paid in January of thethis scheme, certify that Unem- following year.ployment insurance is a specificpay-as-you-go scheme. 2010 – UNÉDIC FINANCIAL REPORT - 13
  13. 13. 2.3. Contributions of affiliates 2.3.1. INCOME The income from technical management correspond to general and specific contributions that the employers are required to pay for the year according to mandatory periodic declarations that they make to regional departments of Pôle emploi or Urssaf agencies involved in the experiments linked to the transfer of recovery. When the forms are not received within the specified time, an estimate of the contributions due is carried out per affiliate. 2.3.2. AFFILIATE RECEIVABLES Contributions yet to be received for the year are calculated according to the income recorded between 1 January and 28 February of the following financial year and relating to the financial year elapsed. A provision is recorded at the end of the year on affiliates’ debts which appear doubtful. It is calculated according to the age of the debts, the litigation stage reached and the type of debts (declared or estimated amounts). 2.3.3. CREDITOR AFFILIATES Funds paid by the affiliates and collected by the various regional departments of Pôle emploi and which could not be assigned to an identified debt are shown under balance sheet liabilities. For flows deriving from Acoss, a portion of the funds not assigned shall be recorded as income from contributions following a statistical evaluation, with the balance shown under balance sheet liabilities. 2.4. Other items 2.4.1. FIXED ASSETS The intangible and tangible fixed assets are recorded in the accounts according to ARC (Accounting Regulatory Committee) provisions regulation no. 2002-10 on the amortisation and depreciation of assets and ARC regulation no. 2004-06 on the definition, accounting and evaluation of assets. Amortisation is practiced according to the straight-line method over the following terms Software 5 years Buildings and structures 10 to 40 years Fixtures and fittings 10 to 20 years IT facilities and equipment 3 to 6 years Office furniture 10 years Office equipment 5 years Other 4 to 10 years14 - UNÉDIC FINANCIAL REPORT - 2010
  14. 14. APPENDIX: ACCOUNTING PRINCIPLES, RULES AND METHODS2.4.2. CORPORATE COMMITMENTS 2.4.3. EXTRAORDINARY PROFIT The main pre-consolidation adjust- OR LOSS ment transactions concern:Given the provisions of theNational collective agreement for The extraordinary profit or loss • he leasing held by SCI Reuilly1; tUnemployment insurance scheme includes: • he offset of depreciations tpersonnel, Unédic is required • echnical management transac- t and write-backs by categories ofto pay retirement indemnities provisions: contingencies and tions which do not derive fromcalculated as monthly wage by expenses, affiliates, benefit recipients,number of years of service. ordinary activity and relate to benefit recipient or recovery administrative management;Furthermore, bonuses are to be domains, • roportional integration, at 50% of ppaid under long-term service the SI Convergence Emploi EIG;bonuses (médailles du travail). • tems relating to administrative i management, that is to say the • limination of balances from eCommitments are calculated using transactions relating to the managed items provided for by the generalthe following information: third party (AGS) shown in chart of accounts and, in• se of personal information: age, u particular, the capital gains or Unédic’s annual accounts, in order sex, salary, length of service; to solely present the Unemployment losses from disposals of tangible• etermination d of internal insurance transactions in the and intangible fixed assets. actuarial assumptions: staff consolidated balance sheet. turnover rate, retirement age The capital gains or losses from and terms and conditions, wage disposals of financial fixed increase rate; assets are, the aforementioned• se of a discount rate for the u notwithstanding, recorded in the commitment corresponding to financial transactions. the Bloomberg reference rate, i.e. 4.75% for the 2010 financial year.Using this data, the amount of 2.5. Principles ofthe commitments is calculated consolidation of Unem-individually for each employeepresent, it being understood ployment insurancethat for the long-term service scheme accountsbonuses, the commitment must becalculated for the bonuses that risk Unédic shall “consolidate” allbeing paid for the entire period of Unemployment insurance institu-work, i.e. a maximum of 4 bonus tions’ accounts. Strictly on a legallevels. basis, the “consolidated” whole corresponds to a “combination” ofThe amounts thus obtained are the accounts according to regulationrecorded in the accounts as no. 99-02 of the National Accountingprovisions for contingencies andexpenses and the change in these Council.provisions is recorded in the There is no legal relationshipresult for the period including the between the entities included inimpacts of assumption changes. the scope of consolidation exceptAdded to this from 2010 is the for the SCIs (Non-trading Realamount of commitments due Estate Companies), subsidiaries ofunder the defined benefits Unédic. For the 2010 financial year,pension plan for senior this situation only concerns twoexecutives of the Unemployment institutions which did not mergeinsurance scheme present with Unédic as at 31 December 2010.as at 1 January 2001, providingevidence of 8 years in this role The scope of consolidation isand having ended their career in an presented in the chapter of theUnemployment insurance institution. appendix on additional information. 2010 – UNÉDIC FINANCIAL REPORT - 15
  15. 15. APPENDIX 3. BALANCE SHEET ANALYSIS 3.1. Analysis of balance sheet assets 3.1.1. FIXED ASSETS 3.1.1.1. Tangible and intangible fixed assets All of the movable property and some real estate sites made available to Pôle emploi since its creation were the subject of: • framework agreement for the disposal of movable property of 15 November 2011, selling to Pôle emploi the a fixed assets acquired by the Assédic agencies and Unédic’s IT establishments; • sale of 78 real estate sites, with these transactions taking place in November and December 2010. a The transactions recorded with regard to the fixed assets and the amortisation during the 2010 financial year are presented below: Gross Gross value at the value at the Acquisitions Sales closing of CHANGES IN GROSS FIXED ASSETS opening of and or asset Transfers the financial IN 2010 (in millions of Euros) the financial creations retirement (4) year year (2) (3) (5)=(1)+(2)- (1) (3)+(4) T otal intangible fixed assets (A) 140,9 0,3 131,9 9,3 Total tangible fixed assets (B) 1 235,6 6,3 723,1 518,8 Property: Land, buildings and fittings 895,4 1,9 389,6 507,8 Other tangible fixed assets 339,8 1,9 333,5 0,2 8,3 urrent tangible fixed assets C 0,4 2,5 0 -0,2 2,6 Total (A+B) 1 376,5 6,6 855,0 0 528,1 Gross Amortisa- Reductions: value at the tion at the Increases: sales and closing of CHANGES IN AMORTISATION opening of Transfers Provisions asset retire- the financial IN 2010 (in millions of Euros) the financial (2) ment (4) year year (3) (5)=(1)+(2)- (1) (3)+(4) T OTAL intangible fixed assets (A) 126,9 0,7 121,0 6,6 Total tangible fixed assets (B) 815,1 23,1 522,6 0 315,6 Property: buildings and fittings 519,5 21,9 231,1 0 310,3 Other tangible fixed assets 295,6 1,2 291,5 0 5,3 Total (A+B) 942,0 23,8 643,6 0 322,216 - UNÉDIC FINANCIAL REPORT - 2010
  16. 16. APPENDIX: BALANCE SHEET ANALYSIS3.1.1.2. Financial fixed assetsThis item, for the sum of 28.9 million Euros, essentially comprises the loans for their original amount within theframework of the construction subsidy for 28.5 million Euros and the deposits and securities paid amounting to0.4 million Euros.3.1.2. CURRENT ASSETS3.1.2.1. Receivablesa) BENEFIT RECIPIENT DEBTORSThe gross value of this item is up by 10.9% on the previous financial year: 430.5 million Euros versus 388.1 million Euros.95.2% of it is made up of undue Unemployment insurance payments to benefit recipients, i.e. 409.8 million Euros.Transactions relating to undue Unemployment insurance payments are presented in the table below: Change 2010 2009 (in millions of Euros) 2010/2009 Undue advances and payments on account at the opening of the financial year (A) 388,1 376,4 3,1 % Detection of undue payments during the financial year (B) 867,1 746,2 16,2 % Reimbursement and recoveries of undue payments (C) 796,2 715,0 11,3 % Write-offs and losses on undue payments (D) 28,8 20,3 41,9 % Advances and payments on account (E) 12,7 12,3 3,3 % Recovered advances and payments on account (F) 12,4 11,5 7,8 % Benefit recipient debtors at the end of the financial year (including advances and 430,5 388,1 10,9 % payments on account) (G) = (A)+(B)- (C)-(D)+(E)-(F) Provision set aside for bad debts (H) 230,2 211,7 8,7 % Provisioning rate (H) / (G) 53,4 % 54,5 % 1,1 pts Net book value (1) = (G)–(H) 200,3 176,4 13,6 %The risk of not recovering undue payments is covered by the setting aside of a provision equal to 53.4% of thedebt compared with a rate of 54.5% for the 2009 financial year.b) AFFILIATESThe burden of gross contributions yet to be recovered, i.e. 4,747.3 million Euros, is down by 6.2% compared withthe previous financial year. It is broken down into:• ain contributions: 4,236.3 million Euros or 89.2% of the total, m• ndividual contributions: 311.9 million Euros or 6.6% of the total, i• additional contributions: 199.1 million Euros or 4.2% of the total. Change 2010 2009 (in millions of Euros) 2010/2009 Uncontested debts to be received (A) 3 478,7 3 711,3 -6,3% Bad debts to be received (B) 1 268,6 1 352,1 -6,2% Gross value (C) = (A) + (B) 4 747,3 5 063,4 -6,2% Provision set aside for bad debts (D) 1 017,6 983,5 34,0% Provisioning rate (D) / (B) 80,2% 72,7% 7,5 pts Net book value (E) = (C) – (D) 3 729,7 4 079,9 -8,6% 2010 – UNÉDIC FINANCIAL REPORT - 17
  17. 17. Uncontested debts to be received portion being recorded in the • 17.2 million Euro claim against a correspond to contributions due accounts as bad debts, with the Acoss relating to current for 2010 which were settled at impact being an 86.4 million Euro transactions of the contribution the beginning of the following reduction in the burden of bad recovery domain. financial year. debts between 2009 and 2010. 3.1.2.4. Marketable securities The burden of bad debts is down A provision is set aside in order to This item, for the sum of slightly (-6.2%), with this change cover the risk of not recovering 1,364 million Euros, corresponds to resulting from the improvement in bad debts, which represents 80.2% money market funds, 760 million the economic situation. of the contested contributions to of which are dedicated to the be received or an increase of 7.5 coverage of commercial paper It should be noted that for the points compared with the 2009 issues in the event of market debts of affiliates managed by the financial year. This change is failure. CCMSA, the review of such debts explained, in particular, by a review of the results of the recovery of Marketable security inventory until the end of the first quarter as at 01/01/2010 3 265 recorded the debts invoked in contested contributions over previous years which resulted in Acquisitions in 2010 13 339 January 2011 in the accounts for 2010 as uncontested debts to be adjusting the provisioning rate of Sales in 2010 15 240 received, while in previous years, such debts. Marketable security inven- a review of the results at the end tory as at 31/12/2010 1 364 of January resulted in a significant 3.1.2.2. State This item, for the sum of 53.7 million Euros, represents 3.1.3. DEFERRED EXPENSES an amount due by the State for This item for the sum of 2.9 million arrangements prior to 2009 Euros concerns the costs of bond managed on behalf of the State issues which are distributed in a and not transferred to Pôle emploi. linear manner over the term of the issue from December 2009, i.e. 3.1.2.3. Other debts 3 years. This item, for the sum of 87.1 million Euros, predominantly 3.1.4. REDEMPTION PREMIUMS comprises: The bond issued by Unédic • he national participatory youth t includes an issue premium, employment programme (EJEN) corresponding to the difference to be received for 0.7 million between the nominal value of the Euros; bonds and the issue value, for the • n income to be received from a sum of 12.5 million Euros for the the State as part of the CA 4 billion Euro bond issued in 2009. (Contract for the future) – CAE This premium is amortised over (Employment Support Contract) the term of the issue, i.e. 3 years, arrangement balance for and represents a net value of 16.1 million Euros; 8.0 million Euros as at 31 December • claim against establishments a 2010. under management agreements amounting to 23.0 million Euros; • claim against sales of fixed a assets for 2.5 million Euros; • 20.6 million Euro claim against a Pôle emploi relating to current transactions of benefit recipient domains and other agreements18 - UNÉDIC FINANCIAL REPORT - 2010
  18. 18. APPENDIX: BALANCE SHEET ANALYSIS3.2. Analysis of balance sheet liabilities3.2.1. NET FINANCIAL POSITIONThe net financial position, at the end of the 2010 financial year, is negative by 9,150.2 million Euros and is changingin the following manner:• et financial position as at 31 December 2009: -5,903.4 million Euros n• egative result for the 2010 financial year: -3,246.8 million Euros n• net financial position as at 31 December 2019: -9,150.2 million Euros3.2.2. PROVISIONS FOR CONTINGENCIES AND EXPENSESThis item for a total amount of 60.7 million Euros predominantly comprises the following provisions:• Unédic’s contribution to the financing of AS-FNE (special benefit from the national employment fund) for 18.2 million Euros;• he rights acquired up to their retirement by the recipients of ARPE (job substitution allowance) for 0.2 million t Euros (i.e. a reduction of 0.3 million Euros compared with 2009); this provision covers the costs of benefits yet to be paid and the financing of additional pension benefits;• he unemployment insurance contributions paid in error by some public employers and to be repaid for t 20.8 million Euros;• he provision relating to the procedures for sharing the fixed assets of the EIG for 2.7 million Euros; t• he provision for risks of dispute over dossiers from benefit recipient and recovery domains flagged up by the t regional departments of Pôle emploi for 5.7 million Euros;• provisions for corporate commitments: - rovisions for retirement indemnities (IDR) for the sum of 11.5 million Euros; p - provisions for long-term service bonuses for 1.1 million Euros.The change in provisions for contingencies and expenses during the 2010 financial year is presented in the tablebelow. Write-back Write- back Opening Closing Provision provision provision balance balance(in millions of Euros) used not usedARPE 0,5 - 0,3 - 0,2AS-FNE 22,6 18,2 22,6 - 18,2IDR 4,9 6,6 - - 11,5L ong-term service bonuses 1,1 - - - 1,1Public employer reimbursement 0 20,8 - - 20,8Other 3,9 5,0 - - 8,9Total 33,0 50,6 22,9 - 60,73.2.3. FINANCIAL LOANS AND DEBTSThe change in financing during 2010 is as follows:Financing arrangements Opening Of which Additional Repayment of Closing Of which(Amounts in millions of Euros) balance accrued interest financing financing balance accrued interestBond issues 6 267 67 2 200 4 006 6Credit/financing establishments loans 2 627 3 305 5 932 of which commercial papers 2 625 2 655 5 280 of which other loans 2 650 652Bank loans and overdrafts 35 32 3Total 8 929 67 3 305 2 232 9 941 6 2010 – UNÉDIC FINANCIAL REPORT - 19
  19. 19. 3.2.3.1. Bond issues The bonded debt amounts to 4,006 million Euros at the end of the 2010 financial year. It corresponds to: • he 4 billion Euro loan (3 years, 2.125%) issued in December 2009; t • he accrued interest on the 4 billion Euro loan, i.e. 6.4 million Euros. t 3.2.3.2. Loans from various credit and finance establishments The total amount of this item comes to 5,932.4 million Euros. It comprises: • he commercial papers issued by Unédic amounting to 5,280 million Euros; t • he establishment of a bridging facility, pending the launch of a bond issue, for 650 million Euros; t • he leasing debt corresponding to the financing of the IT production centre for 1.6 million Euros; t • he accrued interest for 0.8 million Euros. t Transactions concerning the commercial papers were as follows in 2010: Inventory as at 01/01/2010 Issues in 2010 Repayments in 2010 Inventory as at 31/12/2010 2 625 13 940 11 285 5 280 Amount in millions of Euros The due dates of these commercial papers are as follows: Due date of commercial During the During the Total papers 1st quarter 2011 2nd quarter 2011 4 085 1 195 5 280 A mount in millions of Euros 3.2.3.3. Bank loans and overdrafts The total amount of this item comes to 2.6 million Euros and comprises: • he accounting balances of creditor bank and postal accounts for 2.5 million Euros; t • he accrued interest on bank overdrafts used for 0.1 million Euros. t The bank loans and overdrafts correspond to the negative cash flow presented in the cash flow statement. 3.2.4. OTHER DEBTS 3.2.4.1. Affiliated debts This item, amounting to 105.6 million Euros, corresponds to the sums received from employers which could not be assigned to debts at the end of the financial year. 3.2.4.2. Benefit recipient debts and other accounts payable This item for a total amount of 2,372.5 million Euros corresponds, essentially, to the benefits to be paid: benefits from the month of December 2010 paid at the start of 2011, i.e. 2,409.5 million Euros and 63.1 million Euros for the redeployment benefits to be paid to benefit recipients minus the advance retirement levy for the sum of 98.4 million Euros.20 - UNÉDIC FINANCIAL REPORT - 2010
  20. 20. APPENDIX: BALANCE SHEET ANALYSIS3.2.4.3. Tax and social security debts 71.3 million Euros due to 5 • 5.7 million Euros due primarily 3et sociales ARRCO (Association of to IRCANTEC (SupplementaryThis item for a total of 68.5 million supplementary pension plans Retirement Pensions Institu-Euros comprises: for salaried employees) which is tion for Non-Certified State• rovision for paid leave and p broken down into: Employees and Employees of holiday and 13th month bonuses 61.8 million Euros correspon- 4 Public Administrations); amounting to 3.0 million Euros ding to contributions yet to be • eciprocal accounts with Pôle r paid for 2010; emploi for 360.7 million Euros instead of 3.1 million Euros in 6.9 million Euros due by 2 including the one relating to the 2009; ARRCO pursuant to the 2009 financing of Pôle emploi through• he benefit recipient advance t regularisation; levies yet to be paid, i.e. 49.0 the 10% contribution for the sum 1.7 million Euros due to 7 of 337.2 million Euros. million Euros corresponding to ARRCO pursuant to the 2008 benefits paid in December 2010; regularisation;• ther tax and social security debts o 4.6 million Euros pursuant 6 3.2.5. ACCRUALS for 16.5 million Euros. to the AFSP (Benefit from Unearned income, i.e. 13.1 million the specific temporary fund) Euros, essentially concerns3.2.4.4. Trade debts arrangement. payments made by publicThe sum of 6.0 million Euros, 92.6 million Euros due to 4 companies and establishmentsrepresenting the invoices yet to AGIRC (General Association which are not affiliated to thebe paid as at 31 December 2010, is of Pension Institutions for Unemployment insurance scheme,divided into two sections: Managerial Staff) which is but which have signed a manage- primarily broken down into: ment agreement with Unédic.• uppliers of goods and services: s 5.2 million Euros 76.2 million Euros corres- 5 Payments are made for benefit ponding to Unédic’s commit- recipients registered as unemployed• uppliers of fixed assets: 0.8 million s ment to AGIRC, as provided and whose acquired rights may be Euros for in the agreement of spread over several financial years 19 December 1996 which according to their age.3.2.4.5. Other debts had valued the amount ofThe main items of this section, the supplementary retirementtotal amount of which comes to contributions for the periods2,260.3 million Euros, concern: of unemployment prior to this date and set a 20 year• he various creditors for 769.7 t payment schedule at the million Euros essentially consist rate of 1/20th each year, of a debt of 769.6 million Euros with the debt amount being to a financial establishment. This re-assessed each year by debt results from the sale in applying the price index; 2007 of a State debt to a financial 2.8 million Euros correspon- 9 establishment that Unédic ding to contributions yet to undertook to pay on maturity, i.e. be paid for 2010; 3 January 2011; 58.0 million Euros due by 1• he cost to be paid as at t AGIRC pursuant to the 2009 31 December 2010 to various adjustment; pension funds, for the validation 3.5 million Euros due by 2 of the benefit recipients’ AGIRC pursuant to the 2008 additional pension points: adjustment. 2010 – UNÉDIC FINANCIAL REPORT - 21
  21. 21. APPENDIX 4. PROFIT AND LOSS ACCOUNT ANALYSIS 4.1. Technical management 4.1.1. PROCEEDS 4.1.1.1. Contributions The proceeds from contributions for the 2010 financial year are down slightly by 0.02% compared with 2009: (in millions of Euros) 2010 2009 2010/2009 Main contributions 30 115,7 29 916,4 0,67 % Special contributions 442,5 645,9 -31,49% Total 30 558,2 30 562,3 -0,02% The main contributions are up slightly with a change of 0.7%. It should be noted that Acoss’ assumption of responsibility for the recovery of contributions as of 1 January 2011 has an impact on the level of proceeds from contributions in 2010. In fact, in December 2010, some employers staggering pay made declarations to their Urssaf agencies and not to the regional departments of Pôle emploi. As the principle of attaching such proceeds to the accounting year is different between these two organisations, the amount of 2010 contributions does not take into account the sum of 298 million Euros for these employers. Furthermore, the reimbursement of unemployment insurance contributions to Pôle emploi generates a reduction in the proceeds from 2010’s main contributions of 42 million Euros. Given this reassessment, the level of change in proceeds from contributions (+1.8%) is very close to the increase in the private sector’s wage bill in 2010 which stands at 1.9% (source: Acoss). Special contributions experienced a considerable reduction of 31.5%, given the improvement in the economic situation and the drop in the number of members of the CRP (Personal redeployment agreement) arrangement.22 - UNÉDIC FINANCIAL REPORT - 2010

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