Financial report : unemployment insurance in 2012

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Financial report : unemployment insurance in 2012

  1. 1. FINANCIAL REPORT INSURANCE IN 2012 UNEMPLOYMENT
  2. 2. MANAGING DIRECTOR’S MANAGEMENT REPORT 3 CONSOLIDATED FINANCIAL STATEMENTS 6 KEY EVENTS OF THE FINANCIAL YEAR 9 1.1 Regulatory measures decided on in 2012 9 1.2 Financial relations between Pôle emploi and Unédic 9 1.3 State/Unédic joint arrangements 10 1.4 Increase in Unemployment insurance benefits 10 1.5 Financing the Unemployment insurance scheme 11 ACCOUNTING PRINCIPLES, RULES AND METHODS 13 2.1 General principles 13 2.2 Unemployment benefits 13 2.3 Contributions of affiliates 14 2.4 Other items 14 2.5 Principles of consolidation of Unemployment insurance scheme accounts 15 BALANCE SHEET ANALYSIS 16 3.1 Analysis of balance sheet assets 16 3.2 Analysis of balance sheet liabilities 19 PROFIT AND LOSS ACCOUNT ANALYSIS 23 4.1 Technical management 23 4.2 Administrative management 26 4.3 Financial management 28 4.4 Extraordinary profit or loss 28 4.5 Corporation tax 28 4.6 Financial year profit or loss 28 ADDITIONAL INFORMATION 29 5.1 Estimate of the benefits to be paid to benefit recipients receiving benefits at the end of the financial year using underlying assumptions 29 5.2 Individual right to training 30 5.3 Number of Unemployment insurance staff 30 5.4 Scope of consolidation 30 AUDITORS’ REPORT ON THE CONSOLIDATED ACCOUNTS 31 1 2 3 4 5
  3. 3. Managing Director’s MANAGEMENT REPORT CHARACTERISTICS OF 2012 2012 started in a fragile economic environ- ment, in France as in the rest of the euro zone. In particular, the prospects for growth for 2012 were weakened by the downturn of summer 2011, caused by the sovereign debt crisis. As a result, French growth slightly shrank in the first half of 2012, and then activity made slight progress in the third quarter, before falling off again in the fourth. All in all, activity stagnated over the whole of 2012, after growth of +1.7% in 2011 (source: INSEE (National Institute of Statistics and Economic Studies)). Although a few jobs were created during the first quarter, sluggish activity resulted in job losses over the next three quarters. The number of jobseekers required to engage in positive job searches, unemployed (cate- gory A), continuously increased in 2012, under the combined impact of job losses and an increase in the active population. At the same time, the number of unemployed people receiving benefits from the Unem- ployment insurance scheme continued to increase over the whole year. Thus, at the end of December 2012, there were 2,292,000 unemployed people receiving benefits in France, i.e. an increase of +130,000 over the year (CVS data, whole of France). The slower rise in the wage bill and the increase in benefit payments increased the Unemployment insurance scheme’s indebt- edness over 2012: • the revenue from contributions increased primarily under the influence of the rise in the affiliated wage bill in 2012 (+2.5%); • benefit expenses increased by +6.4% in one year; • +5.8% for Unemployment benefits (ARE); • +13.0% for other benefits. The discrepancy between the contribu- tions and the benefits and assistance expenses is positive, amounting to 2.67 billion Euros. After taking into account expenses relating to validation of benefit recipients’ pension points in particular (1.81 billion Euros) and the contribution of the Unemployment insurance scheme to the running of Pôle emploi (State employment agency) (3.02 billion Euros), the technical profit margin becomes loss-making by 2.58 billion Euros. In terms of financing the Unemployment insurance scheme, it should be empha- sised that: • during autumn 2011, the rating agencies confirmed the maximum ratings attrib- uted to Unédic (AAA, Aaa). However, at the same time as downgrading France’s rating, Standard & Poor’s downgraded Unédic’s rating to AA+ in January 2012. For the same reasons, Moody’s down- graded the rating to Aa1 in November 2012. These decisions continued to have no impact on the excellent credit condi- tions obtained by Unédic on the financial markets; • the Amending Finance Law of 29 Decem- ber 2012 authorises the Ministry of Econ- omy and Finance to grant a French State guarantee to bond issues to be launched by Unédic in 2013 up to the limit of 5 bil- lion Euros in principal; • In April and May 2013, Unédic completed almost all of its bond issues with 3 issues for a total of 4.5 billion Euros.
  4. 4. 4FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 RECONCILIATION BETWEEN THE CHANGE IN CASH BALANCE AND THE ACCOUNTING RESULT CHANGE IN CASH BALANCE The net change in cash balance for the Unemployment insurance transactions is negative by 2,314 million Euros and is reflected in the following manner: This shows the result of current transac- tions. NET ACCOUNTING RESULT The discrepancy between the change in cash balance and the book loss for the financial year of 529 million Euros is primar- ily explained by: • the allowance and write-back of allow- ance transactions for amortisation and provisions, without affecting the cash bal- ance, for a net amount of 302 million Euros; • the 124 million euro drop in the working capital requirements linked to the activity, with a decrease in claims against the oper- ators offsetting an increase in claims against the affiliates and benefit recipi- ents, and an increase in the benefit expenses to be paid as at 31 December 2012. The net position, taking into account the profit or loss for the financial year, is nega- tive by 13,453 million Euros as at 31 Decem- ber 2012. EVENTS SUBSEQUENT TO CLOSURE None. 2013 OUTLOOK Unédic regularly updates its expenditure and revenue forecasts by taking into account the change in the economic situation. The latest break-even point forecast for 2013 and 2014, drawn up in May 2013, relies on the consensus of economists in May, which anticipates a reduction of -0.2% in 2013, followed by growth of +0.7% in 2014. As a consequence of weak activity, 143,600 jobs affiliated to the Unemploy- ment insurance scheme would be lost in 2013, followed by 40,800 in 2014. In con- junction with the slowdown in inflation and the increase in unemployment, the average wage per capita (SMPT) would increase more slowly: +2.0% in 2013 and 2014. The wage bill, penalised by both the decrease in employment and the deceleration in wage growth would slow down to +1.1% in 2013, and would then increase by +1.4% in 2014. The increase in those registered with Pôle emploiundercategoryAwouldcontinue,but would nevertheless slow down during 2013, mainly under the impact of public employ- ment policies. There would be +178,700 peo- ple registered in category A in 2013 and +128,700 in 2014. Together with the increase in the potential number of benefit recipients, the increase in the number of unemployed people receiving benefits from the Unem- ployment insurance scheme would continue (+77,800 unemployed people receiving 31 December 2011 31 December 2012 Change BOND ISSUES - 5,900 -8,900 -3,000 COMMERCIAL PAPERS -7,480 -7,945 -465 OVERDRAFT -1 -40 -39 INVESTMENTS 1,551 1,517 -34 BANK BALANCES 307 1,531 1,224 TOTAL -11,523 -13,837 -2,314 (in millions of Euros)
  5. 5. 5 benefits in 2013 and +65,600 in 2014). This labour market situation would increase expenditure and slow down the increase in the Unemployment insurance scheme’s reve- nue. In 2013, the “revenue/expenditure” bal- ance would be -4.8 billion Euros, and the accumulated deficit would reach 18.5 billion Eurosattheendof2013.In2014,theforecasts were established on the basis of the current Unemployment insurance convention, with this convention having to be renegotiated by the social partners during the second half of 2013. The balance would be -5.6 billion Euros and the deficit would reach -24.1 billion Euros at the end of 2014. In brief, the expenditure and revenue fore- casts for 2013 and 2014 would be as follows: In order to cover the cash requirement, the Board of Directors, which met on 24 January 2013, approved a programme of bond issues of 5 billion Euros, in one or more tranches, with a maximum term of 10 years. Three new bond issues were successfully launched from April to May 2013: • 1.5 billion Euros at 10 years at the rate of 2.25%; • 1.5 billion Euros at 3 years at the rate of 0.375%; • 1.5 billion Euros at 7 years at the rate of 1.25%. These bond issues benefit from the State guarantee. 2013 Forecast 2014 Projection TOTAL REVENUE 33,091 33,422 TOTAL EXPENDITURE 37,854 38,984 CHANGE IN CASH BALANCE -4,763 -5,562 NET BANK INDEBTEDNESS POSITION -18,546 -24,109 (in millions of Euros, as at 31 December)
  6. 6. CONSOLIDATED financial statements ASSETS 2012 2011 FIXED ASSETS 170.5 203.3 INTANGIBLE FIXED ASSETS 0.5 1.9 TANGIBLE FIXED ASSETS 143.7 174.2 FINANCIAL FIXED ASSETS 26.3 27.2 CURRENT ASSETS 7,862.0 6,834.4 RECEIVABLES 4,590.4 4,295.7 • BENEFIT RECEIVABLES 261.2 213.0 • AFFILIATED RECEIVABLES 4,329.2 4,082.7 OTHER RECEIVABLES 216.5 667.9 MARKETABLE SECURITIES 1,517.1 1.551.3 AVAILABLE CAPITAL 1,531.0 306.7 PREPAID EXPENSES 7.0 12.8 DEFERRED EXPENSES 7.4 2.8 BOND REDEMPTION PREMIUMS 12.1 7.0 TOTAL ASSETS 8,052.0 7,047.5 (in millions of Euros) CONSOLIDATED BALANCE SHEET - UNEMPLOYMENT INSURANCE LIABILITIES 2012 2011 NET FINANCIAL POSITION -13,453.2 -10,610.8 RESERVES 0.8 RETAINED EARNINGS -10,610.8 -9,150.2 RESULT FOR THE FINANCIAL YEAR -2,843.2 -1,460.6 PROVISIONS FOR CONTINGENCIES AND EXPENSES 55.8 56.2 DEBTS 21,394.0 17,583.8 LOANS AND FINANCIAL DEBTS 17,038.6 13,429.8 BOND ISSUES 9,040.6 5,936.5 • OTHER LOANS AND FINANCING 7,945.0 7,481.2 • BANK LOANS AND OVERDRAFTS 39.6 0.7 • OTHER FINANCIAL DEBTS 13.4 11.4 OTHER DEBTS 4,355.4 4,154.0 • AFFILIATED DEBTS 140.4 120.0 • BENEFIT DEBTS 2,734.7 2,549.2 • TAX AND SOCIAL SECURITY DEBTS 70.5 67.3 • TRADE PAYABLES 4.2 4.6 • STATE DEBTS 0.0 0.0 • OTHER DEBTS 1,405.6 1,412.9 ACCRUALS 55.4 18.3 TOTAL LIABILITIES 8,052.0 7,047.5 (in millions of Euros)
  7. 7. 7 2012 2011 TECHNICAL MANAGEMENT INCOME 33,212.1 32,720.5 CONTRIBUTIONS 32,958.2 32,314.2 OTHER INCOME 124.0 100.0 WRITE-BACK OF PROVISIONS 78.4 277.2 TRANSFERS OF EXPENSES 51.5 29.1 EXPENSES 35,790.2 33,975.4 UNEMPLOYMENT BENEFITS 26,681.7 25,220.8 OTHER BENEFITS 2,627.4 2,324.4 REDEPLOYMENT BENEFITS 972.8 1,097.5 VALIDATION OF PENSION POINTS 1,811.0 1,614.1 OTHER EXPENSES 3,346.8 3,354.8 PROVISIONS 350.5 363.8 TECHNICAL PROFIT OR LOSS -2,578.1 -1,254.9 CORPORATION TAX AND SIMILAR LEVIES -4.8 -3.6 CONSOLIDATED PROFIT AND LOSS ACCOUNT - UNEMPLOYMENT INSURANCE ADMINISTRATIVE MANAGEMENT INCOME 84.7 81.4 PROVISION OF SERVICES 49.5 43.8 OTHER INCOME 35.2 37.6 EXPENSES 113.3 106.5 PURCHASES 0.7 0.5 EXTERNAL SERVICES 54.0 49.1 TAXES AND LEVIES 6.4 5.4 WAGES AND SOCIAL SECURITY CONTRIBUTIONS 27.4 25.9 OTHER EXPENSES 0.1 0.0 AMORTISATION AND PROVISIONS 24.7 25.6 ADMINISTRATIVE MANAGEMENT PROFIT OR LOSS -28.6 -25.1 FINANCIAL MANAGEMENT FINANCIAL INCOME 44.2 14.4 FINANCIAL EXPENSES 281.3 191.4 FINANCIAL PROFIT OR LOSS -237.1 -177.0 EXTRAORDINARY TRANSACTIONS TECHNICAL MANAGEMENT 0.0 0.0 ADMINISTRATIVE MANAGEMENT 5.4 0.0 EXTRAORDINARY PROFIT OR LOSS 5.4 0.0 PROFIT OR LOSS -2,843.2 -1,460.6 (in millions of Euros)
  8. 8. 8FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 2012 2011 CONSOLIDATED NET RESULT -2,843.2 -1,460.6 ELIMINATION OF TRANSACTIONS WITH NO EFFECT ON CASH FLOW OR NOT LINKED TO THE ACTIVITY: 286.0 111.5 • AMORTISATION AND PROVISIONS 293.6 112.7 • CAPITAL GAINS OR LOSSES ON DISPOSALS -7.6 -1.2 CHANGE IN WORKING CAPITAL REQUIREMENT 124.8 1,646.8 NET CASH FLOW LINKED TO THE ACTIVITY -2,432.4 -2,995.9 CONSOLIDATED CASH FLOW STATEMENT - UNEMPLOYMENT INSURANCE ACQUISITION OF TANGIBLE AND INTANGIBLE FIXED ASSETS -8.4 -1.5 DISPOSAL OF TANGIBLE AND INTANGIBLE FIXED ASSETS 22.6 15.2 CHANGE IN FINANCIAL FIXED ASSETS 0.9 1.7 CHANGE IN SUPPLIERS OF FIXED ASSETS -0.1 -0.5 NET CASH FLOW LINKED TO INVESTMENT TRANSACTIONS 15.0 14.9 BOND ISSUES 3,000 1,900.0 SHORT-TERM CREDIT LINES -1.2 -650.0 COMMERCIAL PAPERS 465.0 2,200.0 OTHER TRANSACTIONS 104.8 23.7 NET CASH FLOW LINKED TO FINANCING TRANSACTIONS 3,568.6 3,473.7 CHANGE IN CASH FLOW (ALL SCHEMES) 1,151.2 492.8 NET CASH FLOW AT THE OPENING OF THE PERIOD 1,857.3 1,364.5 POSITIVE CASH FLOW: AVAILABLE CAPITAL 1,858.0 1,367.1 NEGATIVE CASH FLOW: BANK LOANS AND OVERDRAFTS -0.7 -2.6 NET CASH FLOW AT THE CLOSING OF THE PERIOD 3,008.5 1,857.3 POSITIVE CASH FLOW: AVAILABLE CAPITAL 3,048.1 1,858.0 NEGATIVE CASH FLOW: BANK LOANS AND OVERDRAFTS -39.6 -0.7 (in millions of Euros)
  9. 9. 9 Key events OF THE FINANCIAL YEAR1 1.1 REGULATORY MEASURES DECIDED IN 2012 While the Unemployment insurance conven- tion and the Improved job security contract (CSP) arrangement entered into in 2011 will produce their effects up until 31 December 2013, the social partners have taken deci- sions relating to specific populations. Thus, the National multi-sector agreement (ANI) of 11 July 2011, on supporting young people to encourage them to stay in employment, institutes a special financial support arrangement for young people under 26 by assuming responsibility for costs relating to being recruited for a job. This benefits are financed by a 5-point reduction in the amount of Assistance for the takeover or creation of a company (ARCE), up to a limit of 40 million Euros. Given the time required to implement the assistance for young people, resulting in a payment in 2012 limited to 4 million Euros, this measure was extended until 31 Decem- ber 2013. Via a National multi-sector agreement of 6 February 2012 on long-term reduced activ- ity (APLD), the social partners also decided on changes with regard to the assumption of responsibility by the Unemployment insurance scheme: a package of 80 million Euros for 2012 was added to the initial package of 150 million Euros dating from 2009. Unédic contributes up to 2.90 Euros within this new framework from the very first hour of short-time working, which rep- resented an expenditure of 18 million Euros in 2012. This provision was extended until 30 June 2013, the date on which the new regulations on reduced activity should come into force. 1.2 FINANCIAL RELATIONS BETWEEN PÔLE EMPLOI AND UNÉDIC The financial relations between Pôle emploi and Unédic originate in: • the 2012-2014 tripartite agreement signed between the State, Unédic and Pôle emploi, which sets out the objectives of Pôle emploi’s action and the resources placed at its disposal; • the cash management agreement entered into between Unédic and Pôle emploi that specifies the amount of the 10% contribu- tionoutofthereceiptofcontributionsowed by Unédic and the terms of payment, result- ing in a cost of 3,025 million Euros in 2012; • the bipartite agreements on the recovery of contributions and benefits, with revenue of 1,004 million Euros and expenditure of 28,978 million Euros in 2012. Both these pieces of legislation were replaced at the beginning of 2013 by a single agreement on service delegations and operational coop- eration.
  10. 10. 10FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 Furthermore, Pôle emploi is entrusted with implementing specific arrangements by entering into agreements: • to finance the support of parties to the Improved job security contract that fol- lowed the Personal redeployment agree- ment (CRP) and Occupation transition contract (CTP) arrangements, with an expenditure of 75.5 million Euros in 2012; • in respect of measures provided for in the National multi-sector agreement for the support of young people, the 2012 expenditure being 4 million Euros. Finally, transactions are paid out of the operational budgets of both organisations: • rental payments and charges paid by Pôle emploi to occupy real estate sites belong- ing to Unédic for 27.8 million Euros; • the sale by Unédic of computer equip- ment from the dissolution of the SI Convergence Emploi EIG amounting to 1.5 million Euros; • the sale to Pôle emploi of two real estate sites, the IT production site of Castelnau- le-Lez for 6.8 million Euros and that of Vandoeuvre for 1 million Euros. 1.3 STATE /UNÉDIC JOINT ARRANGEMENTS The State and the social partners agreed to prepare the agreement on Long-term reduced activity (APLD) by amending the minimum term of agreements entered into by companies from 3 months to 2 months. A supplementary package of 80 million Euros paid for by the Unemployment insurance scheme was put in place for the actions implemented until 31 December 2012, a deadline that was ultimately postponed to 30 June 2013. The expenditure recorded in 2012 in this regard increased to 18 million Euros.Theinitialpackageof150millionEuros made it possible in this same year to assume responsibility for this arrangement up to 10 millionEuros,withthetotalexpenditurefor both packages representing 28 million Euros. The Improved job security contract resulted in 2012 in the assumption of responsibility by the State of 24 million Euros, to finance the improved job security benefits for ben- eficiaries providing evidence of 12 to 24 months’ seniority in the company at the time of signing up for the arrangement, for the portion exceeding the unemployment benefit amount. Furthermore, a trial period has been implemented in fifteen employ- ment areas, to enable jobseekers at the end of a fixed-term contract (CDD) to take advantage of support benefits provided for within the framework of the CSP, with the State contributing to the support costs. 1.4 INCREASE IN UNEMPLOYMENT INSURANCE BENEFITS The Unédic Board of Directors decided, at its meeting on 27 June 2012, to increase the reference salary, which serves as the basis for calculating benefits, by 2% as of 1 July 2012.
  11. 11. 11 1.5 FINANCING THE UNEMPLOYMENT INSURANCE SCHEME 1.5.1 2012 FINANCING OPERATIONS At the end of the 2012 financial year, the net position of outstanding loans was 13,837 Euros, i.e.: 1.5.1.1 Bond issues and bank loans In 2009, Unédic opened a 12 billion euro EMTN (Euro Medium Term Notes) pro- gramme, within which its bond issues were launched. This programme’s upper limit was increased to 14 billion Euros further to the decision of the Board of Directors of 7 Feb- ruary 2012. In 2012, Unédic raised a total of 7 billion Euros on the bond market: 1.3 billion Euros at 7 years, 1.2 billion Euros at 6 years, 1.3 billion Euros at 5 years, 2.7 billion Euros at 3 years, to which are added 0.5 billion Euros at 2 years. It also repaid the bond issue in an amount of 4 billion Euros subscribed in 2009 and which became due on 3 December 2012. In 2012, the EMTN programme benefited from the rating attributed to Unédic by the Fitch Ratings (AAA), Standard & Poor’s (AA+) and Moody’s (Aa1) rating agencies, with these last two ratings resulting from a downgrade in January and November 2012 respectively. Given the restrictions imposed by Article 213-15 of the Financial and Monetary Code governing bond issues by associations on the financial markets, the Board of Directors decided to apply for a State guarantee for its bond issues in 2013. This guarantee was authorised by the Amended Finance Law of 29 December 2012 and granted by order of the Ministry of Economy and Finance on 31 January 2013. 1.5.1.2 Commercial papers The use of this financing method for the associations was authorised, under certain conditions, in Article 37 of law no. 2003- 706 of 1 August 2003. The initial amount of 1,200 million Euros in 2004 was gradu- ally increased, to reach an upper limit of 12,000 million Euros authorised by the Board of Directors in June 2012. The total outstanding amount of the programme as at 31 December 2012 is 7,945 million Euros. These commercial papers are the subject of drawdowns as needed. This commercial paper programme obtained the short-term rating “A1+” by the Standard & Poor’s rating agency and “P1” by Moody’s as of its launch in January 2004. Since July 2009, it has also bene- fited from the F1+ rating from the Fitch Ratings agency. Initially, at the request of the Moody’s rat- ing agency, syndicated and confirmed lines of credit were put in place to ensure 100% coverage of this programme and thereby mitigate any imbalances in the European money market. Since July 2012, these lines of credit have been completely replaced by a reserve of liquid assets for a minimum of 2 billion Euros,the level of which varies according to the use of the commercial papers pro- gramme. 1.5.1.3 Traditional bank financing arrangements Short-term financing requirements are cov- ered in the form of bank overdrafts negoti- ated by mutual agreement with Unédic’s banking partners (1.5 billion Euros negoti- ated). The use of these overdrafts at the end of the 2012 financial year was 39.6 million Euros. 1.5.1.4 Investments A commitment was made with regard to the rating agencies to build up a reserve of liquid assets according to the drawdowns on the commercial papers programme. Given a • BOND ISSUES: 8,900 MILLION EUROS, • COMMERCIAL PAPERS: 7,945 MILLION EUROS, • INVESTMENTS: -1,517 MILLION EUROS, • BANK BALANCES: -1,491 MILLION EUROS N.B.: the aggregate net debt including the sums payable to Pôle emploi for the 10% contribu- tion and which are not yet paid (154 million Euros) therefore amounts to 13,991 million Euros.
  12. 12. 12FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 commercial paper outstanding liability of 7,945 million Euros as at 31 December 2012, the reserve of liquid assets intended to cover the commitments made with the rating agencies on this date is achieved with all the 1,517 million Euros of investments and 1,491 million Euros of bank balances. 1.5.2 FINANCING OF THE 2013-2014 PERIOD The threefold strategy set out and approved by the Board of Directors from 2009 remains operational: • The work carried out with the rating agen- cies enabled Unédic to continue to benefit from a rating enabling it to raise the neces- sary resources under the best conditions. However, it should be noted that, at the beginning of 2012, the sovereign debt crisis led Standard & Poor’s to downgrade the French State’s rating to AA+, while keeping its short-term rating unchanged at A-1+. Unédic’s rating was automatically aligned with that of the French State. The same decision was made on 21 November 2012 by Moody’s, which downgraded the rating from Aaa to Aa1. These decisions on the financing costs and the opportunities to access the financial markets for Unédic had very little effect, insofarasthemarketshadanticipatedthem; • The EMTN programme, the upper limit of which was increased to 14 billion Euros in 2012, shall enable Unédic to retain the responsiveness necessary to its future bond issues. An initial issue in April 2013 made it possible to raise 1.5 billion Euros over a maturity of 10 years, thereby evenly spreading its exposure to interest rate risk; • The commercial papers programme, the upper limit of which was increased to 12 billion Euros in 2012, continues to enable Unédic to raise the additional short-term resources it needs under the best condi- tions. The financing instruments thus imple- mented will enable Unédic to cover the 2013 deficit forecast to be 4.8 billion Euros in the financial statement of the Unemployment insurance scheme published in May 2013. Concerning the 2014 financial year, the break-even point forecasts were made in May 2013 on the basis of current regulation. They assume a level of growth that should remain weak (0.7%) and a loss of approxi- mately 40,000 jobs, anticipating a result for the Unemployment insurance scheme that would remain negative, thereby generating a cash burn in the region of 5.6 billion Euros. Net indebtedness would then reach approx- imately 24.1 billion Euros at the end of the year, for which the (support, remuneration and maturity) financing procedures are yet to be specified given the situation of the financial markets. These provisions shall be adjusted as soon as the results of the nego- tiation that must take place before the end of 2013 are known.
  13. 13. 13 2.1. GENERAL PRINCIPLES The Unemployment insurance scheme’s consolidated annual accounts for the finan- cial year ended 31 December 2012, drawn up in Euros, including the balance sheet, the profit and loss account and the appendix, were drawn up in accordance with the Unemployment insurance organisations’ chart of accounts approved by the National Accounting Council (CNC) dated 9 January 1995 (notice of compliance no. 79). They take into account the specific informa- tion linked to the declaratory nature of Unemployment insurance and the conse- quences that arise therefrom, with regard to both the declarations of affiliates and the payments to recipients. The signatory organisations of the Unem- ployment insurance convention of 6 May 2011 , in view of Article L.351-3-1 of the French Labour Code on the method of financing benefits paid under this scheme, certify that Unemployment insurance is a specific “pay-as-you-go” scheme. Unédic’s annual accounts were drawn up on the basis of financial information produced by the following operators: Acoss, CCMSA, CCVRP, Pôle Emploi, CCSS (Monaco), CPS (Saint-Pierre et Miquelon). This financial information is summarised in summary documents conveying the transactions completed on behalf of the Unemployment insurance scheme. 2.2. UNEMPLOYMENT BENEFITS 2.2.1 EXPENSES The regulatory provisions stipulate that job- seekers register then provide Pôle emploi with evidence of their situation on a monthly basis to avoid their entitlements being called into question. These formalities ena- ble the benefits to be dealt with on a monthly basis under technical manage- ment expenses. In addition to the Decem- ber benefits paid in January of the following year, payment adjustments that may take place in the following months will be esti- mated to take into account corresponding expenditure in the corresponding year. For people exempt from checking, accounting is, the aforementioned notwithstanding, also carried out on a monthly basis. 2.2.2 BENEFIT DEBTS Under the item “Benefit debts” is the amount of benefits considered as owing for the current financial year, according to the principles referred to above, and which are calculated by using the benefits paid in Jan- uary of the following year and the estimate of the payment adjustments taking place in the following months. 2.2.3 BENEFIT RECIPIENT RECEIVABLES The accounts receivable of benefit recipi- ents (overpayments and advances) are the subject of a provision built up according to the age of the debts. The method for calculating provisions for depreciation of the benefit recipients’ over- payments is based on statistical law making it possible to measure the probability of recovering them. Overpayments for fraud were the subject of a 100% provision of their amount. ACCOUNTING principles, rules and methods2
  14. 14. 14FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 2.3 CONTRIBUTIONS OF AFFILIATES 2.3.1 INCOME The income from technical management corresponds to general and specific contri- butions that the employers are required to pay for the year, according to mandatory periodic declarations that they make to Urs- saf (Social Security Contribution Collection Agencies), CGSS (General Social Security Fund), CMSA (Agricultural Social Mutual Fund) and regional departments of Pôle emploi. The forms received in January are deemed to concern the previous year. For those received in February, the reference on the form for the previous year makes it pos- sible to register amounts declared in unearned income. When the forms are not received within the prescribed time limits, 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 Febru- ary of the following financial year and relat- ing to the financial year elapsed. A provision is recorded at the end of the year on affiliates’ debts that appear doubt- ful. It is calculated according to the age of the debts and forecasts of companies’ abil- ity to pay according to their characteristics. 2.3.3 CREDITOR AFFILIATES Funds paid by affiliates and collected by the various operators recovering on behalf of Unédic and which could not be assigned to an identified debt are 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 the provisions of ARC (Accounting Regulatory Committee) regulation no. 2002-10 on the amortisation and depreciation of assets and ARC regulation no. 2004-06 on the defini- tion, accounting and evaluation of assets. Amortisation is practised according to the straight-line method over the following durations: 2.4.2 CORPORATE COMMITMENTS Given the provisions of the National collec- tive agreement (CCN) for Unemployment insurance scheme personnel, Unédic is required to pay retirement indemnities cal- culated as monthly wage by number of years of service. Furthermore, bonuses are to be paid under long-term service bonuses (médailles du travail). Commitments are calculated using the fol- lowing information: • new CCN provisions: amendment of 10 February 2011; • use of personal information: age, sex, sal- ary, length of service; • determination of internal actuarial assumptions: staff turnover rate (0% to 3% according to the employee’s age), retire- ment age and terms and conditions (60 to 65 according to the year of birth with retirement at the initiative of the employee), a 3%wage increase rate includ- ing inflation; • use of a discount rate for the commitment corresponding to the Bloomberg reference rate, i.e. 2.90% for the 2012 financial year. SOFTWARE 5 years BUILDINGS AND STRUCTURES 10 to 40 years FIXTURES AND FITTINGS 10 to 20 years IT INSTALLATIONS AND EQUIPMENT 3 to 6 years OFFICE FURNITURE 10 years OFFICE EQUIPMENT 5 years OTHER 4 to 10 years
  15. 15. 15 Using this data, the amount of the commit- ments is calculated individually for each employee present, it being understood that for the long-term service bonuses, the com- mitment must be calculated for the bonuses which risk being paid for the entire period of work, i.e. a maximum of 4 bonus levels. The amounts thus obtained are recorded in the accounts as provisions for contingen- cies and expenses and the change in these provisions is recorded in the result for the period including the impact of assumption changes. Added to this from 2010 is the amount of commitments due under the defined ben- efits pension plan for the senior executives of the Unemployment insurance scheme present as at 1 January 2001, providing evi- dence of 8 years in this role and having ended their career in an Unemployment insurance institution. 2.4.3. EXTRAORDINARY PROFIT OR LOSS The extraordinary profit or loss includes: • technical management operations which do not derive from ordinary activity and relating to benefit recipient or recovery domains; • items relating to administrative manage- ment, that is to say the items provided for by the general chart of accounts and, in particular, the capital gains or losses from disposals of tangible and intangible fixed assets. The capital gains or losses from disposals of financial fixed assets are, the aforemen- tioned notwithstanding, recorded in the financial transactions. 2.5 PRINCIPLES OF CONSOLIDATION OF UNEMPLOYMENT INSURANCE SCHEME ACCOUNTS Unédic shall proceed with a “consolidation” of all Unemployment insurance institutions’ accounts. Strictly on a legal basis, the “con- solidated” whole corresponds to a “combi- nation” of the accounts according to regulation no. 99-02 of the National Accounting Council. There is no legal relationship between the entities included in the scope of consolida- tion except for SCI (real estate investment trust) Reuilly 1, subsidiary of Unédic. For the 2012 financial year, SCI Reuilly 1, wholly owned by Unédic, was absorbed by the latter. This operation does not call into question the consolidation of Sci Reuilly 1 for the 2012 financial year. The scope of consolidation is presented in the chapter of the appendix on additional information. The main reprocessing operations concern: • the leasing held by SCI Reuilly 1; • the goodwill arising from the first consoli- dation of SCI Reuilly 1; • elimination of balances from transactions relating to the managed third party (AGS) shown in Unédic’s annual accounts, in order to only present in the consolidated balance sheet the Unemployment insur- ance transactions.
  16. 16. 16FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 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 and immovable property was the subject of: • a sale of 13 real estate sites; • an inventory carried out on the intangible fixed assets. The transactions recorded with regard to the fixed assets and the amortisation during the 2012 financial year are presented below. 3 (1) (2) (3) (4) (5)=(1)+(2)-(3)+(4) Amortisation at the opening of the financial year Appropriation Increases Reductions in sales and decommissio- nings Transfers Gross value at the closing of the financial year TOTAL INTANGIBLE FIXED ASSETS (A) 7.7 0.2 7.5 0 0.4 TOTAL TANGIBLE FIXED ASSETS (B) 308.6 20.6 21.3 0 307.9 PROPERTY: BUILDINGS AND FITTINGS 305.8 20.3 20.6 0 305.5 OTHER TANGIBLE FIXED ASSETS 2.8 0.3 0.7 0 2.4 TOTAL (A+B) 316.3 20.8 28.8 0 308.3 CHANGES IN AMORTISATION IN 2012 (in millions of Euros) (1) (2) (3) (4) (5)=(1) +(2)-(3)+(4) Gross value at the opening of the financial year Acquisitions and creations Sales or decommissio- nings Transfers Gross value at the closing of the financial year TOTAL INTANGIBLE FIXED ASSETS (A) 9.6 0.2 8.9 0 0.9 TOTAL TANGIBLE FIXED ASSETS (B) 482.8 8.2 39.6 0 451.4 PROPERTY: LAND, BUILDINGS AND FITTINGS 477.6 7.8 37.4 0 448 OTHER TANGIBLE FIXED ASSETS 5.1 0.3 2.2 0.1 3.3 CURRENT TANGIBLE FIXED ASSETS 0.1 0.1 0 -0.1 0.1 TOTAL (A+B) 492.4 8.4 48.5 0 452.3 CHANGES IN GROSS FIXED ASSETS IN 2012 (in millions of Euros) A provision for depreciation of properties and developments is recorded as part of the planned disposal of certain sites for which a proposed purchase in lieu of the sale price estimate is lower than the net book value.
  17. 17. 17 3.1.1.2 Financial fixed assets This item, for an amount of 26.2 million Euros, essentially comprises the loans for their orig- inal amount within the framework of the construction subsidy for 25.8 million Euros and the deposits and securities paid amounting to 0.4 million Euros. 3.1.2 CURRENT ASSETS 3.1.2.1 Receivables a) Benefit recipient debtors The gross value of this item is up by 15.72% compared with the previous financial year: 540.4 million Euros compared with 467 million Euros. 95.8% of it is made up of Unemployment insurance overpayments to benefit recipients, i.e. 517.7 million Euros. The transactions relating to the Unemployment insurance overpayments are presented in the table below: The risk of not recovering overpayments is covered by the setting aside of a provision equal to 51.7% of the debt compared with a rate of 54.4% for the 2011 financial year. b) Affiliates The burden of gross contributions yet to be recovered, i.e. 5,662.5 million Euros, is up by 9.5% compared with the previous financial year. It is broken down into: • c• main contributions: 5,027.4 million Euros or 88.8% of the total; • individual contributions: 455.1 million Euros or 8.0% of the total; • additional contributions: 180.0 million Euros or 3.2% of the total. 2012 2011 Change 2012/2011 ADVANCES AND OVERPAYMENTS ON ACCOUNT AT THE OPENING OF THE FINANCIAL YEAR (A) 467.0 430.5 8.4% DETECTION OF OVERPAYMENTS DURING THE FINANCIAL YEAR (B) 933.7 901.4 3.6% REIMBURSEMENT AND RECOVERIES OF OVERPAYMENTS (C) 811.0 821.6 (1.3)% WRITE-OFFS AND LOSSES ON OVERPAYMENTS (D) 49.4 43.6 13.3% ADVANCES AND PAYMENTS ON ACCOUNT (E) 10.0 12.4 (19.4)% RECOVERED ADVANCES AND PAYMENTS ON ACCOUNT (F) 9.9 12.1 (18.2)% BENEFIT RECIPIENT DEBTORS AT THE END OF THE FINANCIAL YEAR (INCLUDING THE ADVANCES AND PAYMENTS ON ACCOUNT) (G) = (A) + (B) - (C) - (D) + (E) - (F) 540.4 467.0 15.72% PROVISION SET ASIDE FOR BAD DEBTS (H) (279.2) (254) 9.9% PROVISIONING RATE (H) / (G) 51.7% 54.4% -2.7 pts NET BOOK VALUE (I) = (G) - (H) 261.2 213 22.6% TRANSACTIONS RELATING TO UNEMPLOYMENT INSURANCE OVERPAYMENTS (in millions of Euros) 2012 2011 Change 2012/2011 UNCONTESTED DEBTS TO BE RECEIVED (A) 4,011.2 3,799.8 5.6% BAD DEBTS TO BE RECEIVED (B) 1,651.3 1,369.6 20.6% GROSS VALUE (C) = (A) + (B) 5,662.5 5,169.4 9.5% PROVISION SET ASIDE FOR BAD DEBTS (D) (1,333.3) (1,086.7) 22.7% PROVISIONING RATE (D) / (B) 80.7% 79.3% 1.4 pts NET BOOK VALUE (E) = (C) – (D) 4,329.2 4,082.7 6.0% (in millions of Euros)
  18. 18. 18FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 The uncontested debts to be received cor- respond to contributions due for 2012, which were settled at the beginning of the following financial year. The burden of bad debts has increased sub- stantially (20.6%), with this change result- ing not only from the worsening economic situation, but also from the effects of the transfer of recovery to Acoss, which has seen its burden of bad debts increase by 360 million Euros. For its part, the bad debts managed by Pôle emploi have reduced, but less dramatically, by 79 million Euros. A provision is set aside in order to cover the risk of not recovering bad debts, which rep- resents 80.7% of the contested contribu- tions to be received or a 22.7% increase compared with the 2011 financial year. The provision is calculated by each of the oper- ators responsible for recovering Unemploy- ment insurance contributions, according to the review of the results of recovering bad debts over previous years. 3.1.2.2 State This item, for an amount of 50.2 million Euros, represents an amount due by the State for arrangements prior to 2009 man- aged on behalf of the State and not trans- ferred to Pôle emploi. 3.1.2.3 Other debts This item, for an amount of 165.8 million Euros, predominantly comprises: • the national participatory youth employ- ment programme (EJEN) to be received for 0.9 million Euros; • an income to be received from the State as part of the CA (Contract for the future) – CAE (Employment Support Contract) arrangement balance for 16.1 million Euros; • a claim against establishments under management agreements amounting to 13.8 million Euros; • a claim against sales of fixed assets for 1.1 million Euros; • a 7.3 million euro claim against Monaco relating to current transactions of the con- tribution recovery domain; • a 49.3 million euro claim against Acoss, corresponding to the balance of contribu- tions paid by the employers during December, to be repaid to Unédic; • a claim against Saint-Pierre et Miquelon for 0.7 million Euros, relating to current transactions of the contribution recovery domain; • a claim against CCMSA for 4.4 million Euros, relating to current transactions of the contribution recovery domain; • a claim against the State concerning the exemption of ship-owners for 0.9 million Euros relating to current transactions of the contribution recovery domain; • a claim against the State concerning the exemption of apprentices for 15.4 million Euros relating to current transactions of the contribution recovery domain; • a claim against AGS for 47.2 million Euros in respect of management costs re-in- voiced to AGS. 3.1.2.4 Marketable securities This item, for an amount of 1,517.1 million Euros, corresponds to money market funds amounting to 1,515 million Euros, dedicated to the coverage of commercial paper issues in the event of market failure. Added to this is an amount of 2.1 million Euros for the deposit certificates. 3.1.2.5 Bank balances This item, for an amount of 1,531 million Euros, comprises: • passbook deposits paid for an amount of 1,500 million Euros; • bank account balances amounting to 31 million Euros. 3.1.3 Deferred expenses This item, for an amount of 7.4 million Euros, concerns the costs of bond issues that are distributed in a linear manner over the term of the bonds. Marketable security invento- ry as at 01/01/2012 Acquisi- tions in 2012 Sales in 2012 Marketable security invento- ry as at 31/12/2012 1,551 36,271 36,307 1,515 (in millions of Euros)
  19. 19. 19 3.2 ANALYSIS OF BALANCE SHEET LIABILITIES 3.2.1 NET FINANCIAL POSITION The net financial position, at the end of the 2012 financial year, is negative by 13,453.2 million Euros and is changing as follows: • net financial position as at 31 December 2011: -10,610.8 million Euros; • result of the absorption of SCI Reuilly 1: 0.8 million Euros; • negative result for the 2012 financial year: -2,843.2 million Euros; • net financial position as at 31 December 2012: -13,453.2 million Euros. 3.1.4 Redemption premiums The bonds issued by Unédic include a bond premium, corresponding to the difference between the nominal value of the bonds and the issue value. These premiums are amortised over the term of the issue. Date Deferred fees and costs Prior amortisation 2012 amortisation Aggregate amortisation as at 31/12/2012 Bond fee amortisation balance 31/12/2012 2009 4.5 3.1 1.4 4.5 - - 2011 1.9 0.4 0.7 1.1 0.8 2012 7.9 - - 1.3 1.3 6.6 TOTAL DEFERRED EXPENSES 14.3 3.5 3.4 6.9 7.4 SUMMARY OF DEFERRED EXPENSES FURTHER TO BOND ISSUES (in millions of Euros) Date Issue premium amount Prior amortisation 2012 amortisation Aggregate amortisation as at 31/12/2012 Issue premium balance 31/12/2012 2009 12.5 8.6 3.9 12.5 - - 2011 4.3 1.1 1.4 2.5 1.8 2012 11.9 - - 1.6 1.6 10.3 TOTAL ISSUE PREMIUM 28.7 9.7 6.9 16.6 12.1 (in millions of Euros)
  20. 20. 20FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 3.2.2 Provisions for contingencies and expenses This item, for a total amount of 55.8 million Euros, predominantly comprises the fol- lowing provisions: • Unédic’s contribution to the financing of AS-FNE (special benefits from the national employment fund) for 8.3 million Euros; • the rights acquired up to their retirement by the recipients of ARPE (job substitu- tion allowance) for 0.1 million Euros: this provision covers the costs of benefits yet to be paid and the financing of additional pension benefits; • the unemployment insurance contributions paid in error by certain public employers and to be repaid for 21.1 million Euros; • the provision for risks of disputes over benefit recipient and recovery domains flagged up by the regional departments of Pôle emploi for 8.3 million Euros; • provisions for corporate commitments • provision for retirement indemnities (IDR) for the sum of 15.0 million Euros; • provision for long-term service bonuses for 1.6 million Euros. 3.2.3 Loans and financial debts Opening balance Provision Write-back provision used Write-back provision not used Closing balance ARPE 0.1 - - - - - - 0.1 AS-FNE 12.5 8.3 12.5 - - 8.3 IDR 15.5 0.8 0.9 0.4 15.0 LONG-TERM SERVICE BONUSES 1.7 - - 0.1 - - 1.6 PUBLIC EMPLOYER REIMBURSEMENT 20.5 0.6 - - - - 21.1 OTHER 5.9 3.8 - - - - 9.7 TOTAL 56.2 13.5 13.5 0.4 55.8 CHANGE IN PROVISIONS FOR CONTINGENCIES AND EXPENSES DURING THE 2012 FINANCIAL YEAR (in millions of Euros) Financing arrangements Opening balance Of which accrued interest Additional financing Repayment of financing Closing balance Of which accrued interest BOND ISSUES 5,937 37 7,000 4,000 9,040 140 CREDIT/FINANCING ESTABLISHMENTS LOANS 7,480 - - 465 - - 7,945 - - OF WHICH COMMERCIAL PAPERS 7,480 - - 465 - - 7,945 - - OF WHICH OTHER LOANS 0 - - - - - - - - BANK LOANS AND OVERDRAFTS 1 - - 39 - - 40 - - TOTAL 13,418 37 7,504 4,000 17,025 140 CHANGE IN FINANCING DURING 2012 (in millions of Euros)
  21. 21. 21 Added to this is an amount of 140.6 million Euros corresponding to accrued coupons at the end of the financial year. 3.2.3.2 Loans from various credit and finance establishments • The total amount of this item comes to 7,945 million Euros, corresponding to the commercial papers issued by Unédic. The transactions concerning the commer- cial papers were as follows in 2012: The due dates of these commercial papers are as follows: 3.2.3.3 Bank loans and overdrafts The total amount of this item comes to 39.6 million Euros and corresponds to the accounting balances of creditor bank and postal accounts and the accrued interest on bank overdrafts used. 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 140.4 million Euros, corresponds to the sums received from employers and 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 2,734.7 mil- lion Euros, corresponds, essentially, to the benefits to be paid: • from the month of December 2012 paid in January 2013, i.e. 2,692.4 million Euros and 51.1 million Euros for the redeployment benefits to be paid to benefit recipients; • for 2012 paid in February and March 2013 for an amount of 100.2 million Euros; • less the advance retirement levy for an amount of 115.3 million Euros. 3.2.3.1. Bond issues The bonded debt amounts to 8,900 million Euros at the end of the 2012 financial year. ISSUE Amount in Euros Issue date Maturity Coupon rate 2.1 1,500,000,000 31/03/2011 31/03/2014 2.375 % 2.2 150,000,000 23/12/2011 2.3 350,000,000 29/02/2012 2.4 150,000,000 25/04/2012 3 250,000,000 13/10/2011 13/04/2013 1.370 % 4.1 2,500,000,000 27/02/2012 27/02/2015 1.750 % 4.2 200,000,000 10/04/2012 5.1 1,000,000,000 29/02/2012 25/04/2019 3.000 % 5.2 300,000,000 25/04/2012 6.1 1,000,000,000 26/04/2012 26/04/2017 2.125 % 6.2 300,000,000 10/12/2012 7.1 1,000,000,000 01/06/2012 01/06/2018 2.125 % 7.2 100,000,000 16/10/2012 7.3 100,000,000 26/10/2012 BONDED DEBT Invento- ry as at 01/01/2012 Issues in 2012 Repay- ments in 2012 Invento- ry as at 31/12/2012 7,480 14,675 14,210 7,945 (in millions of Euros) During the 1st quarter 2013 During the 2nd quarter 2013 During the 2nd half of 2013 Total 5,425 1,965 555 7,945 (in millions of Euros)
  22. 22. 22FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 3.2.4.3 Tax and social security debts This item, for a total of 70.6 million Euros, comprises: • provision for paid leave and holidays and 13th month bonuses amounting to 2.6 mil- lion Euros; • the benefit recipient advance levies yet to be paid, i.e. 47.6 million Euros correspond- ing to the benefits paid in December 2012; • other tax and social security debts for 20.4 million Euros. 3.2.4.4 Trade debts The amount of 4.2 million Euros, represent- ing the invoices yet to be paid as at 31 December 2012, is divided into two sections: • suppliers of goods and services: 3.9 mil- lion Euros; • suppliers of fixed assets: 0.3 million Euros. 3.2.4.5 Other debts The main items of this section, the total amount of which comes to 1,405.6 million Euros, concern: • the cost to be paid as at 31 December 2012 to various pension funds, for the validation of the benefit recipients’ additional pen- sion points: • 557.5 million Euros due to Arrco (Associ- ation of supplementary pension plans for salaried employees) which is broken down into: • 540.3 million Euros corresponding to the contributions yet to be paid for 2012; • -52.5 million Euros in respect of the semi-final 2012 position; • 5.1 million Euros due by Arrco in respect of the 2011 adjustment; • 64.6 million Euros in respect of the AFSP (Benefits from the specific temporary fund) arrangement. • 612.0 million Euros due to Agirc (Gen- eral Association of Pension Institutions for Managerial Staff) which is primarily broken down into: • 398.9 million Euros corresponding to Unédic’s commitment to Agirc, as provided for in the agreement of 19 December 1996 which had val- ued the amount of supplementary retirement contributions for the periods of unemployment prior to this date and set a 20-year pay- ment schedule at the rate of 1/20th each year, with the debt amount being re-assessed each year by applying the price index; • 262 million Euros corresponding to the contributions yet to be paid for 2012; • -37.5 million Euros in respect of the semi-final 2012 position; • -16.6 million Euros due by Agirc in respect of the 2011 adjustment. • 78 million Euros due to other supplemen- tary retirement pension organisations, including Ircantec (Supplementary Retirement Pensions Institution for Non-Certified State Employees and Employees of Public Administrations). • the liaison accounts with Pôle emploi for 138.8 million Euros including that relating to the financing of Pôle emploi through the 10% contribution for the sum of 154.0 million Euros. 3.2.5 Accruals Unearned income, i.e. 55.4 million Euros, concerns: • the payments made by public companies and establishments which are not affili- ated to the Unemployment insurance scheme, but which have signed a man- agement agreement with Unédic. The payments are made for benefit recipients registered as unemployed and whose acquired rights may be spread over sev- eral financial years according to their age. This represents an amount of 17.7 million Euros; • he bond premiums on bond issues repre- senting 37.7 million Euros. These premiums are amortised over the term of the issue. Date Issue amount Bond premium amount Prior amortisation 2012 amortisation Aggregate amortisation as at 31/12/2012 Prepaid income balance 31/12/2012 2011 150 1.7 0.4 0.4 0.8 0.9 2012 1,500 42.5 0.0 5.7 5.7 36.8 44.2 0.4 6.1 6.5 37.7 (in millions of Euros)
  23. 23. 23 Profit and loss ACCOUNT ANALYSIS 4.1. TECHNICAL MANAGEMENT 4.1.1 INCOME 4.1.1.1 Contributions The income from contributions for the 2012 financial year is up by 1.99% compared with 2011: After correcting exceptional items recorded in 2011, the increase in income from main contributions is 2.56% in 2012. This is explained by the 2.37% increase in the wage bill and additional items under previous financial years. The change in the wage bill should be compared to the increase in the average salary per capita (SMPT) of 2.5% and the decrease in staff numbers (-0.1% to -0.2%). Special contributions saw a 43.4% increase in relation to the increase in the number of members of the CRP (Personal redeploy- ment agreement) arrangement. 4.1.1.2. Other income This item, for an amount of 124 million Euros, predominantly comprises the income in respect of management agreements, i.e. 52 million Euros, in addition to the surcharges for delay and penalties for 57.7 million Euros. 4.1.1.3 Net write-back of provisions The total amount of decreases or write- backs of provisions is 78.4 million Euros, and is related to: • Unédic’s contribution to the current financing of AS-FNE amounting to 12.6 million Euros; • the depreciation of debts relating to man- agement agreements for 0.6 million Euros; • doubtful debts of affiliates for 52.3 million Euros; • the depreciation of detected overpay- ments for 12.9 million Euros. 4.1.1.4 Transfer of expenses This item, for the sum of 51.5 million Euros, predominantly comprises: • the reimbursements of benefits by the affiliates amounting to 20.5 million Euros; • the full reimbursement of benefits paid to the EJEN (National Youth Employment Programme) for the sum of 1.3 million Euros; 2012 2011 2012/2011 MAIN CONTRIBUTIONS 32,333.4 31,878.6 1.43% SPECIAL CONTRIBUTIONS 624.8 435.7 43.4% TOTAL 32,958.2 32,314.3 1.99% INCOME FROM CONTRIBUTIONS FOR THE 2012 FINANCIAL YEAR (in millions of Euros) 4
  24. 24. 24FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 • the reimbursement of benefits between the EU countries for 5.8 million Euros; • the partial payment of improved job secu- rity contract (CSP) benefits by the State for 23.9 million Euros. 4.1.2 EXPENSES The technical management expenses total increased by 5.34% in 2012 as a result of a continuous decline in the economic situa- tion over the financial year. The benefit expenses and the cost of validat- ing benefit recipients’ pension points were the most affected by this decline. On the other hand, the amount of assistance pay- ments reduced by 11.4% with a significant drop in payments in respect of Assistance for the takeover or creation of a company. 4.1.2.1 Benefits The overall cost of benefits increased by 6.4% in 2012, with the following breakdown: The expenses per benefit result from the assumption of responsibility for: • payments to benefit recipients made dur- ing the financial year; • the reduction in expenses associated with the detection of overpayments; • the provision reversal recorded in 2012 for benefits to be paid for the previous finan- cial year; • the supplementary expenses represented by the provision recorded for the benefits paid at the start of 2013 for periods from 2012 or previous years. 2012 2011 2012/2011 UNEMPLOYMENT BENEFITS (ARE) 26,681.7 25,220.7 5.79% OTHER BENEFITS 2,627.4 2,324.5 13.03% TRAINING UNEMPLOYMENT BENEFITS (ARE) 1,057.3 1,060.0 -0.25% SPECIFIC REDEPLOYMENT BENEFITS (ASR)/ BENEFITS FROM THE SPECIFIC TEMPORARY FUND (ASP) 1,554.8 1,239.6 25.4% OTHER 15.3 24.9 -38.55% TOTAL 29,309.10 27,545.2 6.40% (in millions of Euros) Benefits paid in 2012 (+) Overpayments detected 2012 (-) 2012 benefits paid in 2013 (+) Write-back of 2011 benefits paid in 2012 (-) Financial year expenses (=) ARE 27,319.8 877.4 2,502.3 2,332.7 26,612.0 CSP/CTP/EJEN ARE 80.6 1.7 0.0 9.2 69.7 TOTAL ARE 27,400.4 879.1 2,502.3 2,341.9 26,681.7 TRAINING ARE 1,080.1 23.1 131.3 131.0 1,057.3 ASR/ASP 1,532.2 24.3 158.8 111.9 1,554.8 VARIOUS OTHERS 17.4 1.6 1.0 1.5 15.3 OTHER BENEFITS 2,629.7 49.0 291.1 244.4 2,627.4 TOTAL 30,030.1 928.1 2,793.4 2,586.3 29,309.1 (in millions of Euros)
  25. 25. 25 Improved job security benefits have taken over from the Specific redeployment bene- fits and the Occupation transition benefits for those signed up to this support arrange- ment as of 1 September 2011. The main changes in terms of payment of benefits are as follows: • ARE payments represented the sum of 27.320 billion Euros in 2012 compared with 25.797 billion Euros in 2011, i.e. a 5.90% increase which is explained by a 1.44% increase in the average amount of the daily benefits, and a 4.39% increase in the num- ber of compensated days; • Training ARE payments (excluding social contributions of 75 million Euros) repre- sented an amount of 1,005 billion Euros in 2012 compared with 0.984 billion Euros in 2011, i.e. a 2.12% increase which is explained bya1.56%increaseintheaverageamountof the daily benefits, and a 0.55% increase in the number of compensated days; • ASR and ASP payments represented the sum of 1.532 billion Euros in 2012 compared with 1.271 billion Euros in 2011, i.e. a 20.5% increase which is explained by a 1.69% reductionintheaverageamountofthedaily benefits, and a 22.55% increase in the num- ber of compensated days. 4.1.2.2 Redeployment benefits Redeployment benefits amounted to 972.8 million Euros in 2012, compared with 1,097.5 million Euros in 2011, and are broken down in the following manner: Assistance for the takeover or creation of a company (ARCE) represents the main ben- efits amounting to 841.5 million Euros or 86.5% of all benefits. Its amount decreased by 13.95% in 2012. 4.1.2.3. Validation of pension points This item corresponds to the cost of the val- idation of benefit recipients’ supplementary pension points for the sum of 1,811 million Euros in 2012, compared with 1,614.1 million Euros in 2011. This increase is explained by the increase in benefit recipient expendi- ture and expenditure adjustments recorded in 2011. The breakdown by pension scheme is shown in the table below: 2012 2011 2012/2011 IDR – ASP DIFFERENTIAL REDEPLOYMENT INDEMNITY 13.2 0 100% ADR – COMPENSATORY ALLOWANCE UPON REDEPLOYMENT 50.5 50.9 -0.79% ARCE – ASSISTANCE FOR THE TAKEOVER OR CREATION OF A COMPANY 841.5 977.9 -13.95% IDR – CRP DIFFERENTIAL REDEPLOYMENT INDEMNITY 7.3 14.4 -49.31% OTHER BENEFITS 60.3 54.3 11.05% TOTAL REDEPLOYMENT BENEFITS 972.8 1,097.5 -11.36% REDEPLOYMENT BENEFITS (in millions of Euros) TOTAL ARRCO 2,207.7 AGIRC 677.3 OTHER FUNDS (IRCANTEC – CRPNPAC) 134.9 TOTAL PENSION FUNDS 3,019.9 CONTRIBUTION OF BENEFIT RECIPIENTS -1,208.9 VALIDATION OF PENSION POINTS 1,811.0 (in millions of Euros)
  26. 26. 26FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 4.1.2.4 Other technical management expenses This item, for an amount of 3,346.8 million Euros, is down by 0.24% compared with 2011. The main expenses comprise: • the debt write-offs and cancellations of affili- ate debts for 155.5 million Euros; • the debt write-offs and cancellations of ben- efit recipient debts for 49.8 million Euros; • the assumption of responsibility by Unédic for its contribution to the FNE (National Employment Fund) agreements for 7.6 mil- lion Euros; • the 10% contribution due by Unédic to Pôle emploi for 3,024.9 million Euros; • Unédic’s contribution to the Improved job security contract (CSP) costs for 76.9 million Euros; • Unédic’s contribution to the financing of the long-term reduced activity (APLD) arrange- ment for the sum of 28.3 million Euros. 4.1.2.5 Provisions The provisions total 350.5 million Euros and are broken down as follows: • depreciation of claims against affiliates for 298.9 million Euros; • depreciation of overpayments to benefit recipients for 38.7 million Euros; • depreciation for contingencies and expenses amounting to 12.9 million Euros which primarily concerns the provision for financing the ASFNE for 8.3 million Euros, the provision for Acoss disputes of 0.9 mil- lion Euros and the provision for Pôle emploi contingencies and expenses of 3 million Euros. 4.2 ADMINISTRATIVE MANAGEMENT 4.2.1 INCOME 4.2.1.1 Provision of services This item, amounting to 49.5 million Euros, is essentially made up of income received from third parties within the framework of management agreements: 4.2.1.2 Other income This item, for a total amount of 22.9 million Euros, mainly represents the rent paid by Pôle emploi within the context of the supply of the Unemployment insurance scheme’s real estate assets. 4.2.2 EXPENSES The expenses came to 113.3 million Euros in 2012 and increased by 6.38% compared with 2011. The amortisation of the real estate base (284 sites as at 31 December 2012), its main- tenance and its management constitute a significant administrative management expense. 4.2.2.1 Purchases This item represents 0.6% of the administra- tive management expenses, or 0.7 million Euros, compared with 0.5 million Euros in 2011. 2012 2011 AGS 45.3 41.1 PÔLE EMPLOI 4.1 2.6 OTHER AGREEMENTS WITH THIRD PARTIES 0.0 0.0 OTHER PROVISIONS OF SERVICES 0.1 0.0 TOTAL 49.5 43.7 (in millions of Euros)
  27. 27. 27 4.2.2.2 External services This item represents 47.6% of the adminis- trative management expenses. The increase in the bank costs item is due to the bond issue costs in 2012. The “Other external services” item includes, inter alia, expenses relating to the financing of employer and union organisations, within the context of managing the Unemploy- ment insurance scheme, i.e. 3.8 million Euros in 2012. 4.2.2.3 Taxes and levies This item represents 5.7% of the administra- tive management costs and is broken down as follows: The “Other taxes and levies” item benefited from property tax and household refuse collection tax rebates amounting to 0.3 mil- lion Euros in 2012 compared to 2 million Euros in 2011. 4.2.2.4 . Wages and social security costs This item represents 24.6% of the adminis- trative management costs. It is broken down into: 4.2.2.5 Amortisation and provisions This item represents 21.8% of the adminis- trative management expenses, or 24.7 mil- lion Euros, compared with 25.6 million Euros in 2011, with the reduction being attributable to the sales of real estate sites. 2012 2011 WORKS AND SERVICES PROVIDED BY THIRD PARTIES 9.3 11.0 OTHER EXTERNAL SERVICES (INCLUDING EXPENSES TO FINANCE UNION AND EMPLOYER ORGANISATIONS: 3.8 MILLION EUROS IN 2012) 8.8 10.5 RENTS 2.2 2.0 TRANSPORTATION AND TRAVEL 1.3 1.3 POSTAL AND TELECOMMUNICATIONS COSTS 0.5 0.5 NOTARIAL FEES AND COSTS 19.5 18.0 BANK AND POSTAL COSTS 12.4 5.7 TOTAL 54.0 49.1 (in millions of Euros) 2012 2011 WAGES 18.5 17.6 SOCIAL SECURITY COSTS 8.9 8.3 TOTAL 27.4 25.9 (in millions of Euros) 2012 2011 TAXES ON EARNINGS 2.0 1.9 OTHER TAXES AND LEVIES 4.4 3.4 TOTAL 6.4 5.3 (in millions of Euros)
  28. 28. 28FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 4.3 FINANCIAL MANAGEMENT The financial result is negative: • -177 million Euros in 2011; • -237 million Euros in 2012. 2012 expenses came to 281.2 million Euros and correspond mainly to: • structured financing expenses for 274.3 million Euros, or: • 242.9 million Euros for the bond issues and the bridging facility; • 31.4 million Euros in interest on the commercial papers programme; • amortisation of bond issue redemption premiums for 6.9 million Euros. The average financing rate for 2012 came to 1.38%. 4.4 EXTRAORDINARY PROFIT OR LOSS The income from extraordinary transactions is slightly profitable (+5.4 million Euros) and is made up of the following transactions: • capital gains of 4.8 million Euros for sales of fixed assets; • withdrawal from SCI Reuilly 1 for 2.9 million Euros; • cost relating to the net book value of the fixed assets disposed of for a sum of 2.2 million Euros; • miscellaneous expenses amounting to 0.1 million Euros. 4.5 CORPORATION TAX Unédic is liable for corporation tax for profit or loss on property revenue and income from movable property. The tax due, at the rate of 24%, came to 4.8 million Euros for 2012. 4.6 FINANCIAL YEAR PROFIT OR LOSS This item represents the net profit or loss for the 2012 financial year for the Unemployment insurance scheme. The result is negative by 2,843.2 million Euros.
  29. 29. 29 Additional INFORMATION 5.1 ESTIMATE OF THE BENEFITS TO BE PAID TO BENEFIT RECIPIENTS RECEIVING BENEFITS AT THE END OF THE FINANCIAL YEAR USING UNDERLYING ASSUMPTIONS The method of management by distribution implies that certain technical provisions which might be set aside within the frame- work of an insurance or welfare activity are not set aside within the specific framework of the Unemployment insurance scheme. However, they constitute potential forecast expenditure calculated at the end of the financial year, which only the break-even point of the Unemployment insurance scheme or a change in regulation might call into question in the future. With a view to ensuring third parties are bet- ter informed, we present to you below the estimates that we consider the most impor- tant, in addition to their means of calculation. More extensive information on the expendi- ture and income forecasts can be found in the managementreportinthe“2013Outlook”sec- tion, in accordance with works regularly con- ducted by the Unemployment insurance scheme on the benefits/contributions equilib- rium and the coverage of its financing needs. 5.1.1 ESTIMATE OF THE BENEFITS YET TO BE PAID BY THE UNEMPLOYMENT INSURANCE SCHEME TO THE BENEFIT RECIPIENTS COMPENSATED AT THE END OF THE FINANCIAL YEAR The amount of benefits to be paid over the average duration of unemployment yet to run as of 31 December 2012, to benefit recip- ients registered on this date, was assessed by Unédic’s studies and analyses depart- ment at 23,034 million Euros. This amount does not take into account the benefits to be paid to recipients of an indemnification maintenance until their retirement. The means and procedures used to calculate this estimate are as follows: • calculation of benefits paid in 2012 to cur- rent benefit recipients as at 31 December 2011 (2,331,792 benefit recipients), i.e. 15,248 million Euros; • calculation of benefits yet to be paid to this population after 31 December 2012, i.e. 6,558 million Euros. This population repre- sents 27.90% of current benefit recipients as at 31 December 2011; • for this 2011 population, the total amount of benefits yet to be paid by the Unem- ployment insurance scheme is 21,807 mil- lion Euros; • this amount is updated, taking into account a 5.63% increase in benefit recip- ients as at 31 December 2012 compared with 31 December 2011; the estimate of the benefits yet to be paid to the benefit recip- ients compensated at the end of the 2012 financial year is 23,034 million Euros. 5.1.2 ESTIMATE OF THE BENEFITS YET TO BE PAID BY THE UNEMPLOYMENT INSURANCE SCHEME TO BENEFIT RECIPIENTS RECEIVING AN EXTENSION OF AN ALLOWANCE These benefits concern the jobseeker ben- efit recipients who may, under certain con- ditions, collect their indemnities up to retirement age. The amount of benefits yet to be paid to these benefit recipients registered at the end of the financial year was assessed by Unédic’s studies and analyses department at 505 million Euros. The calculation is made by prolonging the indemnification rate used as at 31 December 2012 until the day before the retirement date, with the maximum age being 65. 5
  30. 30. 30FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 5.2 INDIVIDUAL RIGHT TO TRAINING The vocational training agreement, signed on 6 October 2005, implements, by adapting them to the context of Unemployment insurance, the provisions of law no. 2004-391 of 4 May 2004 and the National multi-sector agreement of 5 December 2003. The provisions of the agreement stipulate that from 1 January 2004, employees of the Unem- ploymentinsuranceschemeacquireindividualrightstotraining,cappedat21hoursperannum and per employee. This right, cumulated over 6 years, therefore amounts to a maximum of 126 hours per employee as at 31 December 2012. Whentheaccountsaredrawnup,theacquiredrightsarecalculatedbyusingthepersonaldata of the Unemployment insurance employees. As at 31 December 2012, the accumulation of acquired rights came to almost 32,333 hours. 5.3 NUMBER OF UNEMPLOYMENT INSURANCE STAFF The number of Unédic staff as at 31 December 2012 is 347 Unédic employees, 234 of which are allocated to the Unédic/AGS Delegation. 5.4 SCOPE OF CONSOLIDATION The scope of consolidation includes: • Unédic; • one unmerged Assédic agency, French Guiana; • SCI Reuilly 1, Unédic subsidiary which was the subject of a merger by Unédic on 31 August 2012; • the SI Convergence Emploi EIG created in March 2007 by ANPE and Unédic and which was removed on 25 April 2012. No. INSTITUTIONS 69 French Guiana SCI Reuilly 1 Unédic SI Convergence Emploi EIG
  31. 31. AUDITORS’ REPORT on the consolidated accounts Financial year ended 31 December 2012
  32. 32. 32FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012 1. OPINION ON THE CONSOLIDATED ACCOUNTS We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis or by means of other methods of selection, evidence supporting the amounts and information in the consolidated accounts. An audit also includes assessing the accounting principles used and significant estimates made, as well as evaluating the overall presentation of the accounts. We believe that the information that we have collected is sufficient and relevant on which to base our opinion. We certify that, in accordance with French accounting rules and principles, the consoli- dated accounts of the financial year give a true and fair view of the assets, the financial position, and the income of the whole made up of the Unemployment insurance institu- tions and the other entities included in the combination of accounts (“the consolidation”). Although not wishing to undermine the opinion expressed above, we draw your attention to the point referred to in the appendix relating to the measures taken in order to finance the Unemployment insur- ance scheme given the economic context and its impact on the technical equilibrium forecasts (see note 1.5.2. “Financing of the 2013-2014 period”). To the members of the Board of Directors: In fulfilment of the assignment entrusted to us by your Board of Directors, we hereby report to you, for the financial year ended 31 December 2012, on: • the audit of the so-called combined con- solidated accounts of the Unemployment insurance scheme managed by Unédic, as they are enclosed with this report; • the justification of our assessments; • the specific verifications and informa- tion required by law. The consolidated accounts have been approved by the Managing Director of Unédic. Our role is to express an opinion on these accounts based on our audit. 2. JUSTIFICATION OF THE ASSESSMENTS Pursuant to the provisions of Article L.823-9 of the French Commercial Code relating to the justification of our assessments, we hereby inform you that the assessments we have carried out concerned the appropriate nature of the accounting principles applied and, where necessary, the reasonable nature of the significant estimates used and the overall presentation of the accounts, by way of: • The note in the appendix referring to the accounting principles, rules and methods specifies that the Unemployment insur- ance scheme is a specific scheme by distri- bution and that the accounts were drawn upinaccordancewiththechartofaccounts of the unemployment insurance organisa- tions approved by the National Accounting Council. In order to draw up the consoli- dated accounts, the specific nature of Unemployment insurance is thereby taken into account and the consequences arising therefrom, both in respect of the declara- tions of affiliates and the payments to ben- efit recipients. • Furthermore, the financial year’s accounts were drawn up with a view to continued Unemployment insurance activities, given the structuring hypothesis referred to in note 1.5.2 of the “Financing of the 2013- 2014 period” appendix which sets out Unédic’s ability to have access to the nec- essary financing. As part of our assessment of the accounting rules and principles used, we verified the appropriate nature of the accounting meth- ods specified above and the information provided in the notes of the appendix.
  33. 33. 33 3. SPECIFIC VERIFICATIONS AND INFORMATION We have also performed, in accordance with professional standards applicable in France, the specific verifications required by law. We have no matters to report regarding their fair presentation and conformity with the consolidated accounts given in the Manag- ing Director’s management report and in the documents sent to the members of the Board of Directors on the financial position and the consolidated accounts. • Note 2.1 of the appendix specifies that the Unemployment insurance scheme’s accounts were drawn up on the basis of financial information produced by third parties, primarily by Pôle emploi and Acoss, with regard to the transactions car- ried out by these entities on behalf of the Unemployment insurance scheme. • We have familiarised ourselves with the “Auditors’ Report on the accounting state- ments of Pôle emploi linked to the manage- ment on behalf of Unédic of individual contributions from certain affiliates and payments to benefit recipients”, drawn up on 16 May 2013, and which gives a favoura- ble opinion. • We have familiarised ourselves with the “Court’s positions on the 2012 accounts of Acoss’ recovery activity” adopted by the 6th Chamber of the French Audit Court on 26 June 2013 and which give reasonable assurance as to the cash flows specifically concerning the Unemployment insurance scheme both in terms of income and col- lections. • We ensured the correct transcription of these accounting statements in the Unem- ployment insurance scheme’s accounts. • We were aware of the work carried out by the Pôle emploi Auditors and by the French Audit Court and we supplemented it with specific requests concerning both the internal audit and the audit of the accounts. Our work consisted in examin- ing the relevance and sufficient nature of the information obtained. The assessments were made in the context of our audit of the consolidated accounts, taken as a whole, and therefore contributed to the formation of our opinion expressed in the first part of this report. Paris and Neuilly, 27 June 2013 THE AUDITORS FCN Deloitte Associés SERGE FLOCH STÉPHANE LOUBIÈRES ANNE BLANCHE VINCENT BLESTEL
  34. 34. NOTES FINANCIAL REPORT – UNEMPLOYMENT INSURANCE IN 2012
  35. 35. Unédic - 2012 Financial Report. June 2013. ISSN: 0997-1351. Editorial design and graphics by 4, rue Traversière - 75012 Paris Téléphone : 01 44 87 64 00 Fax : 01 44 87 64 01 unedic.fr twitter.com/unedic

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