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2.0 Notes to the consolidated financial statements at December 31 st <strong>2007</strong> 1.8. Underwriting expenses on insurance policies 1.11. Goodwill 1.12. Other intangible fixed assets Underwriting expenses on insurance policies correspond to commissions paid to business-getters, claims paid out to policyholders, related costs and changes in underwriting provisions gross of reinsurance (including changes for the fair valuation of technical liabilities for investment policies). Costs per destination for insurance companies are broken down by category on the income statement in line with the format retained by the APRIL GROUP. 1.9. Income or expenses net of reinsurance cessions Income or expenses net of reinsurance cessions correspond to the net balance of: Premiums ceded, representing expenses, Claims ceded, representing income, Reinsurance commissions, representing income, Change in provisions ceded, representing income (net write-back) or expenses (net charge). 1.10. Other operating income and expenses Other operating income and expenses comprise income and expenses as defined by CNC recommendation 2004 R02: Capital gains and losses on the disposal of non-current tangible and intangible assets, Depreciation of non-current tangible and intangible assets, except for depreciation relative to goodwill, Restructuring expenses, Provisions relative to a major dispute. Goodwill represents the difference between the acquisition cost, plus related costs, of the securities of consolidated companies and the Group share in the fair value of assets, liabilities and contingent liabilities that may be identified as acquired on the date on which the equity interest is acquired. Goodwill is recorded as an intangible fixed asset. In accordance with IAS 36, it is subject to value tests as soon as any signs of an impairment in value come to light and at least once a year, based on the discounted cash-flow (DCF) method. For these tests, goodwill is broken down for each cash- flow generating unit, which correspond to consistent groups relative to the generation of cash-flow. In light of the organization in place within the Group, cash-flow generating units correspond either to subsidiaries or to groups of subsidiaries with common characteristics. The conditions for impairment tests on cash-flow generating units are detailed in Section 1.16.2. Negative goodwill is booked directly into earnings. In the event of an impairment in the going value, a depreciation charge is recorded in the consolidated financial statements under “change in value of goodwill”. The depreciation recorded is non-reversible and may not be written back if the going value for the goodwill in question climbs back above its book value again. Other intangible fixed assets include intangible fixed assets acquired separately such as software solutions or policyholder portfolios. Intangible fixed assets resulting from acquisitions are recorded separately from goodwill when they can be identified, controlled by the company and are likely to generate future economic benefits. The development costs of software for use in-house, for the portion relative to internal and external costs, contributing directly to the creation of an improvement in performance, are recorded as assets provided that they will generate future economic benefits and that they are clearly identified. Other software development costs are immediately booked as expenses. Intangible fixed assets are broken down into two categories, with assets with a definite lifespan and assets with an indefinite lifespan: Fixed assets with a definite lifespan are amortized over their useful life, as defined below, Fixed assets with an indefinite lifespan are not amortized. Nevertheless, irrespective of their lifespan, fixed assets are subject to an annual impairment test. The amortization of intangible fixed assets with a definite lifespan is calculated based on the acquisition or production cost in line with the linear method and the asset’s useful life. 101 Return to the contents section
2.0 Notes to the consolidated financial statements at December 31 st <strong>2007</strong> The latter is revised each year: Policyholder portfolios are amortized in proportion to their renewal rate, over a maximum period of 10 years. Software products are amortized over a period ranging from one to three years, depending on their planned useful life. 1.13. Tangible fixed assets (excluding investment properties) In accordance with IAS 16, the gross value of tangible fixed assets corresponds to their acquisition or creation cost. Tangible fixed assets are valued on a historical cost basis and are not subject to any revaluations. Fixed assets are primarily self-financed and there are no assets that require a lengthy period of preparation in order to be able to be used or sold. As such, no borrowing costs are incorporated into the cost of assets. Maintenance and repair costs are booked directly under expenses for the year, with the exception of those making it possible to raise performance levels for the asset in question or increase its useful life. Amortization charges are calculated in line with the linear method based on the acquisition or production cost, after deducting, as relevant, the residual value. The depreciation period is based on the estimated useful life: Buildings are amortized over up to 50 years, General fixtures and fittings are amortized over up to eight years, Office equipment is amortized over up to five years, IT equipment is amortized over up to three years, Office furniture is amortized over up to five years. 1.14. Investment properties In accordance with IAS 40, the Group has chosen to value investment properties based on the amortized cost method, i.e. based on the historical cost less cumulative deprecation charges. 1.15. Fixed assets under finance-leases In accordance with IAS 17 “Leases”, fixed assets held under finance-leases are recorded under assets at the lower of their discounted value of future payments or their fair value. The corresponding debt is recorded as a liability under borrowings and financial debt. They are amortized in line with their estimated useful life as defined above. 1.16. Impairment in value of assets Assets with an indefinite useful life are not amortized, but are subject to an annual impairment test. Assets that are amortized are subject to an impairment test when, due to specific circumstances of events, the collectability of their book values is called into question. 1.16.1. Intangible fixed assets with a definite lifespan and tangible fixed assets: If there are any such signs, the recoverable value of fixed assets is estimated and an impairment in value is recorded when the book value of an asset is higher than its recoverable value. The recoverable value of an asset represents the higher of the asset’s net sales price or its going value, determined by estimating the future financial flows to be generated by the asset. 1.16.2. Intangible fixed assets with an indefinite lifespan and goodwill: For this test, fixed assets are grouped together into cashflow generating units, which are defined as a consistent group of assets generating different cash inflows and outflows from other sets of assets. In light of the organization in place within the Group, cashflow generating units correspond either to subsidiaries or to groups of subsidiaries with common characteristics. The going value of assets is determined by discounting net future cash-flows (discounted cash-flow method). The financial flows based on activity forecasts for the next four years are discounted in line with the following assumptions: A risk-free rate of 4%, determined in relation to the rate for French government bonds, A risk rate of 4.07%, defined in relation to the risk premium demanded by investors on the small and midcap market, A sensitivity coefficient for the risk rate of between 1 and 4, determined according to the activity of each subsidiary, its maturity, the existence or not of a portfolio of recurring activities and the breakdown of clients in this portfolio, A conservative infinite growth rate between 0% and 2%, determined according to activity forecasts for the subsidiary. 102 Return to the contents section
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Contents 01 Main Document Responsib
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1.0 for this reference document and
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2.0 General information on the comp
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4.0 Net 4.0 worth-financial positio
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5.0 Corporate Governance LA FRANCAI
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5.0 Corporate Governance MADECO A M
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1.0 APRIL GROUP statutory financial
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7.0 Index 7.0 of headings of headin
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7.0 Index of headings INFORMATIONS
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2007 - April

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