Financial report – unemployment insurance in 2013

FINANCIAL REPORT

INSURANCE INUNEMPLOYMENT

2013

MANAGING DIRECTOR’S MANAGEMENT REPORT 3

CONSOLIDATED FINANCIAL STATEMENTS 6

1 KEY EVENTS OF THE FINANCIAL YEAR 101.1 NEW REGULATORY MEASURES DECIDED ON IN 2013 101.2 FINANCIAL RELATIONS BETWEEN PÔLE EMPLOI AND UNÉDIC 111.3 STATE/UNÉDIC JOINT ARRANGEMENTS 111.4 INCREASE IN UNEMPLOYMENT INSURANCE BENEFITS 121.5 FINANCING THE UNEMPLOYMENT INSURANCE SCHEME 12

2 ACCOUNTING PRINCIPLES, RULES AND METHODS 142.1 GENERAL PRINCIPLES 142.2 UNEMPLOYMENT BENEFITS 142.3 CONTRIBUTIONS OF AFFILIATES 152.4 OTHER ITEMS 152.5 PRINCIPLES OF CONSOLIDATION OF UNEMPLOYMENT INSURANCE SCHEME ACCOUNTS 16

3 BALANCE SHEET ANALYSIS 173.1 ANALYSIS OF BALANCE SHEET ASSETS 173.2 ANALYSIS OF BALANCE SHEET LIABILITIES 21

4 PROFIT AND LOSS ACCOUNT ANALYSIS 244.1 TECHNICAL MANAGEMENT 244.2 ADMINISTRATIVE MANAGEMENT 274.3 FINANCIAL MANAGEMENT 284.4 EXTRAORDINARY PROFIT OR LOSS 284.5 CORPORATION TAX 28 4.6 FINANCIAL YEAR PROFIT OR LOSS 28

5 ADDITIONAL INFORMATION 295.1 ESTIMATE OF THE BENEFITS TO BE PAID TO BENEFIT RECIPIENTS RECEIVING BENEFITS AT THE END OF THE FINANCIAL YEAR USING UNDERLYING ASSUMPTIONS 295.2 INDIVIDUAL RIGHT TO TRAINING 305.3 NUMBER OF UNEMPLOYMENT INSURANCE STAFF 305.4 SCOPE OF CONSOLIDATION 30

AUDITORS’ REPORTON THE CONSOLIDATED ACCOUNTS 31

CONTENTS

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Characteristics of 2013In France as in the whole of the euro zone, 2013 started in an economic context still weakened by the economic downturn of summer 2011. Over the whole year, French business grew by +0.4%, as in 2012. On the one hand, business was supported by the upturn in household consumption linked to low levels of inflation, but on the other it was limited by the marked decline in investment for the second year in a row.

Due to low levels of growth, job losses in the trade sector, which started in the second half of 2011, con-tinued in 2013. However, they levelled off and a few job creations were observed at the end of the year. The number of jobseekers required to engage in pos-itive job searches, unemployed (category A), increased by 5.3% in 2013. The number of unem-ployed people receiving benefits from the Unem-ployment insurance scheme increased slightly over a year (+1.0%), partly due to the increase in unem-ployed people coming to the end of their entitlement to benefits. Thus, at the end of December 2013, there were 2.3 million unemployed people receiving bene-fits in France (CVS data, whole of France).The slower rise in the wage bill and the increase in benefit payments increased the Unemployment insurance scheme’s indebtedness over 2013:

•Therevenuefrommaincontributionsincreasedby1.13% primarily under the influence of the rise in the affiliated wage bill in 2013;

•Benefitexpensesincreasedby+5.17%inoneyear;•4.4%forUnemploymentbenefits(ARE);•13.1%forotherbenefits.The discrepancy between the contributions and the benefits and assistance expenses remains positive, amounting to 1.74billionEuros.After taking intoaccount expenses relating to the validation of bene-fit recipients’ pension points in particular (1.8 billion Euros)andthecontributionoftheUnemploymentinsurance scheme to the running of Pôle emploi (Stateemploymentagency)(3.1billionEuros),thetechnical profit margin becomes loss-making by 3.40billionEuros.

In terms of financing the Unemployment insurance scheme, it should be emphasised that:•Byorderof29January2014,theMinistryofEcon-

omy and Finance granted the French State’s express guarantee to bond issues to be launched byUnédicin2014uptothelimitof7billionEurosin principal plus interest and costs;

•At the end of May 2014, Unédic completed approximately70%ofitsannualprogramme,i.e. 4.850billionEuros.

MANAGING DIRECTOR’SMANAGEMENT REPORT

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Reconciliation between the change in cash balance and the accounting result

CHANGE IN CASH BALANCEThe net change in cash balance for the Unemployment insurance transactions is negative by 3,838 million Eurosandisreflectedinthefollowingway:

Events subsequent to closureNone.

This shows the result of current transactions.

NET ACCOUNTING RESULTThediscrepancyof-191millionEurosbetweenthechangeincashbalanceof-3,838millionEurosandthebooklossforthefinancialyearof-3,647millionEurosisprimarilyexplainedby:•Theallowanceandwrite-backofallowancetrans-

actions for amortisation and provisions reducing the result but without affecting the cash balance, foranamountof+110millionEuros;

•The331millionEuroincreaseintheworkingcapitalrequirements for the business, which generates a cash requirement. This increase corresponds, in particular, to an increase in gross claims against theoperatorsfor152millionEurosandanincreasein other claims consisting mainly of the repayment of181millionEurostobeobtainedfromourEuro-pean partners for the partial payment of the bene-fits paid to cross-border workers.

The net position, which corresponds to the addition oftheresultforthefinancialyearof-3,647millionEurosandthecombinedcontributions,lossesand

surplusesofpreviousyearsisnegativeby17,100mil-lionEurosasat31December2013.

The575millionEurodiscrepancybetweenUnédic’snegative net position and the “cash position” as at 31 December 2013 (combination of loans, commer-cial papers and overdrafts net of investments and bank balances) corresponds, in particular:•To the cash requirement represented, as at

31 December 2013, by the financing of the surplus operating receivables (mainly affiliated receiva-bles) and financial receivables on the operating debts (mainly benefit recipient debts) and finan-cialdebtsfor-2,127millionEuros;

•Tothecashrequirementrepresentedbythecur-rent investments amount as at 31 December 2013 for-461millionEuros;

•Tothefinancingcapacityrepresentedbythecom-bination of amortisation and provisions as at 31December2013for+2,013millionEuros(theseamounts reduce the results but have no impact on the cash balance).

31 December 2012 31 December 2013 Change

Bond issues -8,900 - 13,650 -4,750

Commercial papers -7,945 -6,920 1,025

Overdraft - 40 - 40

Investments 1,517 940 -577

Bank balances 1,531 1,955 424

TOTAL - 13,837 - 17,675 - 3,838

(inmillionsofEuros)


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2014 and 2015 OutlookUnédic regularly updates its expenditure and reve-nue forecasts by taking into account the change in the economic situation.The latest financial forecast for 2014 and 2015, drawnupinMay2014,isbasedontheconsensusofeconomistsinMay,whichanticipatesagrowthof+0.8% in 2014 and +1.3% in 2015. The forecast is based on the regulation of the new unemployment insurance convention of 2014.

As a consequence of weak activity, a further -27,000jobsaffiliatedtotheUnemploymentinsur-ance scheme would be lost in 2014. In 2015, under the combined effects of the increase in growth, Tax CreditforCompetitivenessandEmployment(CICE)and the accountability pact, there would be +66,000 more jobs affiliated to the Unemployment insurance scheme.

In conjunction with low levels of inflation and the high rate of unemployment limiting employees’ bar-gainingpower,theaveragewagepercapita(SMPT)would increase more slowly: 1.5% in 2014 and 1.8% in 2015. Thus, the increase in the wage bill would be limited to +1.4% in 2014. In 2015, it would grow by +1.9%,supportedbytheincreaseinemployment.

In 2014, total employment would increase as a result of the slowdown in trade job losses and assisted contracts in the non-market sector, but this would be insufficient to offset the momentum of the work-ing population. In total, we would see an increase of +103,200 jobseekers registered with Pôle emploi under category A in 2014. In 2015, with the halting of entrants into future employment arrangements, total employment would slow down. The implemen-tation of the new convention in the second half of 2014 would result in a sharp increase in the number of benefit recipients. Thus, in 2014, unemployed peoplereceivingbenefits(ARE)wouldincreaseby+109,000 people, +83,000 of whom would beattributable to the sole effect of the convention. In 2015, the number of unemployed people receiving benefits would increase by +55,000 people, +23,000 of whom attributable to the convention.

The application of the new convention would result in a reduction in the deficit estimated at 300 million Eurosoverthesecondhalfof2014and830millionEurosover2015.Thedeficitwouldthenincreaseto-3.7billionEurosin2014and-3.6billionEurosin2015,bringingthecombineddebtto-24.9billionEurosattheendoftheyear.

Inordertocoverthecashrequirement,theBoardofDirectors,whichmeton27June2013,approvedaprogrammeofbondissuesof8billionEuros,inoneor more tranches, with a maximum term of 10 years.

Five new bond issues were successfully launched fromMarchtoApril2014:•2.5billionEurosat10yearsattherateof2.375%;•1.5billionEurosat7yearsattherateof1.5%;

•0.150billionadditionalEurosat4yearsattherateof 2.125%;



•0.500billionadditionalEurosat9yearsattherateof 2.250%.

These bond issues benefit from the State guarantee.

Inbrief,theMay2014expenditureandrevenueforecastsfor2014and2015wouldbeasfollows:

2014 Forecast 2015 Forecast

Total revenue 33,803 34,559

Total expenditure 37,754 38,148

Change in cash balance -3,746 -3,589

NET BANK INDEBTEDNESS POSITION -21,334 -24,923

(inmillionsofEuros)


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CONSOLIDATEDFINANCIAL STATEMENTS

2013 2012

FIXED ASSETS 158.7 170.5

Intangible fixed assets 0.8 0.5

Tangible fixed assets 132.6 143.7

Financial fixed assets 25.3 26.3

CIRCULATING ASSETS 8,066.7 7,862.0

Receivables 4,680.7 4,590.4

Benefit receivables 277.9 261.2

Affiliated receivables 4,402.8 4,329.2

Other receivables 484.9 216.5

Marketable securities 940.4 1,517.1

Available capital 1,955.9 1,531.0

Prepaid expenses 4.8 7.0

DEFERRED EXPENSES 11.1 7.4

BOND REDEMPTION PREMIUMS 18.4 12.1

TOTAL ASSETS 8,254.9 8,052.0

Consolidated balance sheet - Unemployment insuranceASSETS

(inmillionsofEuros)

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2013 2012

NET FINANCIAL POSITION -17,099.9 -13,453.2

Reserves 0.8 0.8

Retained earnings -13,454.0 -10,610.8

Result for the financial year -3,646.7 -2,843.2

PROVISIONS FOR CONTINGENCIES AND EXPENSES 50.1 55.8

DEBTS 25,230.8 21,394.0

Loans and financial debts 20,770.0 17,038.6

Bond issues 13,836.5 9,040.6

Other loans and financing 6,920.0 7,945.0

Bank loans and overdrafts - 39.6

Other financial debts 13.5 13.4

Other debts 4,460.8 4,355.4

Affiliated debts 145.1 140.4

Benefit debts 2,773.3 2,734.7

Tax and social security debts 60.5 70.5

Trade payables 10.8 4.2

State debts - -

Other debts 1,471.1 1,405.6

ACCRUALS 73.9 55.4

TOTAL LIABILITIES 8,254.9 8,052.0

LIABILITIES

(inmillionsofEuros)


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2013 2012

TECHNICAL MANAGEMENT

INCOME 34,107.1 33,212.1

Contributions 33,453.1 32,958.2

Other income 161.8 124.0

Write-back of provisions 198.5 78.4

Transfers of expenses 293.7 51.5

EXPENSES 37,508.6 35,790.2

Unemployment benefits 27,853.6 26,681.7

Other benefits 2,971.1 2,627.4

Redeployment benefits 892.9 972.8

Validation of pension points 1,840.6 1,811.0

Other expenses 3,658.2 3,346.8

Provisions 292.2 350.5

TECHNICAL PROFIT OR LOSS -3,401.5 -2,578.1

ADMINISTRATIVE MANAGEMENT

INCOME 80.4 84.7

Provision of services 46.3 49.5

Other income 34.1 35.2

EXPENSES 104.0 113.3

Purchases 0.8 0.7

External services 51.9 54.0

Taxes and levies 6.0 6.4

Wages and social security contributions 26.9 27.4

Other expenses - 0.1

Amortisation and provisions 18.4 24.7

ADMINISTRATIVE MANAGEMENT PROFIT OR LOSS -23.6 -28.6

FINANCIAL MANAGEMENT

Financial income 27.4 44.2

Financial expenses 254.6 281.3

FINANCIAL PROFIT OR LOSS -227.2 -237.1

EXTRAORDINARY TRANSACTIONS

Technical management - -

Administrative management 8.8 5.4

EXTRAORDINARY PROFIT OR LOSS 8.8 5.4

CORPORATION TAX AND SIMILAR LEVIES -3.2 -4.8

PROFIT OR LOSS -3,646.7 -2,843.2

Consolidated profit and loss account - Unemployment insurance

(inmillionsofEuros)


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2013 2012

CONSOLIDATED NET RESULT -3,646.7 -2,843.2

Elimination of transactions with no effect on the cash flow or not linked to the activity: 93.9 286.0

amortisation and provisions 102.8 293.6

capital gains or losses on disposals -8.9 -7.6

Change in working capital requirement -330.6 124.8

NET CASH FLOW LINKED TO THE ACTIVITY -3,883.5 -2,432.4

Acquisition of tangible and intangible fixed assets -4.0 -8.4

Disposal of tangible and intangible fixed assets 13.8 22.6

Change in financial fixed assets 1.0 0.9

Change in suppliers of fixed assets 1.1 -0.1

NET CASH FLOW LINKED TO INVESTMENT TRANSACTIONS 11.8 15.0

Bond issues 4,750.0 3,000.0

Short-term credit lines - -1.2

Commercial papers -1,025.0 465.0

Other transactions 34.4 104.8

NET CASH FLOW LINKED TO FINANCING TRANSACTIONS 3,759.4 3,568.6

CHANGE IN CASH FLOW (ALL SCHEMES) -112.2 1,151.2

NET CASH FLOW AT THE OPENING 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

NET CASH FLOW AT THE CLOSING OF THE PERIOD 2,896.3 3,008.5

Positive cash flow: available capital 2,896.3 3,048.1

Negative cash flow: bank loans and overdrafts - -39.6

Consolidated cash flow statement - Unemployment insurance

(inmillionsofEuros)


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1.1 New regulatory measures decided on in 2013Theconventionof6May2011onunemploymentbenefitsandtheconventionof19July2011ontheImproved job security contract (CSP) will produce theirrespectiveeffectsuntil30Juneand31Decem-ber 2014.

The National interprofessional agreement (ANI) for a new economic and social model towards improv-ing the competitiveness of companies and job and career path security for employees was signed by thesocialpartnerson11January2013.Asprovidedfor by article 4 of this agreement, the rules defining the terms of application of the variation in employ-ers’ share of unemployment insurance contributions weresetbytheadditionalclauseof29May2013totheconventionof6May2011.Theseinclude:•Theincreaseinemployers’shareofunemployment

insurance contributions payable in respect of cer-tain fixed-term contracts.

The amount of the contributions recorded in the accountscameto29.1millionEurosfor2013;

•The temporary exemption from the employers’share of unemployment insurance contributions for hiring employees under 26 on a permanent contract.

The amount of the exempted contributions came to16.6millionEurosfor2013.

Thesemeasurescameintoforceon1July2013.

The National interprofessional agreement (ANI) of 11January2013alsolaiddownprovisionsrelatingtothe Improved job security contract and partial activity.Thus,theadditionalclauseno.2of29May2013onthe amendment of article 4 of the agreement of 19July2011ontheImprovedjobsecuritycontract(approved by order of 9 August 2013, OfficialGazette(J.O.)of7September)implementsthepay-mentofa1,000Eurobonustobeneficiariesoftheexperimental Improved job security contract (CSP) undertaking vocational or certified training, and whose entitlements to unemployment benefits (ARE)areexhaustedbeforethetrainingends.No payment was recorded for the 2013 financial year.

Finally,lawno.2013-504of14June2013onimprovedjob security, reflecting article 19 of theNationalinterprofessional agreement (ANI), created a new partial activity scheme which replaces the special short-time working benefits and the long-term reducedactivitybenefits(APLD).Thisnewarrangementcameintoforceon1July2013.The financial agreement between the State and Unédic is currently being signed.

KEY EVENTSOF THE FINANCIAL YEAR

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1.2 Financial relations between Pôle emploi and UnédicThe 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 cashmanagement agreement entered intobetween Unédic and Pôle emploi that specifies the amount of the 10% contribution out of the receipt of contributions owed by Unédic and the terms of payment,resultinginacostof3,138millionEurosin 2013;

•anagreementonservicedelegationsandopera-tional cooperation. For 2013, the revenues (contri-butions)were1,110millionEurosandtheexpenses(benefits and assistance) were 30,349 millionEuros.

Furthermore, Pôle emploi is entrusted with imple-menting specific arrangements by entering into agreements:•tofinancethesupportofpartiestotheImproved

job security contract that followed the Personal redeploymentagreement(CRP)andOccupationtransition contract (CTP) arrangements, with an expenditureof105.7millionEurosin2013;

•inrespectofmeasuresprovidedforintheNationalinterprofessional agreement for the support of young people, the 2013 expenditure being 12 mil-lionEuros.

With regard to the operating budgets of both bod-ies, it is worth recalling the invoicing of rents and charges paid by Pôle emploi to occupy real estate sitesbelongingtoUnédicfor21.7millionEuros.

Finally, Pôle emploi undertook exceptional benefit adjustment transactions concerning former employ-ees of public sector self-insurance employers. Thus, in2013,thesumof2.4millionEuroswasadjustedinUnédic’s accounts for repayment of benefits wrongly financed by the Unemployment insurance scheme. As a result, a larger transaction was carried out at the beginning of 2014 in order to identify other benefit payments to be adjusted. In this case, public sector employers will be asked to repay the Unemployment insurance over a maximum period of 5 years.

At the same time, supported by Unédic, Pôle emploi is reviewing the implementation of measures to avoid repeating this type of error.

1.3 State/Unédic joint arrangementsInrespectoftheLong-termreducedactivity(APLD)arrangement, the amount allocated by Unédic came to47.3millionEurosin2013.

The Improved job security contract resulted in 2013 inthepaymentbytheStateof39millionEuros,tofinance the Improved job security benefits for bene-ficiaries providing evidence of 12 to 24 months’ sen-iority 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 employment areas, to enable jobseekers at the end of a fixed-term contract (CDD) to take advantage of support bene-fits provided for within the framework of the CSP.

Finally, the State contributes to the support costs for all CSP beneficiaries.


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1.4 Increase in unemployment insurance benefits TheUnédicBoardofDirectorsdecided,atitsmeet-ingon27June2013,toincreaseby0.6%asof1July2013:•theamountofthefixedportionoftheUnemploy-mentbenefits(ARE);

•theamountoftheminimumallowance(ARE);•theminimumthresholdforunemploymentbene-

fits for benefit recipients undertaking a training programme.

1.5 Financing the unemployment insurance scheme1.5.1 2013 FINANCING TRANSACTIONSAt the end of the 2013 financial year, the net position ofoutstandingloanswas17,675millionEuros,i.e.•bondissues: 13,650millionEuros,•commercialpapers: 6,920millionEuros,•investments: -940millionEuros,•bankbalances: -1,955millionEuros.

N.B.: theaggregatenetdebt including the sumspayable to Pôle emploi for the 10% contribution and whichhavenotyetbeenpaid(340millionEuros)thereforeamountsto18,015millionEuros.

1.5.1.1 Bond issues and bank loansIn2009,Unédicopeneda12billionEuroEMTN(EuroMediumTermNotes)programme,withinwhichitsbond issues were launched. This programme’s upper limitwasincreasedto20billionEurosfurthertothedecisionoftheBoardofDirectorsof27June2013.

In2013,Unédicraisedatotalof5billionEurosonthebondmarket:1,500billionEurosmaturingin2023(10 years), 1,500billionEuros in 2020 (7 years),1,500billionEurosin2016(3years),towhichareadded0.100billionEurosmaturingin2017(4years),0.100billionEurosin2018(5years),and0.300bil-lionEurosin2019(6years).

In2013,theEMTNprogrammebenefitedfromtherating attributed to Unédic by the Fitch (AA+), Moody’s(Aa1)andS&P(AA)ratingagencies.Thislast rating was downgraded in November 2013.

TheBoardofDirectorsof27June2013decidedtoissue one or more tranches of new bonds for a max-imumamountof8billionEuros.

Given the restrictions imposed by Article 213-15 of theFinancialandMonetaryCodegoverningbondissues by associations on the financial markets, Unédic applied for a State guarantee. This guarantee wasauthorisedbytheAmendedFinanceLawof 29December2013andgrantedbyOrderoftheMin-istryofEconomyandFinanceon29January2014foratotalof7billionEurosinprincipal,plusinterestand costs.

1.5.1.2 Commercial papersThe use of this financing method for the associa-tions was authorised, under certain conditions, in Article37oflawno.2003-706of1August2003.Theinitialamountof1,200millionEurosin2004wasgradually increased, to reach an upper limit of 12,000 million Euros authorised by the Board ofDirectors in June 2012. The total outstandingamount of the programme as at 31 December 2013 is6,920millionEuros.Thesecommercialpapersarethe subject of drawdowns as needed.

This commercial paper programme obtained the short-termrating“A1+”bytheStandard&Poor’srat-ingagencyand“P1”byMoody’sasofitslaunchinJanuary2004.SinceJuly2009,ithasalsobenefitedfromtheF1+ratingfromtheFitchRatingsagency.

Initially, at the request of the rating agencies, syndi-cated and confirmed lines of credit were put in place to ensure coverage of this programme and thereby mitigateany imbalances in theEuropeanmoneymarket.Since July 2012, these lines of credit have beenreplaced by a reserve of liquid assets for a minimum of2billionEuros,thelevelofwhichvariesaccordingto the use of the commercial papers programme.

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1.5.1.3 Traditional bank financing arrangementsVery short-term financing requirements are covered in the form of bank overdrafts negotiated by mutual agreement with Unédic’s banking partners (1.4 bil-lionEurosnegotiated).None of these overdrafts was used at the end of the 2013 financial year.

1.5.1.4 InvestmentsGiven a commercial paper outstanding liability of 6,920billion Euros as at 31December 2013, thereserve of liquid assets mentioned above is an amountof2,896billionEuros.

1.5.2 FINANCING OF THE 2014-2015 PERIODThe threefold strategy set out and approved by the BoardofDirectorsfrom2009remainsoperational:•Theworkcarriedoutwiththeratingagenciesena-

bled Unédic to continue to benefit from a rating equivalent to the one assigned to the French State, enabling it to raise the necessary resources under the best conditions;

•TheEMTNprogramme,theupperlimitofwhichwas increased to 20 billion Euros, shall enableUnédic to retain the responsiveness necessary to its future bond issues. Within the framework of the completion of its 2014 bond issue programme (7billionEuros),Unédiccreatedtwonewbondissues: 2.5billionEurosat 10years (2024)and 1.5billionEurosat7years(2021).Variousamend-ments to the already existing bond issues brought thebondissuetotalto4.350billionEurosattheend of April.

•The commercial papers programme, the upperlimitofwhichwasincreasedto12billionEurosin2012, continues to enable Unédic to raise the addi-tional short-term resources it needs under the best conditions.

The financing instruments thus implemented will enable Unédic to cover the 2014 deficit forecast to be3.7billionEurosinthefinancialstatementoftheUnemploymentinsuranceschemepublishedinMay2014.

The financial forecasts for 2014 and 2015 were made inMay2014onthebasisofthenewunemploymentinsurance convention of 2014. They rely on the growth forecasts of the consensus of economists: +0.8%over2014and+1.3%over2015.Lossesofjobsaffiliated to the unemployment insurance scheme wouldbe-27,400in2014.In2015,therewouldbe+66,000 more jobs affiliated to the Unemployment insurance scheme.

Consequently, the result for the Unemployment insurance scheme would remain negative over 2014 and 2015, with cash consumption in the region of 3.7billionEurosover2014andthen3.6billionEurosover 2015. Net indebtedness would then reach approximately24.9billionEurosattheendof2015,for which the (support, remuneration and maturity) financing procedures are yet to be specified given the situation of the financial markets.

2.1 General principlesThe Unemployment insurance scheme’s consoli-dated annual accounts for the financial year ended 31December2013,drawnupinEuros,includingthebalance 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)dated9January1995(noticeofcom-plianceno.79).

They take into account the specific information linked to the declaratory nature of Unemployment insurance and the consequences that arise there-from, with regard to both the declarations of affili-ates and the payments to recipients.

The signatory organisations of the Unemployment insuranceconventionof6May2011,inviewofArticleL.351-3-1oftheFrenchLabourCodeonthemethodof 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 fol-lowing operators: Acoss, CCMSA, CCVRP, PôleEmploi,CCSS(Monaco),CPS(Saint-PierreetMique-lon), and summarised in summary documents con-veying the transactions completed on behalf of the Unemployment insurance scheme.

2.2 Unemployment benefits2.2.1. Expenses The regulatory provisions stipulate that jobseekers register then provide Pôle emploi with evidence of their situation on a monthly basis to avoid their enti-tlements being called into question. These formali-ties enable the benefits to be dealt with on a monthly basis under technical management expenses. In additiontotheDecemberbenefitspaidinJanuary

of the following year, payment adjustments that may take place in the following months will be esti-mated to take into account corresponding expendi-ture in the corresponding year. For people exempt from checking, accounting is, the aforementioned notwithstanding, also carried out on a monthly basis.

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ACCOUNTING PRINCIPLES,RULES AND METHODS

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2.2.2. Benefit debtsUnder the item“Benefitdebts” is theamountofbenefits considered as owing for the current financial year, according to the principles referred to above, and which are calculated by using the benefitspaidinJanuaryofthefollowingyearandthe estimate of the payment adjustments taking place in the following months.

2.2.3. Benefit recipient receivablesThe accounts receivable of benefit recipients (over-payments and advances) are the subject of a provi-sion built up according to the age of the debts.

The method for calculating provisions for deprecia-tion of the benefit recipients’ overpayments 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.

2.3 Contributions of affiliates2.3.1. IncomeThe income from technical management corresponds to general and specific contributions that the employers are required to pay for the year, according to mandatory periodic declarations that they make to Urssaf (Social Security Contribution Collection Agencies), CGSS (General Social Security Fund), CMSA(AgriculturalSocialMutualFund)andregionaldepartments of Pôle emploi. The forms received in Januaryaredeemedtoconcernthepreviousyear.For those received in February, the reference on the form for the previous year makes it possible to register amounts declared in unearned income.

When the forms are not received within the pre-scribed time limits, an estimate of the contributions due is carried out per affiliate.

2.3.2. Affiliate receivablesContributions yet to be received for the year are cal-culated according to the income recorded between 1Januaryand28Februaryofthefollowingfinancialyear and relating to the financial year elapsed.

A provision is recorded at the end of the year on affiliates’ debts that appear doubtful. It is calculated according to the age of the debts and forecasts of companies’ ability to pay according to their charac-teristics.

2.3.3. Creditor affiliatesFunds 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 items2.4.1. Fixed assetsThe intangible and tangible fixed assets are recorded intheaccountsaccordingtotheprovisionsofARC(AccountingRegulatoryCommittee)regulationno.2002-10 on the amortisation and depreciation of assets and ARC regulation no. 2004-06 on thedefinition, accounting and evaluation of assets.

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

AMORTISATION IS PRACTISED ACCORDING TO THE STRAIGHT-LINE METHOD OVER THE FOLLOWING DURATIONS


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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 “consolidated” whole corresponds to a “combination” of the accounts accordingtoregulationno.99-02oftheNationalAccounting Council.

There is no legal relationship between the entities included in the scope of consolidation.

The scope of consolidation is presented in the chap-ter of the appendix on additional information.

The main reprocessing operation concerns elimina-tion of balances from transactions relating to the managed third party (AGS) shown in Unédic’s annual accounts, in order to only present the Unem-ployment insurance transactions in the consolidated balance sheet.

2.4.2. Corporate commitmentsGiven the provisions of the National collective agreement (CCN) for Unemployment insurance scheme personnel, Unédic is required to pay retire-ment indemnities calculated as a 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 following information:•newCCNprovisions:amendmentof10February

2011;•useofpersonalinformation:age,sex,salary,length

of service;•determinationof internalactuarialassumptions:

staff turnover rate (0% to 3% according to the employee’s age), retirement 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 including inflation;

•useofadiscountrateforthecommitmentcorre-sponding to the Bloomberg reference rate, i.e.3.25% for the 2013 financial year.

Using this data, the amount of the commitments is calculated individually for each employee present, it being understood that for the long-term service bonuses, the commitment 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 contingencies and expenses and the change in these provisions is recorded in the result for the period including the impacts of assumption changes.

Added to this from 2010 is the amount of commitments due under the defined benefits pension plan for senior executives of the Unemployment insuranceschemepresentasat1January2001,pro-viding evidence of 8 years in this role and having ended their career in an Unemployment insurance institution.

2.4.3. Extraordinary profit or lossThe extraordinary profit or loss includes:•technicalmanagementoperationswhichdonot

derive from ordinary activity and relating to bene-fit recipient or recovery domains;

•itemsrelatingtoadministrativemanagement,thatis 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 finan-cial fixed assets are, the aforementioned notwith-standing, recorded in the financial transactions.

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BALANCE SHEET ANALYSIS

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3.1 Analysis of balance sheet assets3.1.1 FIXED ASSETS3.1.1.1. Tangible and intangible fixed assetsElevenrealestatesitesweresoldduringthefinancialyear.The transactions recorded with regard to the fixed assets and the amortisation during the 2013 financial year are presented below:

(1) (2) (3) (4) (5)=(1)+(2) -(3)+(4)

Gross value at the opening of

the financial year

Acquisitions and creations

Salesor decommis-

sioningsTransfers

Gross value at the closing of

the financial year

Total intangible fixed assets (A) 0.9 0.4 - - 1.3

Total tangible fixed assets (B) 451.4 3.7 17.8 - 437.3

Property: land, buildings and fittings 448.0 3.2 17.6 0.1 433.7

Other tangible fixed assets 3.3 0.3 0.2 - 3.4

Current tangible fixed assets 0.1 0.2 - -0.1 0.2

TOTAL (A + B) 452.3 4.1 17.8 - 438.6

CHANGES IN GROSS FIXED ASSETS IN 2013

(inmillionsofEuros)

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Aprovisionfordepreciationofpropertiesanddevelopmentsamountingto3.9millionEurosisrecordedaspart 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.

3.1.1.2. Financial fixed assetsThisitem,foranamountof25.3millionEuros,essentiallycomprisestheloansfortheiroriginalamountwithintheframeworkoftheconstructionsubsidyfor25millionEurosandthedepositsandsecuritiespaidamountingto0.3millionEuros.

3.1.2. CURRENT ASSETS 3.1.2.1. Receivablesa)BenefitrecipientdebtorsThegrossvalueofthisitemisupby6.77%comparedwiththepreviousfinancialyear:577millionEuroscomparedwith540.4millionEuros.96%ofitismadeupofUnemploymentinsuranceoverpaymentstobenefitrecipients,i.e.554.1millionEuros.

2013 2012 Change 2013/2012

Advances and overpayments on account at the opening of the financial year (A) 540.4 467.0 15.7%

Detection of overpayments during the financial year (B) 930.2 933.7 (0.4)%

Reimbursement and recoveries of overpayments (C) 820.5 811.0 1.2%

Write-offs and losses on overpayments (D) 73.5 49.4 48.8%

Advances and payments of account (E) 9.5 10.0 (5.0%)

Recovered advances and payments on account (F) 9.1 9.9 (8.1)%

Benefit recipient debtors at the end of the financial year (including the advances and payments on account) (G) = (A) + (B) - (C) - (D) + (E) - (F) 577 540.4 6.77%

Provision set aside for disputed debts (H) (299.2) (279.2) 7.2%

Provisioning rate (H)/(G) 51.9% 51.7% 0.2 pt

Net book value (I) = (G) - (H) 277.8 261.2 6.4%

(inmillionsofEuros)


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(inmillionsofEuros)

(1) (2) (3) (4) (5)=(1)+(2) -(3)+(4)

Amortisation at the opening of

the financial year

Appropriation Increases

Reductions in sales anddecommis-

sionings

TransfersGross value at the closing of

the financial year

Total intangible fixed assets (A) 0.4 0.2 - - 0.6

Total tangible fixed assets (B) 307.9 14.8 21.0 - 301.7

Property: land, buildings and fittings 305.5 14.5 20.8 - 299.2

Other tangible fixed assets 2.4 0.3 0.2 - 2.5

TOTAL (A + B) 308.3 15.0 21.0 - 302.3

CHANGES IN AMORTISATION IN 2013

Theriskofnotrecoveringoverpaymentsiscoveredbythesettingasideofaprovisionequalto51.9%ofthedebtcomparedwitharateof51.7%forthe2012financialyear.

TRANSACTIONS RELATING TO UNEMPLOYMENT INSURANCE OVERPAYMENTS

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The uncontested debts to be received correspond to contributions due for 2013, which were settled at the beginning of the following financial year.

Theburdenofdisputeddebtshasincreasedby7.4%,withthischangeresultingnotonlyfromtheworseningeconomic situation, but also from the effects of the transfer of recovery to Acoss, which has seen its burden of disputeddebtsincreaseby277millionEuros.Foritspart,thedisputeddebtsmanagedbyPôleemploihavereducedby155millionEuros.

Aprovisionissetasideinordertocovertheriskofnotrecoveringdisputeddebts,whichrepresents79.5%ofthe contested contributions to be received or a 5.8% increase compared with the 2012 financial year. The pro-vision is calculated by each of the operators responsible for recovering Unemployment insurance contribu-tions, according to the review of the results of recovering disputed debts over previous years.

3.1.2.2. StateThisitem,foranamountof89.5millionEuros,representsanamountduebytheStateforarrangementspriorto2009managedonbehalfoftheStateandnottransferredtoPôleemploi.

3.1.2.3. Other debtsThisitem,foranamountof395.3millionEuros,predominantlycomprises:•theEJEN/ASPparticipatoryprogrammestobereceivedfor1.2millionEuros;•accruedincomefromtheStateaspartoftheCA(Contractforthefuture)–CAE(EmploymentSupportContract)arrangementbalancefor16.2millionEuros;

•accruedincomeunderrepaymentbyMemberStatestoFranceofallowancespaidtoFrenchcross-borderworkersof181millionEuros;

•accruedincomefromPôleemploiconcerninganadjustmentofsupplementarypensionsfrom2010to2013of6millionEuros;

•aclaimagainstestablishmentsundermanagementagreementsamountingto22.7millionEuros;•aclaimagainstsalesoffixedassetsfor1.3millionEuros;•a7.6millionEuroclaimagainstMonacorelatingtocurrenttransactionsofthecontributionrecovery

domain;•an84.4millionEuroclaimagainstAcoss,correspondingtothebalanceofcontributionspaidbythe

employers during December, to be repaid to Unédic;

2013 2012 Change2013/2012

Uncontested debts to be received (A) 4,039.8 4,011.2 0.7%

Disputed debts to be received (B) 1,774.3 1,651.3 7.4%

Gross value (C) = (A) + (B) 5,814.1 5,662.5 2.7%

Provision set aside for disputed debts (D) (1,411.2) (1,333.3) 5.8%

Provisioning rate (D)/(B) 79.5% 80.7% -1.2 pt

Net book value (E) = (C) – (D) 4,402.9 4,329.2 1.7%

(inmillionsofEuros)

b) AffiliatesTheburdenofgrosscontributionsyettoberecovered,i.e.5,814.1millionEuros,isupby2.7%comparedwiththe previous financial year. It is broken down into:•maincontributions: 5,138.5millionEurosor88.4%ofthetotal;•individualcontributions: 513.2millionEurosor8.8%ofthetotal;•additionalcontributions: 162.4millionEurosor2.8%ofthetotal.

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•aclaimagainstSaint-PierreetMiquelonfor0.8millionEuros,relatingtoworkingbalancesofthecontributionrecovery domain;

•aclaimagainstCCMSAfor4.7millionEuros,relatingtoworkingbalancesofthecontributionrecoverydomain;•aclaimagainsttheStateconcerningtheexemptionofship-ownersfor0.7millionEurosrelatingtoworking

balances of the contribution recovery domain;•aclaimagainsttheStateconcerningtheexemptionofapprenticesfor23.9millionEurosrelatingtoworking

balances of the contribution recovery domain;•aclaimagainstAGSfor44.3millionEurosinrespectofmanagementcostsre-invoicedtoAGS.

3.1.2.4. Marketable securitiesThisitem,foranamountof940millionEuros,correspondstomoneymarketfundsdedicatedtothecover-age of commercial paper issues in the event of market failure.


03

Marketable security inventory as at 01/01/2013 Acquisitions in 2013 Sales in 2013 Marketable security inventory

as at 31/12/2013

1,515 29,711 30,286 940

(inmillionsofEuros)

3.1.2.5. Bank balancesThisitem,foranamountof1,956millionEuros,mainlycorrespondstopaidpassbookdeposits.

3.1.3. DEFERRED EXPENSESThisitem,foranamountof11.2millionEuros,concernsthecostsofbondissuesthataredistributedlinearlyover the term of the bonds.

(en millions d’euros)

3.1.4. REDEMPTION PREMIUMSThe 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 bonds.

DateDeferred fees

and costsPrior

amortisation2013

amortisation

Aggregate amortisation as at 31/12/2013

Bond fee amortisation

balance31/12/2013

2011 1.9 1.1 0.6 1.7 0.2

2012 8.0 1.3 1.9 3.2 4.8

2013 7.0 - 0.8 0.8 6.2

TOTAL DEFERRED EXPENSES 16.9 2.4 3.3 5.7 11.2

Issuedate

Issue premium amount

Prior amortisation

2013 amortisation


Issue premium balance

31/12/2013

2011 4.2 2.5 1.4 3.9 0.3

2012 11.9 1.6 2.3 3.9 8.0

2013 11.6 - 1.5 1.5 10.1

TOTAL ISSUE PREMIUM 27.7 4.1 5.2 9.3 18.4

(inmillionsofEuros)

SUMMARY OF DEFERRED EXPENSES FURTHER TO BOND ISSUES

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3.2 Analysis of balance sheet liabilities3.2.1. Net financial positionThenetfinancialposition,attheendofthe2013financialyear,isnegativeby17,099.9millionEurosandischanging as follows:•netfinancialpositionasat31December2012: -13,453.2millionEuros•negativeresultforthe2013financialyear: -3,646.7millionEuros•netfinancialpositionasat31December2013: -17,099.9millionEuros

3.2.2. Provisions for contingencies and expensesThisitem,foratotalamountof50.1millionEuros,predominantlycomprisesthefollowingprovisions:•Unédic’scontributiontothefinancingofAS-FNE(specialbenefitsfromthenationalemploymentfund)for3.2millionEuros;

•theUnemploymentinsurancecontributionspaidinerrorbycertainpublicsectoremployersandtoberepaidfor22millionEuros;

•theprovisionforrisksofdisputesoverbenefitrecipientandrecoverydomainsflaggedupbytheregionaldepartmentsofPôleemploifor6.5millionEuros;

•provisionsforcorporatecommitments;•provisionforretirementindemnities(IDR)forthesumof12.8millionEuros;•provisionforlong-termservicebonusesfor1.6millionEuros.

Openingbalance Provision

Write-backprovision

used

Write-backprovisionnot used

2013/2012Change

ARPE 0.1 - 0.1 - -

AS-FNE 8.3 3.2 8.3 - 3.2

IDR 15.0 0.1 2.4 - 12.7

Long-term service bonuses 1.6 - - - 1.6

Public sector employer reimbursement 21.1 0.9 - - 22.0

Other 9.7 0.9 - - 10.6

TOTAL 55.8 5 10.8 - 50.1

Financing arrangements

Openingbalance

Of which accruedinterest

Additionalfinancing

Repayment of financing

Closing balance

Of which accrued interest

Bond issues 9,040 140 5,000 250 13,837 187

Credit/financing establishments loans

7,945 - 24,458 25,483 6,920 -

Of which commercial papers 7,945 - 24,458 25,483 6,920 -

Of which other loans - - - - - -

Bank loans and overdrafts

40 - - 40 - -

TOTAL 17,025 140 29,458 25,773 20,757 187

(inmillionsofEuros)

(inmillionsofEuros)

3.2.3. Loans and financial debts

CHANGE IN PROVISIONS FOR CONTINGENCIES AND EXPENSES DURING THE 2013 FINANCIAL YEAR

CHANGE IN FINANCING DURING 2013

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ISSUE Amount in € 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

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

5.3 300,000,000 17/09/2013

6.1 1,000,000,000 26/04/2012 26/04/2017 2.125%

6.2 300,000,000 10/12/2012

6.3 100,000,000 16/09/2013

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

7.4 100,000,000 21/08/2013

8 1,500,000,000 05/04/2013 05/04/2023 2.250%

9 1,500,000,000 30/04/2013 29/04/2016 0.375%

10 1,500,000,000 29/05/2013 29/05/2020 1.250%

3.2.3.1. Bond issuesThebondeddebtamountsto13,650millionEurosattheendofthe2013financialyear.

BONDED DEBT

Addedtothisisanamountof186.5millionEuroscorrespondingtoaccruedcouponsattheendofthefinan-cial year.

3.2.3.2. Loans from various credit and finance institutionsThetotalamountofthisitemcomesto6,920millionEuros,correspondingtothecommercialpapersissuedby Unédic.

3.2.4. OTHER DEBTS3.2.4.1. Affiliated debtsThisitem,amountingto145.1millionEuros,correspondstothesumsreceivedfromemployersandwhichcould not be assigned to debts at the end of the financial year.

(inmillionsofEuros) (inmillionsofEuros)

Inventory as at 01/01/2013 Issues in 2013 Repayments

in 2013Inventory as at 31/12/2013

7,945 24,458 25,483 6,920

During the 1st

quarter 2014During the 2nd quarter 2014

During the 2nd half of 2014 TOTAL

4,995 1,030 895 6,920

THE TRANSACTIONS CONCERNING THE COMMERCIAL PAPERS WERE AS FOLLOWS IN 2013:

THE DUE DATES OF THESE COMMERCIAL PAPERS ARE AS FOLLOWS:

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3.2.4.2. Benefit recipient debts and other accounts payableThisitem,foratotalamountof2,773.3millionEuros,corresponds, essentially, to the benefits to be paid:•fromthemonthofDecember2013paidinJanuary2014,i.e.2,743.8millionEurosand47millionEurosfor the redeployment benefits to be paid to benefit recipients;

•for2013paidinFebruaryandMarch2014foranamountof89.8millionEuros;

•lesstheadvanceretirementlevyforanamountof113.9millionEuros.

3.2.4.3. Tax and social security debtsThisitem,foratotalof60.5millionEuros,comprises:•provision for paid leave and holidays and 13thmonthbonusesamountingto2.8millionEuros;

•thebenefitrecipientadvanceleviesyettobepaid,i.e.47.7millionEuroscorrespondingtothebenefitspaid in December 2013;

•othertaxandsocialsecuritydebtsfor10millionEuros.

3.2.4.4. Suppliers debtsTheamountof10.8millionEuros,representingtheinvoices yet to be paid as at 31 December 2013, is divided into two sections:•suppliersofgoodsandservices:9.5millionEuros;•suppliersoffixedassets:1.3millionEuros.

3.2.4.5. Other debtsThe main items of this section, the total amount of whichcomesto1,471.2millionEuros,concern:•thecosttobepaidasat31December2013tovari-

ous pension funds, for the validation of the benefit recipients’ additional pension points:•619.2millionEurosduetoARRCO(Association

of supplementary pension plans for salaried employees) which is broken down into:•569millionEuroscorrespondingtothecontri-

butions yet to be paid for 2013;•-34.2 million Euros for the semi-final 2013

position;•19.8millionEurosduebyARRCOforthe2012

adjustment;

•64.6millionEurosfortheAFSP(Benefitsfromthe specific temporary fund) arrangement.

•481.9millionEurosduetoAGIRC(GeneralAsso-ciationofPension Institutions forManagerialStaff) which is primarily broken down into:•301.2millionEuroscorrespondingtoUnédic’scommitmenttoAGIRC,asprovidedforintheagreementof19December1996whichhadvalued the amount of supplementary retire-ment contributions for the periods of unem-ployment prior to this date and set a 20-year paymentscheduleattherateof1/20theachyear, with the debt amount being re-assessed each year by applying the price index;

•276.4millionEuroscorrespondingtothecon-tributions yet to be paid for 2013;

•-61.1millionEurosforthesemi-final2013position;•-39.8millionEurosduebyAGIRCforthe2012

adjustment;•5.2millionEurosfortheAFSParrangement;

•47.1millionEurosduetoothersupplementaryretirement pension organisations, including IRCANTEC (Supplementary Retirement Pen-sions Institution for Non-Certified State EmployeesandEmployeesofPublicAdminis-trations).

•theliaisonaccountswithPôleemploiforatotalof303.4millionEurosincludingthatrelatingtothefinancing of Pôle emploi through the 10% contribu-tionforthesumof339.9millionEuros.

3.2.5. ACCRUALSUnearnedincome,i.e.73.9millionEuros,concerns:•the payments made by public companies and

establishments which are not affiliated to the Unemployment insurance scheme, but which have signed a management agreement with Unédic. The payments are made for benefit recipients registered as unemployed and whose acquired rights may be spread over several financial years according to their age. This represents an amount of22.2millionEuros;

•thebondpremiumsonbondissuesrepresenting51.7millionEuros.Thesepremiumsareamortisedover the term of the issue.

DATE Issue amount Bond premium amount

Prior amortisation

2013 amortisation


Prepaid income balance 31/12/2013

2011 150 1.7 0.8 0.8 1.6 0.1

2012 1,500 42.5 5.7 12.2 17.9 24.6

2013 500 28.7 - 1.7 1.7 27.0

TOTAL 2,150 72.9 6.5 14.7 21.2 51.7

(inmillionsofEuros)

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4.1 Technical management4.1.1. INCOME4.1.1.1. ContributionsThe income from contributions for the 2013 financial year is up by 1.5% compared with 2012.

After correcting new items (increases in fixed-term contracts, exemption of permanent contracts for under 26’s, initial recording of accrued income for ACOSS,TTSandTESEcontributions)andtransfersof contributions in respect of financial years prior to 2013, the increase in income from main contributions excluding the apprenticeship arrangement came to +1.13% in 2013.This is primarily explained by the 1.2% 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 percapita(SMPT)of1.8%andthedecreaseinstaffnumbers (-0.6%).Special contributions saw a 22.2% increase in relation totheincreaseinthenumberofmembersoftheCRP(Personal redeployment agreement) arrangement.

4.1.1.2. Other incomeThis item, for an amount of 161.8 million Euros,predominantly comprises the income in respect of managementagreements,i.e.56.7millionEuros,inaddition to the surcharges for delay and penalties for93.2millionEuros.

4.1.1.3. Net write-back of provisionsThe total amount of decreases or write-backs of provisionsis198.5millionEuros,andisrelatedto:•Unédic’scontributiontothecurrentfinancingofAS-FNEamountingto8.3millionEuros;

•thedepreciationofdebtsrelatingtomanagementagreementsfor0.7millionEuros;

•doubtfuldebtsofaffiliatesfor152.5millionEuros;•the depreciation of detected overpayments for 37millionEuros.

2013 2012 2013/2012

Main contributions 32,689.7 32,333.4 1.1%

Special contributions 763.4 624.8 22.2%

TOTAL 33,453.1 32,958.2 1.5%

PROFIT AND LOSSACCOUNT ANALYSIS

04

INCOME FROM CONTRIBUTIONS FOR THE 2013 FINANCIAL YEAR

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The expenses per benefit result from the payment of:•paymentstobenefitrecipientsmadeduringthefinancialyear;•thereductioninexpensesassociatedwiththedetectionofoverpayments;•theprovisionreversalrecordedin2013forbenefitstobepaidforthepreviousfinancialyear;•thesupplementaryexpensesrepresentedbytheprovisionrecordedforthebenefitspaidatthestartof

2014 for periods from 2013 or previous years.

2013 2012 2013/2012

Unemployment benefits (ARE) 27,853.6 26,681.7 4.39%

Other benefits 2,971.1 2,627.4 13.08%

Training unemployment benefits (ARE) 1,055.3 1,057.3 -0.19%

Specific redeployment benefits (ASR)/Benefits from the specific temporary fund (ASP) 1,903.8 1,554.8 22.45%

Other 12.0 15.3 -21.57%

TOTAL 30,824.7 29,309.1 5.17%

Benefitspaid in 2013

(+)

Overpaymentsdetected 2013

(-)

2013 benefits paid in 2014

(+)

Write-back of 2012 benefits paid

in 2013 (-)

Financial year expenses

(=)

ARE 28,652.8 879.4 2,527.8 2,502.3 27,798.9

CSP/CTP/EJEN ARE 54.9 0.3 0.1 - 54.7

Total ARE 28,707.7 879.7 2,527.9 2,502.3 27,853.6

Training ARE 1,075.2 19.4 130.8 131.3 1,055.3

ASR/ASP 1,909.3 24.8 178.1 158.8 1,903.8

Various others 14.2 1.8 0.6 1.0 12.0

Other benefits 2,988.7 46.0 309.5 291.1 2,971.1

TOTAL 31,706.4 925.7 2,837.4 2,793.4 30,824.7

(inmillionsofEuros)


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4.1.1.4. Transfer of expensesThisitem,forthesumof293.7millionEuros,pre-dominantly comprises:•thereimbursementsofbenefitsbytheaffiliatesamountingto20.6millionEuros;

•the full reimbursement of benefits paid to the EJEN(NationalYouthEmploymentProgramme)

forthesumof0.5millionEuros;•thereimbursementofbenefitsbetweenEUcoun-triesfor234millionEuros;

•thepartialpaymentofimprovedjobsecuritycon-tract (CSP) benefits by the State for 38.6 million Euros.

4.1.2. EXPENSESThe technical management expenses total increased by 4.80% in 2013 as a result of a continuous decline in the economic situation over the financial year.The benefit expenses and the cost of validating benefit recipients’ pension points were the most affected by this decline. On the other hand, the amount of assistance payments reduced by 8.2% with a significant drop inpaymentspursuanttoAssistanceforthetakeoverorstart-upofacompany(ARCE).

4.1.2.1. BenefitsTheoverallcostofbenefitsincreasedby5.17%in2013,withthefollowingbreakdown:

Improved job security benefits have taken over from the Specific redeployment benefits and the Occupa-tion transition benefits for those signed up to this support arrangement as of 1 September 2011.

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2013 2012 2013/2012

ADR – Compensatory allowance upon redeployment 54.7 50.5 8.32%

ARCE – Assistance for the takeover or start-up of a company 735.6 841.5 -12.58%

IDR – ASP and CRP differential redeployment indemnity 29.2 20.5 42.44%

Other benefits 74.4 60.3 21.72%

TOTAL REDEPLOYMENT BENEFITS 892.9 972.8 -8.21%

(inmillionsofEuros)


04

Assistance for the takeover or start-up of a company (ARCE)representsthemainbenefitsamountingto735.6 million Euros or 82.4% of all benefits. Itsamount decreased by 12.58% in 2013. 4.1.2.3. Validation of pension pointsThis item corresponds to the cost of the validation of benefit recipients’ supplementary pension points forthesumof1,840.6millionEurosin2013,com-paredwith1.811millionEurosin2012.Thisincreaseisexplained by the increase in benefit recipient expenditure and expenditure adjustments recorded in 2013.

The breakdown by pension scheme is as follows:

4.1.2.4. Other technical management expensesThisitem,foranamountof3,658.2millionEuros,isupby9.31%comparedwith2012.

The main expenses comprise:•thedebtwrite-offsandcancellationsofaffiliatedebtsfor275.9millionEuros;

•thedebtwrite-offsandcancellationsofbenefitrecipientdebtsfor73.8millionEuros;

•thepaymentbyUnédicofitscontributiontotheFNE(NationalEmploymentFund)agreementsfor5.1millionEuros;

•the10%contributionduebyUnédictoPôleemploifor3,137.8millionEuros;

•Unédic’scontributiontotheImprovedjobsecuritycontract(CSP)costsfor105.7millionEuros;

•Unédic’scontributiontothefinancingofthelong-termreducedactivity(APLD)arrangementforthesumof47.3millionEuros.

(inmillionsofEuros)

ARRCO 2,359.6

AGIRC 644.9

Other funds (IRCANTEC – CRPNPAC) 112.4

TOTAL PENSION FUNDS 3,116.9

Contribution of benefit recipients -1,276.3

VALIDATION OF PENSION POINTS 1,840.6

The main changes in terms of payment of benefits are as follows:•ARE payments represented an amount of 28.653 billion Euros in 2013 compared with 27.320billionEurosin2012,i.e.a4.88%increasewhichisexplainedbya1.70%increaseintheaver-age amount of the daily benefits, and a 3.13% increase in the number of compensated days;

•TrainingAREpayments(excludingsocialcontribu-tionsof75millionEuros)representedanamountof1billionEurosin2013comparedwith1.005bil-lionEurosin2012,i.e.a0.44%decreasewhichis

explained by a 2.87% decrease in the averageamount of the daily benefits, and a 2.50% increase in the number of compensated days;

•ASR and ASP payments represented the sum of 1.923 billion Euros in 2013 compared with 1.532billionEurosin2012,i.e.a25.56%increasewhichisexplainedbya0.74%increaseintheaver-age amount of the daily benefits, and a 24.63% increase in the number of compensated days.

4.1.2.2. Redeployment benefitsRedeploymentbenefitsamountedto892.9millionEurosin2013,comparedwith972.8millionEurosin2012,and are broken down in the following way:

REDEPLOYMENT BENEFITS

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4.1.2.5. ProvisionsTheprovisionstotal292.2millionEurosandarebro-ken down as follows:

•depreciation of claims against affiliates for 230.4millionEuros;

•depreciationofoverpaymentstobenefitrecipi-entsfor56.9millionEuros;

•depreciation for contingencies and expensesamounting to4.9millionEuroswhichprimarilyconcernstheprovisionforfinancingtheASFNEfor3.2millionEuros,theprovisionforAcossdisputesof2.4millionEuros,theprovisionforPôleemploicontingenciesandexpensesof-1.7millionEurosand the provision for risk of potential repayment of contributionsof0.9millionEuros.

4.2.1.2. Other incomeThisitem,foratotalamountof19.5millionEuros,mainly represents the rent paid by Pôle emploi within the context of the supply of the Unemployment insur-ance scheme’s real estate assets.

4.2.2. EXPENSESTheexpensescameto104millionEurosin2013anddecreased by 8.21% compared with 2012. The amortisation of the real estate inventory (268 sites as at 31 December 2013), its maintenance and its management constitute a significant administrative management expense.

4.2.2.1. PurchasesThis item represents 0.8% of the administrative managementexpenses,or0.8millionEuros,com-paredwith0.7millionEurosin2012.

4.2.2.2. External servicesThisitemrepresents49.8%ofadministrativeman-agement expenses.

4.2 Administrative management4.2.1. INCOME4.2.1.1. Provision of servicesThisitem,amountingto46.2millionEuros,isessentiallymadeupofincomereceivedfromthirdpartieswithin the framework of management agreements:

2013 2012

AGS 43.6 45.3

Pôle emploi 2.5 4.1

Other agreements with third parties - -

Other provisions of services 0.1 0.1

TOTAL 46.2 49.5

2013 2012

Works and services provided by third parties 8.7 9.3

Other external services(including expenses to finance union and employer organisations: 4.0 million Euros in 2013) 11.9 8.8

Rents 2.3 2.2

Transportation and travel 1.2 1.3

Postal and telecommunications costs 0.4 0.5

Notarial fees and costs 20.3 19.5

Bank and postal costs 7.2 12.4

TOTAL 51.8 54.0

(inmillionsofEuros)

(inmillionsofEuros)


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The “Other external services” item includes, inter alia, expenses relating to the financing of employer and union organisations, within the context of managing the Unemployment insurance scheme, i.e. 4.0millionEurosin2013.

4.2.2.3. Taxes and leviesThis item represents 5.8% of the administrative man-agement costs and is broken down as follows:

4.2.2.4. Wages and social security costsThis item represents 25.9%of theadministrativemanagement costs. It is broken down into:

4.2.2.5. Amortisation and provisionsThisitemrepresents17.7%oftheadministrativeman-agementexpenses,or18.4millionEuros,comparedwith24.7millionEuros in2012,withthereductionbeing attributable to the sale of real estate sites.

4.3 Financial managementThe financial result is negative:•-237millionEurosin2012;•-227millionEurosin2013.

The2013expensescameto254.6millionEurosandcorrespondmainlyto:•structuredfinancingexpensesfor249.5millionEuros,or:•239.8millionEurosforthebondissuesandthebridgingfacility;•9.7millionEurosininterestonthecommercialpapersprogramme;

•amortisationofbondissueredemptionpremiumsfor5.2millionEuros.

The average financing rate for 2013 came to 1.23%.

4.4 Extraordinary profit or lossTheincomefromextraordinarytransactionsisprofitable(+8.8millionEuros)andismadeupofthefollowingtransactions:•capitalgainsof8.9millionEurosforsalesoffixedassets;•expensesrelatingtothescrappingoffixedassetsandmiscellaneousexpensesamountingto0.1millionEuros.

4.5 Corporation taxUnédic is liable for corporation tax for the profit or loss on property revenue and income from movable property.Thetaxdue,attherateof24%,cameto3.2millionEurosfor2013.

4.6 Financial year profit or lossThis item represents the net profit or loss for the 2013 financial year for the Unemployment insurance scheme.Theresultisnegativeby3,646.7millionEuros.

(inmillionsofEuros)

(inmillionsofEuros)

2013 2012

Taxes on earnings 2.0 2.0

Other taxes and levies 4.0 4.4

TOTAL 6.0 6.4

2013 2012

Wages 18.0 18.5

Social security costs 8.9 8.9

TOTAL 26.9 27.4


04

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ADDITIONALINFORMATION

05

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 framework 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 better informed, we present to you below the estimates that we consider the most important, in addition to their means of calculation.

Moreextensiveinformationontheexpenditureandincome forecasts can be found in the management report in the “2014 Outlook” section, in accordance with works regularly conducted by the Unemploymentinsuranceschemeonthebenefits/contributions equilibrium 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 2013, to benefit recipients registered on this date, was assessed by Unédic’s Studies and AnalysesDepartmentat22,763millionEuros.Thisamount does not take into account the benefits to be paid to recipients of an extension of an allowance until their retirement. The means and procedures used to calculate this estimate are as follows:

•calculation of benefits paid in 2013 to currentbenefit recipients as at 31 December 2012 (2,455,673benefit recipients), i.e. 16,185millionEuros;

•calculation of benefits yet to be paid to thispopulation after 31 December 2013, i.e. 6,432 million Euros.Thispopulationrepresents26.70%ofcurrentbenefit recipients as at 31 December 2012;

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5.2 Individual right to trainingThe 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 Nationalinterprofessional agreement of 5 December 2003.

Theprovisionsoftheagreementstipulatethatfrom1January2004,employeesoftheUnemploymentinsurance scheme acquire individual rights to training, capped at 21 hours per annum and per employee. This right, cumulated over 6 years, therefore amounts to a maximum of 126 hours per employee as at 31 December 2013.

When the accounts are drawn up, the acquired rights are calculated by using the personal data of the Unemployment insurance employees. As at 31 December 2013, the accumulation of acquired rights came to almost 34,113 hours.

5.3 Number of Unemployment Insurance staffThe number of Unédic staff as at 31 December 2013 is 343 Unédic employees, 236 of whom are assigned to theUnédic/AGSDelegation.

5.4 Scope of consolidationThe scope of consolidation includes:•Unédic;•oneunmergedAssédicagency,FrenchGuiana.

•forthis2012population,thetotalamountofbene-fits yet to be paid by the Unemployment insurance schemeis22,617millionEuros;

•this amount is updated, taking into account a 0.64% increase in benefit recipients as at 31 December 2013 compared with 31 December 2012; the estimate of the benefits yet to be paid to the benefit recipients compensated at the end of the2013financialyearis22,763millionEuros.

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 benefit recipients who may, under certain conditions, 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 AnalysesDepartmentat0.487billionEuros.Thecalculation is made by prolonging the indemnification rate used as at 31 December 2013 until the day before the retirement date, with the maximum age being 65.

ADDITIONALINFORMATION

04

Financial year ended 31 December 2013

AUDITORS’REPORT ON THECONSOLIDATED ACCOUNTS

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In fulfilment of the assignment entrusted to us by yourBoardofDirectors,weherebyreporttoyou,forthe financial year ended 31 December 2013, on:•theauditoftheso-calledcombinedconsolidated

accounts of the Unemployment insurance scheme managed by Unédic, as they are enclosed with this report;

•thejustificationofourassessments;•thespecificverificationrequiredbylaw.The consolidated accounts have been approved by theManagingDirector of Unédic. Our role is toexpress an opinion on these accounts based on our audit.

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 consolidated 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 institutions 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 measures taken in order to finance the Unemployment insurance scheme given the economic context and its impact on the technical equilibrium forecasts (see note 1.5.2 “Financing of the 2014-2015 period”).

PursuanttotheprovisionsofArticleL.823-9ofthe French Commercial Code relating to the justification of our assessments, we hereby inform you that the assessments we have carried out concern 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:•Thenoteintheappendixreferringtotheaccount-

ing principles, rules and methods specifies that the Unemployment insurance scheme is a specific scheme by distribution and that the accounts were drawn up in accordance with the chart of accounts of the unemployment insurance organisations approved by the National Accounting Council. In order to draw up the consolidated 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 benefit recipients.

•Furthermore, thefinancialyear’saccountsweredrawn up with a view to continued Unemployment insurance activities, given the structuring hypoth-esis referred to in note 1.5.2 of the “Financing of the 2014-2015 period” appendix which sets out Unédic’s ability to have access to the necessary financing.

As part of our assessment of the accounting rules and principles used, we verified the appropriate nature of the accounting methods specified above and the information provided in the notes of the appendix.

To the members of the Board of Directors,

I. Opinion on the consolidated accounts

II. Justification of the assessments

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•Note2.1oftheappendixspecifiesthattheUnem-ployment insurance scheme’s accounts were drawn up on the basis of financial information pro-duced by third parties, primarily by Pôle emploi and Acoss, with regard to the transactions carried out by these entities on behalf of the Unemploy-ment insurance scheme.•Wehavefamiliarisedourselveswiththe“Audi-tors’ Report on the accounting statements ofPôle emploi linked to the management on behalf of Unédic of individual contributions from certain affiliates and payments to benefit recipients”, drawn up on 5 May 2014, and which gives afavourable opinion.

•Wehavefamiliarisedourselveswiththe“Court’spositions on the 2013 accounts of Acoss’ recov-ery activity” adopted by the 6th Chamber of the FrenchAccountingCourton23June2014andwhich gives reasonable assurance as to the cash

flows specifically concerning the Unemployment insurance scheme both in terms of income and collections.

•Weensuredthecorrect transcriptionof theseaccounting statements in the Unemployment insurance scheme’s accounts.

•WewereawareoftheworkcarriedoutbythePôle 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 examining 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.

We have also performed, in accordance with professional standards applicable in France, the specific verification required by law on the information relating to the Unemployment insurance scheme given in the management report.

We have no matters to report regarding their fair presentation and conformity with the consolidated accounts.

III. Specific verification

Deloitte & Associés FCN

Paris&Neuilly-sur-Seine,23June2014

THE AUDITORS

SergeFLOCH StéphaneLOUBIÈRESVincentBLESTELAnneBLANCHE

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NOTES

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Financial report – unemployment insurance in 2013

Economy & Finance