REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

20. FINANCIAL INFORMATION CONCERNING THE COMPANY’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFITS AND LOSSES
20.2 PARENT COMPANY FINANCIAL STATEMENTS FOR 2007
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 SIGNIFICANT EVENTS OF THE YEAR
Free Mobile was incorporated by Iliad in July 2007 in order to bid for a license to develop and operate a mobile
telephony network. Immobilière Iliad was incorporated in December 2007 to purchase and lease real estate assets
as part of the development of the Company’s optical fiber business.
In February 2007, Iliad sold its entire interest in Kertel.
1.2 GENERAL ACCOUNTING PRINCIPLES
The financial statements have been prepared on a going concern basis, in accordance with French generally
accepted accounting principles, including the principles of prudence and segregation of accounting periods,
applied consistently from one accounting period to the next.
1.3 EXCEPTIONS
No exceptions to French generally accepted accounting principles were applied in the preparation of these
financial statements.
1.4 MAIN ACCOUNTING POLICIES
The main accounting policies applied by the Company are described below.
1.4.1 Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are stated at acquisition cost (including transaction expenses)
or production cost.
Depreciation and amortization are calculated by the straight-line method, as follows:
• Software .............................................................................. 1 year
• Trademarks ........................................................................... 10 years
• Buildings ............................................................................. 20 or 30 years
• Fixtures and fittings ................................................................... 10 years
• Plant and equipment .................................................................. 5 years
• Furniture ............................................................................. 5 years
• Computer equipment .................................................................. 4 years
1.4.2 Investments in subsidiaries and affiliates, loans and advances to subsidiaries and affiliates, and other
investment securities
Investments in subsidiaries and affiliates, loans and advances to subsidiaries and affiliates, and other investment
securities are stated at the lower of cost and fair value, excluding incidental expenses. Fair value is determined
based on the net assets of the company concerned and its projected future earnings.
1.4.3 Receivables
Receivables are stated at nominal value.
A provision is recorded for doubtful accounts based on the estimated risk of non-recovery.
1.4.4 Foreign currency transactions
Income and expenses in foreign currencies are converted at the exchange rate prevailing on the date of the
transaction.
Balance sheet items are converted at the year-end rate.
Iliad – Registration Document 2007 - 165