FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS AND LIABILITIES, FINANCIAL POSITIONAND PROFITS AND LOSSES 20 technical and scientific research. Companies that prove that is recognized in the Financial Statements as other income for the they have expenditures that meet the required criteria (research period in which the grant is classified as a receivable. expenditures locatedin France or, since January 1, 2005, within Conditional advances the European Community or in another State that is a party to the Agreement on the European Economic Area that has concluded a Funds received from Bpifrance Financement in the form of tax treaty with France that contains an administrative assistance conditional advances are recognized as financial liabilities, as the clause) receive a tax credit that can be used for the payment of Company has a contractual obligation to reimburse Bpifrance the corporate tax due for the fiscal year in which the expenditures Financement based on a repayment schedule. Each advance is were made and the next three fiscal years, or, as applicable, can made to fund a specific development milestone. Details concerning be reimbursed in cash. The expenditures taken into account for conditional advances are provided in Note 10. Receipts and the calculation of the Research Tax Credit involve only research reimbursements of conditional advances are reflected as cash expenses. flows from financing activities in the Consolidated Statement of Cash Flows. The Company has received the Research Tax Credit since its inception. The rate used to determine the amount recognized annually as a finance cost, the EIR takes into account the estimated future cash The Company received the reimbursement of the Research flows. Tax Credit for the year 2016 in August 2017 for an amount of €2,930 K. It will request the reimbursement of the 2017 Research In the event of a change in payment schedule of the stipulated Tax Credit in 2018 under the Community tax rules for small and repayments of the conditional advances, the Company medium firms in compliance with the regulatory texts in effect for recalculates the net book value of the debt resulting from the the amount of €3,692 K. discounting of the anticipated new future cash flows at the initial EIR. The adjustment that results therefrom is recognized in the The CIR is presented under other income in the Consolidated Consolidated Statement of Income (Loss) for the period during Statement of Income (Loss) as it meets the definition of which the modification is recognized. government grant as defined in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. The conditional advance that can be subject to this type of modification is the advance received from Bpifrance Financement, Subsidies and conditional advances presented in Note 10.1. Due to the innovative nature of its product candidate development programs, the Company has benefited from certain 3.12 Retirement pension obligations sources of financial assistance from Bpifrance Financement. The employees of the Company receive the retirement benefits Bpifrance Financement’s mission is to provide financial assistance stipulated by law in France: and support to emerging French enterprises to facilitate the • compensation paid by the Company to employees upon their development and commercialization of innovative technologies. retirement (defined-benefit plan) and; The funds received by the Company are intended to finance its • a payment of retirement pensions by the Social Security research and development efforts and the recruitment of specific agencies, which are financed by the contributions made by personnel. The Company has received such funding in the form of companies and employees (defined-contribution plans). non-refundable subsidies and conditional advances. For the defined-benefit plans, the costs of the retirement Subsidies benefits are estimated by using the projected credit unit method. Subsidies received are grants that are not repayable by the According to this method, the cost of the retirement benefit is Company and are recognized in the Financial Statements where recognized in the Consolidated Statement of Income (Loss) so there exists reasonable assurance that the Company will comply that it is distributed uniformly over the term of the services of with the conditions attached to the subsidies and the subsidies the employees. The retirement benefit commitments are valued will be received. at the current value of the future payments estimated using, for discounting, the market rate for high quality corporate bonds with Subsidies that are upfront payments are presented as deferred a term that corresponds to that estimated for the payment of the revenue and recognized ratably through income over the duration benefits. of the research program to which the subsidy relates. The difference between the amount of the provision at the A public subsidy that is to be received either as compensation beginning of a period and at the close of that period is recognized for expenses or for losses already incurred, or for immediate through profit or loss for the portion representing the costs of financial support of the Company without associated future costs, services rendered and the net interest costs, and through other 194– GENSIGHT BIOLOGICS – 2017 Registration Document