Plastic Omnium - 2018 Registration Document

5 2018 STATUTORY ACCOUNTS Notes to the statutory accounts PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 235 The accounting policies used to prepare the 2018 financial statements are the same as those used in 2017. The significant accounting policies applied are described below: Property, plant and equipment Property, plant and equipment are initially recognized at cost and depreciated on a straight-line basis over their estimated useful lives, as follows: Buildings 20-40 years; ● Fixtures and fittings 10 years; ● Office equipment and furniture 5-10 years. ● When the component approach is applied, the Company uses different depreciation periods for each significant part of the same fixed assets when one of these components has a different useful life from the main asset of which it is a component. Equity investments and related receivables Gross values of investments in subsidiaries and affiliates are initially recognized at cost or transfer value. If applicable, a provision for impairment will be booked when the value in use or the probable realization value is lower than the net book value. Value in use is determined by taking into account the share of net equity and profit outlook in view of current market conditions as set out in the subsidiaries’ medium-term business plans. Related receivables are valued at their par value. Depreciation is recorded where the inventory value is less than the carrying amount. Related receivables are impaired through a provision by taking into account the overall situation and the likelihood of non-recovery. Treasury stock The Company has been authorized by shareholders to purchase its own shares to (i) maintain a liquid market for its shares under a liquidity contract with an investment firm, (ii) reduce the share capital by canceling shares, (iii) cover current or future stock option or stock grant plans for employees and corporate officers of the Group, or (iv) hold in treasury for subsequent delivery in exchange or payment for acquisitions. The accounting classification of treasury stock depends on its final purpose: treasury shares held to pay for external growth acquisitions, reduce ● share capital or maintain stock liquidity are classified as investments; treasury shares held for the exercise of current stock option plans or for ● future plans still pending allocation are recognized as short-term investment securities; treasury shares are measured in line with their accounting ● classification (investments, stock option plans, acquired under liquidity contract) using a FIFO (first in, first out) method. The gross value equals the acquisition price, and treasury shares are valued at the average market price of the latest month. Impairment is recognized where the gross value is higher than the carrying amount. For shares allocated to covering stock option plans, their fair value is the lower of the exercise price of the options granted. For shares otherwise classified, market value is determined on the basis of the average quoted stock market price during the month before the balance sheet date. Receivables Receivables are valued at their nominal value. Depreciation is recorded where the inventory value is less than the carrying amount. Receivables are depreciated through provisions that take into account possible recovery problems. Short-term investment securities The short-term investment securities are valued by securities category (shares held to maintain stock liquidity, unallocated treasury stock, other short-term investment securities), using a FIFO (first in, first out) method. When necessary, they are impaired, calculated for each line of similar securities. For securities that represent listed securities, the impairment is booked to bring their value to the closing price. Cash and cash equivalents These include cash, and other items with a similar nature to cash, on hand and at the bank, as well as warrants that may be redeemed at any time after they have been subscribed. Cash and cash equivalents are valued at their nominal value. Foreign currency transactions At closing, monetary items in foreign currencies are converted on the balance sheet at the exchange rates in effect at the closing date as an offset to items in “Translation differences – Assets/Liabilities” on the balance sheet, except for hedges, in which case revaluations are carried in net financial income and are offset by the impacts recognized on the hedging instrument. Unrealized foreign exchange gains are not recognized in accounting income.