Plastic Omnium - 2018 Registration Document

4 2018 CONSOLIDATED FINANCIAL STATEMENTS Consolidated financial statements at December 31, 2018 www.plasticomnium.com PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 158 The share capital of Compagnie Plastic Omnium consists of a par value of €0.06, thus bringing the amount to €8,913,966.42. See Note 5.2.1.1 “Capital of Compagnie Plastic Omnium”. At December 31, 2018, these transactions brought the interest of the parent company, the Burelle SA holding company, to 58.51% of the share capital before cancellation of the treasury stock. Evolution of the international economy 2.10 and impacts on the Group’s accounts Hyperinflation in Argentina and Impacts 2.10.1 on the Group’s Financial Statements Argentina has been in deep financial turmoil since 2018 marked by a significant inflation of +47.6% over the year, resulting in a sharp erosion of Argentina’s bond prices on the secondary market, a surge in long-term interest, resulting in a sharp depreciation of the country’s currency, the Argentine peso. The euro/peso exchange rate in Argentina stood at €1 for 22.4 Argentine peso as at December 31, 2017 and €1 for 43.1 Argentine peso as at December 31, 2018. The National Institute of Statistics in Argentina announced the recession of the Argentine economy in mid-December 2018. Since the end of 2018, Argentina has been considered a hyperinflationary country. IAS 29 “Financial Reporting in Hyperinflationary Economies” therefore applies to entities whose functional currency is the Argentine peso. The provisions of this standard have been applied as from January 1, 2018 to the three entities of the Group whose functional currency is the Argentine peso: all non-monetary assets and liabilities have been adjusted for inflation ● by application of a general price index, so that they are expressed in the unit of measurement in effect at the end of the year; the income statement has been restated to correct the inflation ● observed during the year. At December 31, 2018, the Group valued the assets of the three subsidiaries Plastic Omnium Auto Inergy Argentina SA (Clean Energy Systems), Plastic Omnium Argentina and Plastic Omnium Automotive Argentina (Intelligent Exterior Systems) for following amounts: -€4,575 thousand by income in “Other operating income and ● expenses” (see Note 4.6); and +€8,852 thousand by shareholders’ equity. ● See the impacts in Note 5.1.3 “Property, plant and equipment other than investment properties”. In accordance with IFRS, the Group’s financial statements in euros are not restated for 2017. Exit of the United Kingdom from the European Union 2.10.2 and impact on the Group – Brexit The exit of the United Kingdom from the European Union (EU), Brexit or British Exit, voted by the British on June 23, 2016 in a referendum, takes effect on March 29, 2019. Until this date, the United Kingdom remains a member of the European Union. The economic consequences for both the United Kingdom and companies with subsidiaries in the country are not yet fully known, as long as the exit of the European Union is not effective. Moreover, since the vote, the effects on the UK economy are not significant enough despite fluctuations in the pound sterling. Since the 2016 closing, the price of the pound at the following periods has evolved as follows: December 31, 2016: €1 is exchanged for 0.886 pound; ● December 31, 2017: €1 is exchanged for 0.887 pound; ● December 31, 2018: €1 is exchanged for 0.895 pound. ● The Group operates in the United Kingdom through its two companies, Plastic Omnium Automotive Ltd and HBPO UK Ltd, which has been fully consolidated since July 2018 following the HBPO Group takeover. As the activity of these companies is essentially carried out on the territory, there should not be a significant direct impact. However, impairment tests were performed on the long-term assets of these companies on the basis of a hypothetical decline in turnover of 20%; they lead to the conclusion that there is no impairment of assets. The combined turnover and results of these two companies over the last three years represent respectively: 2016 2017 2018 As a percentage of Group sales 6.83% 6.16% 6.11% As a percentage of the Group Net Income 1.61% 0.90% 3.11%