Plastic Omnium - 2020 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS 2020 Consolidated financial statements at December 31, 2020 PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2020 201 FINISHED AND SEMI-FINISHED PRODUCT INVENTORIES 1.3.6.2 Finished and semi-finished products are valued on the basis of standard production costs, revised annually. Cost includes raw materials and direct and indirect production costs. These costs do not include any administrative overheads or IT not linked to production, Research and Development costs or selling costs. In addition, they do not include the cost of below-normal capacity utilization. PROJECT INVENTORIES – TOOLS AND DEVELOPMENT 1.3.6.3 These inventories correspond to costs incurred by the Group in order to satisfy a performance obligation in connection with automotive projects. The cost of inventories is compared at the balance sheet date to the net realizable value. If it exceeds the net realizable value, an impairment loss is recorded to bring the inventories to their net realizable value. Receivables 1.3.7 Receivables are recorded at their fair value at the time they are recorded. The fair value generally corresponds to the nominal value of the receivable as long as the sale has been carried out with normal payment terms. Impairment losses are booked to cover expected credit losses and identified risks of non-recovery. The amount of impairment is calculated on a statistical basis for credit risk and counterparty by counterparty, on an individual basis for non-recovery risk. Finance receivables mainly correspond to development and tooling sales for which the Group has signed an agreement enabling customers to pay in installments (for example: “development unit” prices contractually agreed by customers). These receivables have initial payment periods of more than one year and may bear interest in the framework of an asset financing agreement signed with the customer. The income related to these receivables is recognized in revenue. These finance receivables are deducted when calculating the Group’s net debt. Receivables sold to third parties, which are removed from the balance sheet, meet the following criteria: the rights attached to receivables are transferred to third parties; ● substantially all the risks and rewards of ownership are transferred to ● third parties. The risks taken into account are the following: credit risk, ● risks related to payment arrears both for the duration and amounts, ● the transfer of interest rate risk, which is fully assumed by the buyer. ● Grants 1.3.8 The grants received are recognized as liabilities in the balance sheet; they correspond to grants to finance investments in new sites, production equipments or Research and Development programs. Grants are recognized in profit or loss at the gross margin level, as and when the assets acquired through these grants are depreciated or the associated research expenses are recognized. Staff costs and employee benefits 1.4 Share-based payment 1.4.1 Options granted under employee share purchase and subscription plans are measured at their fair value at the date of grant by the Board of Directors, using the Black & Scholes mathematical model. The fair value is recognized in “Employee benefits expense” on a straight-line basis over the vesting period, with a corresponding adjustment to reserves. When options are exercised, the cash amount received by the Group in respect of the exercise price is recorded in cash and cash equivalents with a corresponding adjustment to consolidated reserves. Provisions for pensions and other post-employment 1.4.2 benefits All Group employees are covered by pensions and other long-term post-employee benefits. Pension plans comprise defined-contribution plans or defined-benefit plans. DEFINED CONTRIBUTION PLANS 1.4.2.1 The cost of defined-contribution plans, corresponding to salary-based contributions to national bodies responsible for pension and death/disability insurance plans made in accordance with local laws and practices in each country, is recognized as an operating expense. The Group has no legal or implicit obligation to pay additional contributions or future benefits. Consequently, no actuarial liability is recorded under these defined-contribution plans. DEFINED BENEFIT PLANS 1.4.2.2 Defined benefit plans are mainly related to post-employment benefit plans and correspond to the following commitments: pension plans for French employees; ● other pension and supplementary pension plans, mainly in the US, ● France and Belgium; plans to cover healthcare costs in the US. ● Defined benefit plans are subject to provisions for staff benefits calculated on the basis of actuarial valuations carried out by independent actuaries using the projected unit credit method. These assessments take into account assumptions specific to each plan such as: retirement dates determined according to the terms of the legislation ● and, in particular for French employees, a voluntary retirement assumption when full benefit rights have been acquired; mortality; ● the probability of active employees departing before retirement age; ● estimates of salary increases up to retirement age; ● discount rates and inflation. ● When defined benefit plans are funded, the commitments under these plans are reduced by the market value of plan assets at the reporting date. The valuation builds in long-term profitability assumptions for the invested assets, calculated on the basis of the discount rate used to value company commitments.

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