Plastic Omnium - 2020 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS 2020 Consolidated financial statements at December 31, 2020 www.plasticomnium.com PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2020 202 Changes in provisions for defined-benefit obligations are recognized over the benefit acquisition period, in the income statement under “Operating expenses”, except for: the effect of the reversal of discounting of the commitments recognized ● in financial expenses; actuarial gains and losses on post-employment benefit obligations ● recognized in equity. OTHER LONG-TERM BENEFITS 1.4.2.3 Other long-term benefits correspond mainly to long-service awards for French employees. Actuarial gains and losses on “Other long-term benefits” (mainly long-service awards) are recognized immediately in profit or loss. Other provisions 1.5 Provisions for employee downsizing 1.5.1 The cost of employee downsizing plans is recognized in the period in which a detailed plan is drawn up and announced to the employees concerned or their representatives, thus creating a well-founded expectation that the Group will implement this plan. Provisions for onerous contracts 1.5.2 Provisions are booked when there are obligations to third parties leading to a likely outflow of resources for the benefit of these third parties without a counterparty of at least equivalent value expected for the Group. Losses identified on onerous contracts, i.e. contracts whose unavoidable costs relating to their obligations are greater than the expected economic benefits, are subject to provisions. These provisions are recognized in current or non-current liabilities depending on whether they are short- or medium/long-term in nature. Goodwill, property, plant and equipment 1.6 and intangible assets Goodwill 1.6.1 Goodwill is measured annually at cost, less any accumulated impairment representing loss of value. Impairments on goodwill are irreversible. Negative goodwill (badwill) is recorded in the income statement during the year of acquisition. Intangible assets 1.6.2 RESEARCH AND DEVELOPMENT COSTS 1.6.2.1 Development costs incurred during the project phase and related to the execution of a contract with a customer not fulfilling a performance obligation are recognized as intangible assets. These internal and external costs relate to the work on the organization of purchasing, logistics and industrial processes to produce the parts that will be ordered by customers. These costs are recognized as intangible assets in progress during the development phase and amortized on a straight-line basis over the estimated life of the series production, i.e. generally three years for exterior parts, five years for fuel systems and the “Modules” business. The amortization of development hours is booked under Research and Development costs. These assets are subject to annual impairment tests and then to the impairment index from the time that they enter service. Assets under construction are subject to annual impairment tests. As of their commissioning, impairment tests are carried out as soon as signs of impairment are identified. The accounting treatment of costs that satisfy a performance obligation is described in Note 1.3.2 “Revenue/Revenue from contracts with customers”. Furthermore, under IFRS 15, only the costs of obtaining contracts that would not exist in the absence of a contract are credited to the assets and depreciated over the expected production period; costs incurred prior to the selection of the Group, whether or not the contract is obtained, are recognized as an expense for the period. OTHER RESEARCH AND DEVELOPMENT COSTS 1.6.2.2 Other Research and Development costs are expenses for the fiscal year. OTHER INTANGIBLE ASSETS 1.6.2.3 Other intangible assets are measured at cost less accumulated amortization and impairment losses. They are amortized according to the linear method over their estimated useful lives. They mainly included the “Ford-Milan,” “Faurecia Exterior Systems business” and “HBPO” customer contracts in 2018. Property, plant and equipment 1.6.3 ASSETS OWNED OUTRIGHT 1.6.3.1 GROSS VALUES Property, plant and equipment are initially recorded at their acquisition cost, at their cost of production when they are manufactured by the Company for its own use (or subcontracted) or at their fair value for those acquired without consideration. Property, plant and equipment may be specific tooling developed by the Group in connection with production contracts signed with customers without transfer of control to customers, for which the Group will receive an integrated remuneration in the part price, where appropriate. In this case, the remuneration is recorded in revenue over the series’ production term. If fixed assets have been sold or transferred within the Group, any gains and losses are eliminated in the consolidated financial statements. Property, plant and equipment are later recognized at cost less total depreciation based on their lifespan and total impairment. Maintenance and repair costs for fixed assets to restore or maintain the future economic benefits that the Company can expect in terms of the estimated level of performance at the time of acquisition are recognized as an expense as incurred. Future expenditures are capitalized only if it is probable that the future economic benefits associated with the expenditure benefit the Group, for example, by an increase in the performance or effectiveness of the asset concerned.