EXEL industries - 2019 Universal Registration Document

Consolidated fi nancial statements Notes to the consolidated fi nancial statements

French tax group provisions Under a tax sharing agreement, with EXEL Industries as head of the tax group, the Group’s French subsidiaries pay advances to EXEL Industries for taxes owed by them and EXEL Industries will settle the Group tax at the end of the fi scal year after any restatements provided for under this system.

Operating leases Operating leases that individually involve small amounts are not material in nature. In particular, there exist no signi fi cant property leases as the Group is the owner of its main production sites.

1.15 Provisions, contingent assets and c contingent liabilities

Tax credits „ Research tax credits (RTC).

In accordance with IAS c 37, provisions are recognized based on case-by-case assessments of the corresponding contingencies and expenses. A provision is recorded whenever Group corporate governance bodies are made aware of a legal or constructive obligation resulting from a past event when it is probable that it will result in an outflow of resources with no inflow of resources representing an equivalent amount expected in return. Provisions are broken down between current and non-current liabilities according to the expected term to maturity of the risk. The provisions with a term to maturity of more than one year are discounted when their impact is material. In cases where it is not probable that an obligation will result in the out fl ow of resources to be settled or because its amount cannot be measured with su ffi cient reliability, it is recognized by the Group o ff - balance sheet as a contingent liability. Contingent liabilities are reported in the notes unless the probability of an out fl ow of resources is very low. Contingent assets are reported in the notes where an in fl ow of economic bene fi ts is probable. Provisions are recorded in the balance sheet for liabilities arising from de fi ned bene fi t plans. These liabilities are calculated using the projected unit credit method based on actuarial valuations performed at the end of the fi scal year. Actuarial assumptions used to calculate these liabilities vary according to the economic conditions of the country in which the plan applies. Each plan is accounted for separately. The Group makes use of the services of an outside entity to partially cover its bene fi t liabilities. The provision recorded in the consolidated fi nancial statements corresponds solely to the uncovered portion as well as social charges for the full amount of these bene fi t liabilities. For de fi ned bene fi t plans fi nanced through outside fund managers (pension funds or insurance policies), any di ff erence in the fair value of plan assets and the present value of obligations is recognized in the balance sheet as an asset or liability. However, such di ff erences are only recognized as assets when they embody a future economic bene fi t for the Group. Past service costs represent the bene fi ts grantedwhen the Company either adopts a new de fi ned bene fi t plan or modi fi es the level of bene fi ts of the existing plan. When new rights to bene fi ts are vested as of the adoption of the new plan or the change of the existing plan, past service costs are immediately recognized in the income statement. Conversely, when the adoption of a new plan or a change in the existing plan results in the vesting of rights subsequent to 1.16 Pensions and similar liabilities (see c note c 13.3)

„ Given the purely fi scal nature of this provision, and possibilities that they will be subject to changes in line with changes in tax regulations mainly in France, research tax credits are recognized as a deduction from the income tax expense. „ Tax credit for encouraging competitiveness and jobs (CICE) „ Given the legislature’s objective of reducing sta ff costs through the CICE, the Group decided to recognize the CICE as a deduction from sta ff costs, under operating income. The CICE was calculated over the period at the same frequency as the salaries towhich it related. Thus, at September c 30, 2019, accrued income was recognized for the CICE with respect to salaries for the period from October to December c 2018. The total amount of the CICE credits recognized in the Group came to €713 c thousand. 1.13 Foreign currency translation The fi nancial statements of foreign companies are converted using the closing rate method: assets and liabilities on the balance sheet are translated at the exchange rate at the year end and income statements at the average exchange rate. Translation di ff erences are recorded directly in equity under the heading “Foreign currency translation reserve”. Transactions by Group entities in a currency other than their functional currency are translated at the exchange rate prevailing on the transaction date. Assets and liabilities denominated in a currency other than the functional currency of the entity are translated at the closing exchange rate in force at the end of the fi scal year. Currency gains and losses are recognized directly under fi nancial income and expense. Finance leases Assets fi nanced by means of fi nance leases as de fi ned by IAS c 17 – Leases are presented as assets at the lower of the present value of future lease payments or fair market value. The corresponding liability is recognized in fi nancial liabilities. Such items are amortized on a straight line basis over their estimated useful lives. Only signi fi cant transactions are restated (where the purchase value at inception of the item fi nanced by the lease exceeds €150 c thousand). The main fi nance leases have been restated in the consolidated financial statements and no additional disclosures are required concerning the corresponding future lease payments. 1.14 Leases

4

EXEL Industries Group I 2019 Universal Registration Document

65