Accounting Policies

These are entered in the assets and depreciated at a minimum of 20% or expensed in the accounting period during which they are incurred. 

A corporate expense will be accounted for as a tangible fixed asset if its purchase price, aggregated with any directly related expenditure of accessories, exceeds €2,000. If the amount is lower, the expense will not be considered a tangible fixed asset, but will instead be accounted for as an operating cost item.

At the time of their acquisition, tangible fixed assets are valued at the purchase price including ancillary expenses.

Depreciation rates are as follows at balance sheet date:

• 20% for equipment and machinery;
• 10% for furniture;
• 20% for vehicles;
• 0% for works of art;
• 3% for constructions; the duration of the rental agreement for installations in the rented buildings;
• annual depreciation based on the likely duration of between 2 and 5 years depending on the nature of the hardware for computer equipment.

However, these rates can be brought up to the levels allowed by the Ministry of Finance for the ancillary expenses and within the framework of the regulations allowing declining balance depreciations. Exceptional depreciations will be applied if necessary to bring the net book value of a tangible asset to its economic value if it is lower.

At the time of their acquisition, investments and other securities held in portfolio are valued at acquisition cost. Ancillary costs are charged to the income statement during the period in which they are incurred. At the balance sheet date, the acquisition cost of each investment or security held in portfolio is compared to its estimated realisable value in accordance with the evaluation method set out below.

If the estimated realisable value is lower than the acquisition cost, write-downs are recorded in the income statement to the extent that the impairment in value is deemed to be durable. Appropriate write-backs are recorded in respect of write-downs on securities on which capital gains are subsequently determined.

More particularly, if a hedging strategy is applied through the purchase of “put” options covering the value reduction of the shares and financed by the sale of “call” options, the premiums paid will be booked on the assets’ side of the balance sheet as short-term investments. At maturity, if the securities they cover are sold, the premiums reduce the gain or loss on disposal; otherwise they are expenses.

As for the premiums received, they are accounted on the liabilities’ side under “Accrued charges and deferred income” until the maturity of the operation, at which time they are switched to profits. At the balance sheet date, it is the overall position (options contracts and securities hedged) that is examined to decide on a possible value adjustments.

These fixed assets are valued on the basis of their net asset value (i.e. book value corrected for gains and losses prudently estimated on the basis of the position, profitability or prospects of the company). The book value is taken from the last balance sheet or the last known financial position.

Listed or publicly-traded shares are in principle valued at the closing rate on the balance sheet date, provided that the market in the shares is active. Unlisted shares and listed shares where the market is not considered to be active are valued by reference to their net asset value as defined above. If their net asset value cannot be calculated, the shares are valued by reference to the book value.

They are recorded at their face value, adjusted, where appropriate, for long-term amounts receivable bearing no interest or granted at low interest rates. If their recoverability is considered to be unlikely, in particular in the light of the financial position of the debtor, an appropriate write-down is recorded.

Trading securities are valued using the same principles set out above for the other securities held in portfolio. Appropriate write-downs are recorded in respect of unrealised losses. If gains are determined on securities that have previously undergone write-downs, appropriate value adjustments will be entered.

Other amounts receivable, short-term investments and cash at bank and in hand are stated at acquisition cost or nominal value. Write-offs and write-backs are recorded according to the assessment criteria set out above for “other financial fixed assets - amounts receivable”.

At the end of each accounting period, the Board of Directors examines prudently, sincerely and in good faith the provisions required to cover anticipated liabilities and possible charges which have arisen during the year and previous years. The provisions relating to previous years are regularly reviewed and released to the income statement if they no longer apply.

Such liabilities are recorded at their nominal value, adjusted, where appropriate, for long-term debts without interest or at a low interest rate.

Accrued and deferred income, and deferred and accrued charges are calculated at the balance sheet date and stated in the appropriate accounts on the assets and liabilities’ sides of the balance sheet.

As a general rule, all amounts payable and receivable are shown in the balance sheet at the currency average rate on the balance sheet date. Variations against the historical value are grouped by currency. If the net difference for a currency shows an unrealised loss, it is recorded as a cost in the income statement. Unrealised exchange gains are added in the balance sheet on the liability side under accrued charges and deferred income. If the foreign currency financing is designed to hedge investments in the same currency, the historical value of this financing transaction is maintained. In accordance with the provisions of Royal decree of 29 April 2019, these same rules will also apply in the future. If, however, the use of one or more of these rules is no longer appropriate, any changes deemed to be necessary would be made, and the reasons for the changes and the effect on the accounts would be mentioned in the notes to the annual accounts.