CFM INDOSUEZ Wealth Management - 2019 annual report

N o t e 1 Accounting principles and policies applied 1. 1. I n t r o d u c t i o n Les états financiers de CFM Indosuez sont établis en conformité avec la réglementation applicable, dans le cadre des dispositions des conventions franco-monégasques, aux établissements de crédit de la Principauté de Monaco. 1. 2 . a c c o u n t i n g p r i n c i p l e s a n d p o l i c i e s A)Translation of assets and liabilities denominated in foreign currencies Assets and liabilities denominated in foreign currencies are translated at the market exchange rates at the balance sheet date. The income and expenses resulting from these translations, together with the translation differences generated on transactions during the financial year, are recognised in the income statement. B) Foreign exchange transactions Spot and forward foreign exchange contracts Spot foreign exchange contracts are valued at the spot market rate for the currency in question at each balance sheet date. Forward currency transactions are back-to-back transactions, and the rate used is the spot rate for the currency in question. Currency options Currency options are back-to-back transactions entered into on the over-the-counter market. C) Forward interest rate instruments Interest rate swaps These are primarily back-to-back contracts that form part of the asset and liability management process. The expenses and income relating to these transactions are entered on the income statement on a pro rata basis. Interest rate options Interest rate options are back-to-back transactions entered into on the over-the-counter market. D) Securities Trading securities Trading securities are securities purchased on an organised market that is sufficiently liquid, with a view to reselling them within a maximum timeframe of six months from the outset. Trading securities are valued at their market value. Gains or losses generated are recorded as income or expenses for the year. Investment securities Investment securities are financial investments purchased in order to provide a financial return. A provision is recorded where their market value is lower than The recording of impairment provisions on equity investments is assessed on an individual basis, taking account of their value-in- use and of the economic and financial appraisal of each company concerned. E) Non-current assets Property, plant and equipment are recorded at their historical cost and in accordance with the component accounting method; repairs, maintenance and small items are recognised in expenses for the period. Intangible assets include business assets purchased, software, and lease rights, and are shown on the balance sheet at their historical cost. Business assets purchased and lease rights are not amortised, and are subject to an impairment test. The depreciation and amortisation charges for other fixed assets are calculated on a straight-line basis. 140 4 / N O T E S T O T H E A C C O U N T S CFM Indosuez Wealth Management