These include an estimate of the closure or restructuring costs of certain activities resulting from plans that were announced but not yet executed at the end of 2019 (mainly severance pay). The plans are detailed by project and by type, and are approved in advance by senior management. They are managed centrally to ensure that the provision is applied based on the actual costs incurred and to justify the remaining balance at the year-end on the basis of the outstanding cost to be incurred.
Vacant property provision valuations are made by discounting the rent payable, less income expected from sub-leasing and additionally include lease expenses and any taxes on vacant premises, where the premises are not intended for use as part of their main activities. Since January 1, 2018, in accordance with IFRS 16, only lease expenses and any taxes are included in the vacant property provisions.
Provisions for risks and litigation (euro 103 million) include a short-term component (euro 44 million) and a long-term component (euro 59 million). They relate to litigation of any type with third parties, including commercial and tax litigation but excluding risks relating to uncertain tax positions.
The obligations for employee benefits (see Note 21) include:
The Group has obligations for a number of defined benefit pension plans, mainly split between:
The largest plans are therefore the pension funds in the United Kingdom (34% of the Group’s obligations) and in the United States (27% of the Group’s obligations).
Defined benefit pension plan valuations were carried out by independent experts. The main countries concerned are the United States, the United Kingdom, Germany, France, Switzerland, Belgium, the United Arab Emirates, Saudi Arabia, South Korea, the Philippines, Japan and India.
No material events occurred during the financial year to affect the value of the Group’s liabilities under these plans (significant plan change).
Publicis Groupe sets aside financial assets to cover these liabilities, primarily in the United Kingdom and the United States, in order to comply with its legal and/or contractual obligations and to limit its exposure to an increase in these liabilities (interest and inflation rate volatility, longer life expectancy, etc.).
The policy to cover the Group’s liabilities is based on regular asset-liability management reviews to ensure optimal asset allocation, designed both to limit exposure to market risks by diversifying asset classes on the basis of their risk profile and to better reflect the payment of benefits to beneficiaries, having regard to plan maturity. These reviews are performed by independent advisers and submitted to the Trustees for approval. Investments are made in compliance with legal constraints and the criteria governing the deductibility of such covering assets in each country. Funding requirements are generally determined on a plan-by-plan basis and as a result a surplus of assets in over-funded plans cannot be used to cover under-funded plans.
