2019 Annual financial report

Note 22 Deferred income

At December 31, 2019 and at December 31, 2018, this line item was mainly comprised of the payment received when arranging the 2014 hedging swaps. This payment is staggered over the term of the hedging.

Note 23 Unrealized foreign exchange gains

The unrealized foreign exchange gains at December 31, 2019 and 2018 stemmed from the remeasurement of two loans granted to MMS Multi Market Services Ireland for USD 869,050,000 and USD 741,270,000, respectively

Note 24 Off-balance-sheet commitments

24.1 Off-balance-sheet commitments given

24.1.1 Commitments related to bonds

Eurobond 2021

When issued in December 2014, this euro 700 million bond at a fixed rate of 1.125% was the subject of a cross-currency interest rate swap transforming it from euro fixed rate to dollar fixed rate. Two contracts, each for euro 350 million, were agreed for 2.921% and 2.918%, respectively.

Eurobond 2024

When issued in December 2014, this euro 600 million bond at a fixed rate of 1.625% was the subject of a cross-currency interest rate swap transforming it from euro fixed rate to dollar variable rate. Two contracts, each for euro 300 million, were originally concluded in December 2014, then converted on January 2, 2015 into fixed rates of 2.965% and 2.994%, respectively.

24.1.2 Obligations related to warrants

The exercise of warrants, which can occur at any time from September 24, 2013 to September 24, 2022, will lead to an increase in the Publicis Groupe’s capital stock. The conversion ratio was adjusted again in July 2019 by a factor of 1.068 to reflect the distributions drawn from the Company’s reserves and premiums. Publicis Groupe SA was, as of December 31, 2019, committed to issuing (in the event that the 896,829 outstanding warrants are exercised) 957,813 shares with a euro 0.40 par value and a euro 30.10 premium.

24.1.3 Description of the stock option and free share plans implemented during the financial year

Six types of free share plans were created during 2019, with the following features:

• Long Term Incentive Plan “LTIP  2019” (May 2019) Under this plan, a certain number of Group managers were awarded free shares, subject to two conditions:
  • employment must continue throughout the three-year vesting period;
  • the free shares are subject to performance criteria, and the total number of shares delivered will depend on the overall growth and profitability targets attained in 2019.
    The shares ultimately awarded in accordance with the level of attainment of these performance targets will be deliverable at the end of a three-year period, i.e. in May 2022.
• Long Term Incentive Plan “LTIP Directoire 2019-2021” (June 2019)
  Under this plan, the members of the Management Board were awarded free shares, subject to three conditions:
  • employment must continue throughout the three-year vesting period;
  • growth and profitability targets must be achieved for 2019, 2020 and 2021;
  • a CSR (Corporate Social Responsibility) criterion must be met. The condition will be considered to be met if, at the end of the third year of the performance period, at least 40% of the members of the Group’s Executive Committees in the Solution Hubs and main countries are women

The shares ultimately awarded in accordance with the level of attainment of these conditions will be deliverable at the end of a three-year period, i.e. in June 2022.

• Long Term Incentive Plan “Sapient 2019 Plan” (May 2019)
  In parallel with the LTIP 2019 and for the fifth consecutive year following the acquisition of Sapient, a plan with two tranches was put in place in 2019 exclusively for managers and employees of Publicis Sapient: