Treasury shares
Irrespective of their intended use, all treasury shares are recognized at their acquisition price by the Groupe as a deduction from equity.
Bonds
Bonds redeemable in cash:
- The bonds are initially recognized at their fair value, which corresponds to the amount of cash received, net of issuance costs.
- Subsequent to initial recognition, bonds are recognized at their amortized cost, using the effective interest rate method, which takes into account all issuance costs and any redemption premium or discount.
Convertible bonds and debentures redeemable for stock:
- For convertible bonds (Océanes) or debentures (Oranes), or debentures with warrants (OBSAs), the liability and equity components are initially recognized separately. The fair value of the debt component at issuance is determined by discounting the future contractual cash flows at market rates that the Company would have had to pay on a bond instrument offering the same terms but without a conversion option. The equity component is measured on issuance by deducting the fair value of the debt component from the fair value of the bond as a whole. The value of the conversion option is not revised during subsequent financial years. Issuance costs are divided between the debt and equity components based on their respective carrying amounts at issuance.
- The debt component is subsequently measured at amortized cost.
Provisions
Provisions are funded when:
- the Groupe has a present obligation (legal or constructive) resulting from a past event;
- it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
- the amount of the outflow can be estimated reliably. Where the effect of the time value of money is material, provisions are discounted to present value. Increases in the amount of provisions resulting from the unwinding of the discount are recognized as financial expenses.
Contingent liabilities are not recognized but, if material, are disclosed in the notes to the financial statements, except in the case of business combinations where they constitute identifiable items for recognition.
Provisions for litigation and claims
These concern identified risks related to litigation or claims of any kind: commercial, regulatory, tax (other than income taxes) or labor. The Groupe establishes a provision if it is likely that outflow will be necessary to eliminate this risk and it is possible to reliably estimate the cost related to this risk. In such cases, the amount of the provision (including any related penalties) is determined by the agencies and their experts, under the supervision of the Groupe’s head office teams, on the basis of their best estimate of the probable costs related to the litigation or the claim.
Restructuring provisions
The total cost of restructuring is recognized in the financial year when these actions have been approved and announced.
In the context of an acquisition, restructuring plans that do not constitute liabilities for the acquired company on the date of the acquisition are recognized as expenses.
These costs consist primarily of severance and early retirement payments and notice periods that have not been worked, which are recognized in employee benefits expenses, and, in some cases, of write-downs of property, plant and equipment and other assets.
Vacant property provisions
If a property is vacant and is not intended to be used in the main activity, a provision is made including rental charges, taxes and any other costs. This provision does not include lease payments, which are recognized as an impairment of right-of-use assets relating to leases following the application of IFRS 16 since January 1, 2018.
In the context of business combinations, provisions are also recorded when the acquired company has property rental contracts with less favorable terms than those prevailing on the market as of the acquisition date.
Pensions and other post-employment benefits
The Groupe recognizes obligations relating to pensions and other post-employment benefits based on the type of plan in question:
- defined contribution plans: the amount of the Groupe’s contribution to the plan is recognized as an expense for the year;
- defined benefit plans: the commitment in respect of defined benefit plans is determined separately for each plan using the projected unit credit method. Actuarial gains and losses relating to post-employment plans and arising during the year are recorded directly in other comprehensive income. The effect of the unwinding of discounts on pensions net of the expected return on plan assets is recorded in “Other financial income and expenses.” Various plan administrative expenses are, when directly invoiced to the Groupe, recognized under operating income.
