2020 Annual Financial Report

Provisions for liabilities and charges

Provisions are funded when:

• the Company 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, with the increase in the amount of the provision resulting from the unwinding of the discounting being recognized under financial expenses.

Contingent liabilities are not recognized but, where material, are disclosed in the Notes to the financial statements.

Financial instruments

In principle, the derivatives established by the Company are subscribed for hedging purposes only. The accounting treatment of these instruments is:

• derivatives purchased to hedge foreign currency receivables, debts, loans or borrowings are revalued in the balance sheet as part of their foreign exchange component in order to embody the symmetry effect at the level of the “Unrealized foreign exchange – Gains/Losses” on the balance sheet;
• realized gains and losses are recorded symmetrically on the hedged item.les pertes et gains réalisés sont enregistrés de manière symétrique à l’élément couvert.

Financial income (expense)

Financial income is recognized by applying the usual rules, namely:

• dividends: on the date the distribution is approved by the General Shareholders’ Meeting;
• financial income on current accounts, time deposits and bonds: as, and when, income is acquired;
• interest and dividends on marketable securities: on the date of receipt.

Financial expenses relating to the Eurobond 2021 and 2024 are presented, where applicable, inclusive of the interest income (expense) arising from the interest rate swaps.

It should, moreover, be noted that the swaps connected with the two aforementioned bonds are treated as hedges of loans in dollars recognized as assets.

Exceptional items

These include capital gains and losses on the sale of property, plant and equipment, and intangible and financial assets.

Note 3   Revenue

Billings are mainly composed of:

• rent received from the building at 133 avenue des Champs-Élysées in Paris, France;
• services invoiced to Groupe companies.de facturations de services à des sociétés du Groupe.

Note 4   Reversal of provisions and expense transfers

Expense transfers mainly include re-invoicing of Groupe companies for the allocation of free Publicis Groupe shares to certain key Groupe managers under co-investment programs (free share and stock options parts).

Note 5   Personnel costs

In 2020, personnel expenses include the compensation of the Chairman of the Management Board and related expenses. They also include the costs related to 2020 free share or stock option plans, amounting to euro 36,323,970, the delivery of which in existing shares results in a charge to the income statement. In 2019, the costs associated with these plans amounted to euro 25,934,131.