Separately acquired intangible assets are recognized at acquisition cost. Intangible assets acquired in the context of a business combination are recognized at their fair value on the acquisition date, separately from goodwill, if they are identifiable. The identifiable nature is demonstrated if they meet one of the following two conditions:
Intangible assets primarily consist of trade names, client relationships, technologies, e-mail address databases and software.
Brands, which have a finite useful life, are amortized over their useful life, estimated at eight years. They are also subject to impairment tests if there are any indicators that they may have been impaired.
Client relationships with a finite useful life are amortized over such useful lives, which are generally between 10 and 15 years. They are also subject to impairment tests if there are any indicators that they may have been impaired.
Technology assets result from the Groupe’s engagement in digital activities. They are amortized over a three to seven year period.
E-mail address databases are used in direct e-mailing campaigns. These bases are amortized over two years.
The method used to identify any impairment of intangible assets is based on discounted future cash flows. The Groupe uses the royalty savings method for trade names, which takes into account the future cash flows that the trade name would generate in royalties if a third party were to pay for the use of said trade name. For client contracts, the method involves discounting future cash flows generated by the client. Valuations are carried out by independent appraisers. The parameters used are consistent with those used to measure goodwill.
Capitalized software includes in-house applications as well as commercial packages; they are measured either at their acquisition cost (if purchased externally) or at their production cost (if developed internally). They are amortized over their useful life:
Publicis recognizes expenditure for studies and research as expenses attributable to the financial year in which they are incurred. This expenditure primarily relates to the following items: studies and tests relating to advertising campaigns, research programs into consumer behavior and clients’ needs in various areas, and studies and modelling to optimize media buying for the Groupe’s clients.
Development expenditure incurred for an individual project is capitalized once they are considered to be reasonably certain of being recovered in the future. Any capitalized expense is amortized over the future period during which the project is expected to generate income.
Items of property, plant and equipment are measured at acquisition cost minus accumulated depreciation and impairment loss.
When appropriate, the total cost of an asset is broken down into its various components that have distinct useful lives. Each component is then recognized separately and depreciated over a distinct term.
Items of property, plant and equipment are depreciated on a straight-line basis over each asset’s estimated useful life. The useful life of property, plant and equipment is generally assumed to be as follows (straight-line method):
If any indicators suggesting impairment loss exist, the recoverable amount of the property, plant and equipment or the cash-generating unit(s) to which such assets belong is compared to their carrying amount. Any impairment loss is recorded in the income statement.
Leases are recognized on the balance sheet at the outset of the lease at the present value of future payments. These leases are recognized under “Lease liabilities” on the liabilities side, offset by “Right-of-use assets related to leases” on the assets side. They are amortized over the term of the lease, which is typically the fixed period of the lease unless there is a stated intention to renew or terminate. In the income statement, depreciation and amortization expenses are recognized in the operating margin and interest expenses under net financial income (expenses). The tax effect of this restatement for consolidation purposes is accounted for through the recognition of deferred tax assets or liabilities.
