On occasion, the client may ask for changes to the scope of the services in the course of the contract. These changes are generally negotiated as new contracts encompassing the additional needs with the related compensation.
The Group supplies a range of integrated communication services for its clients that combine all the Group’s areas of expertise. The Group enhanced its geographic approach, which best presents the manner in which revenue is affected by economic factors.
The breakdown of revenue by geographic region is similar to previous financial years and is presented in the segment information (see Note 31).
The Group decided to apply practical expedients regarding outstanding performance obligations and not to disclose information when the performance obligation is part of a contract that has an original expected duration of one year or less and those for which the Group is entitled to payment for the hours worked to date.
The amounts on the remaining performance obligations on other types of contracts than those listed above are not material and are not presented in the notes.
Net revenue is calculated as revenue less pass‑through costs.
Whether the Group acts as “Agent” or “Principal,” the Group incurs third‑party costs on behalf of clients, directly re‑invoiced to the clients. These costs mainly relate to production and media activities, as well as out‑of‑pocket expenses (especially travel costs) and are recorded into operational costs. As these items can be re‑invoiced to clients, they are not included in the scope of assessment of operations, then the “net revenue” indicator used to measure the Group’s operational performance excludes the re‑invoicing of such costs.
The fair value of the options granted is recognized in employee benefits expense over the vesting period of the options. This is determined by an independent expert, generally using the Black‑Scholes model. By way of exception, where the plan contains market objectives, the Monte‑Carlo method is used. For plans containing non‑market performance objectives, the Group evaluates the probability that the objectives will be achieved and takes account of this estimate in its calculation of the number of shares to be vested.
The fair value of the free shares granted is recognized in employee benefits expense over the vesting period of the rights. This value is determined by an independent expert and is equal to the market price per share on the date of the award, adjusted to reflect the expected loss of dividend(s) during the vesting period. By way of exception, where the plan contains market objectives, the Monte‑Carlo method is used.
For plans containing non‑market performance objectives, the Group evaluates the probability that the objectives will be achieved and takes account of this estimate in its calculation of the number of shares to be vested.
In order to facilitate the analysis of the Group’s operational performance, Publicis records exceptional income and expenses under “Non‑current income and expenses.” This line item mainly includes gains and losses on the disposal of assets.
The operating margin is equal to revenue after deducting personnel costs and other operating costs (excluding other non‑current income and expenses as defined above).
The operating margin is equal to revenue after deducting personnel costs, other operating costs (excluding other non‑current income and expenses described above) and depreciation and amortization expense (excluding intangibles from acquisitions). The operating margin, which represents operating income expressed as a percentage of net revenue, is an indicator used by the Group to measure the performance of cash‑generating units and of the Group as a whole.
The cost of net financial debt includes financial expenses on borrowings and interest income on cash and cash equivalents.
Other financial income and expenses mainly include interest expenses on lease liabilities, the effects of discounting long‑term provisions for vacant properties and pension provisions (net of return on plan assets), the effect of revaluation of earn‑out payments on acquisitions, changes in the fair value of financial assets and foreign exchange gains and losses.
