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 brands, which takes into account the future cash flows that the brand would generate in royalties if a third party were to pay for the use of said brand. For client contracts, the method involves discounting future cash flows generated by the clients. Valuations are carried out by independent appraisers. The parameters used are consistent with those used to measure goodwill.
Items of property, plant and equipment are measured at acquisition cost minus accumulated depreciation and impairment loss.
If significant parts of an item of property, plant, and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant, and equipment and depreciated distinctly.
Depreciation is calculated under the straight-line method over their estimated useful life. The useful life of property, plant and equipment is generally assumed to be as follows:
When there is an indication of impairment loss, 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 profit or loss.
At inception of a contract, the Groupe assesses whether this contract is, or contains, a lease.
A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract gives the right to control an identified asset throughout the useful life of the asset, the Groupe determines whether: i) the contract involves the use of an identified asset, ii) the Groupe has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use, and iii) the Groupe has the right to decide how the asset is used.
The Groupe’s leases relate to real estate, outdoor contracts and other assets (vehicles and IT equipment). Real estate contracts concern offices for which the Groupe is lessee. Office lease terms vary from country to country. The outdoor contracts concern advertising space located in public transport (stations, metro, buses) and made availableto the Groupe in return for the payment of fees with guaranteed minimums. The terms of outdoor contracts are between 1 and 10 years.
Leases are recognized in the balance sheet at the lease commencement date for the present value of the future payments (i.e. rent or fixed or substantially fixed fees). These leases are recognized under “Lease liabilities” on the liabilities side, offset by “Right-of-use assets related to leases” on the assets side.
Right-of-use assets are initially measured at cost and are then amortized on a straight-line basis over the term of the contract, which generally corresponds to the contractual term unless the Groupe is reasonably certain to renew or terminate the contract.
Lease obligations are initially measured at the present value of the lease rentals not yet paid at the start of the lease contract and are then measured at amortized cost using the effective interest rate method. The discount rates applied to determine the lease liability are based on the Groupe’s incremental borrowing rate plus a spread to take into account the specific economic environment of each country. These discount rates are determined having regard to the terms of the leases.
When the Groupe enters into a sublease arrangement, if the sublease is classified as a finance lease, the Groupe derecognizes the head lease right-of-use related to the head lease that is transferred to the sublessee and recognizes a net investment in the sublease as a finance lease receivable. Any resulting difference is recognized in profit or loss.
The Groupe recognizes deferred tax assets and liabilities on the lease liability and the right-of-use asset.
Leases of low-value assets or short-term leases are recognized directly as expenses in profit or loss.
When the property is vacant and is no longer intended for use in core business activities, an impairment test is performed on the right-of-use assets. If the net carrying amount of the right-of-use assets is lower than their recoverable value, then an impairment loss is recognized based on the discounted future lease payments less any expected sublease income.
All investments are initially recognized at fair value, which corresponds either to the price paid or the value of assets given in payment, plus any transaction costs.
After the initial recognition, investments are assessed at fair value as of the reporting date. Gains and losses on investments held for trading are recognized in income. Profits and losses on other financial assets are accounted for either in profit and loss or in other comprehensive income for equity investments.
