Other long-term investments held for maturity and whose sole contractual cash flow characteristics are the payment of the principal and interest, such as bonds, are then assessed at amortized cost using the effective interest rate method. Gains and losses are recognized in profit or loss if they are sold, impaired or amortized.
For investments that are actively traded on organized financial markets, fair value is determined by reference to the published market price at the reporting date. For investments that are not listed on an active market, fair value is determined with reference to the current market price of another substantially similar instrument, or calculated based on the cash flows that are expected from the investment.
This category includes financial receivables from equity-accounted investees or unconsolidated companies held by the Groupe.
Impairment is recognized whenever there is an expected credit loss due to the entity financial situation.
This line item mainly includes work-in-progress for the advertising business when the Groupe acts as “Agent.” They correspond to creative and production technical work (graphics, TV, radio, publishing, etc.) that can be directly passed on to the client but has not yet been invoiced. They are recognized based on costs incurred and impaired when their net realizable value is lower than cost. Non-billable work or costs incurred relating to new client development activities are not recognized as assets, except for tendering expenses which may be re-invoiced to the client under the terms of the contract. In order to assess the net realizable value, inventory and work-in-progress are reviewed on a case-by-case basis and written down, if appropriate, on the basis of criteria such as the existence of commercial disputes with the client.
It also includes, to a lesser extent, media inventories bought on own-account and not resold at the end of the reporting period.
Trade receivables and other operating receivables are initially recognized at their nominal fair value, corresponding to the transaction price of the client contracts.
Credit risked receivables are impaired. Such allowances are determined, on a case-by-case basis, using various criteria such as difficulties in recovering the receivables, the existence of any disputes and claims, or the financial position of the debtor. Impairment of trade receivables also takes into account expected losses on receivables under the simplified approach permitted by IFRS 9.
Due to the nature of the Groupe’s activities, trade receivables are of a short-term nature. Nevertheless, any trade receivables of a long-term nature will be recognized at their discounted value.
Contract assets consist of revenue recorded when a performance obligation has been satisfied but not yet invoiced. Contract assets are transferred to trade receivables when the right to consideration becomes unconditional and the service is invoiced to the client in accordance with the terms of the contract.
The Groupe uses derivatives such as foreign currency and interest rate hedges to hedge its current or future positions against foreign exchange rate risks or interest rate risks. Derivatives are measured at fair value and changes in fair value are generally recognized in the income statement. The fair value is determined either by reference to observable market prices at the closing date or by the use of valuation models based on market parameters at the closing date. Including counterparty risk in the valuation of derivatives did not have a material impact.
The Groupe designates certain derivatives as hedging instruments to hedge its exposure to the variability of cash flows associated with a highly probable transaction due to changes in exchange rates and interest rates.
Whenever these financial instruments are involved in an arrangement treated as a hedge for accounting purposes, the following should be distinguished:
For fair value hedges related to a recognized asset or liability, all gains and losses resulting from the remeasurement of the hedging instrument at fair value are recognized immediately in the income statement. At the same time, any gain or loss on the hedged item will change the carrying amount of this item as an offset to its effect on the income statement. Changes in the fair value of derivatives that qualify as fair value hedges are recognized in other financial income and expenses, as are changes in the value of the underlying items.
For hedges used to hedge firm or highly probable future commitments and that meet the conditions for recognition as hedge accounting (future cash flow hedge), the portion of gain or loss realized on the hedging instrument deemed to be an effective hedge is recognized in other comprehensive income in “hedging cost reserve.” The ineffective portion is recognized immediately in profit and loss. Gains and losses recognized in other comprehensive income are reported in the income statement for the period in which the hedged risk affects income; for example, when a planned sale actually occurs.
The fair value of derivative instruments is recognized in “other current financial assets” and in “other current financial liabilities.”
